SONY SWOT ANALYSIS 2021.

About SONY –

Company Name SONY Corporation

Industries served Consumer Electronics, Imaging and
Sensing. Movies, Music.

Founded 1946. Japan.

Founder Masaru Ibuka
Headquarters Minato City, Tokyo, Japan.
CEO Kenichiro Yoshida
Employee (March, 2020) 111,700
Net Revenue (2019) 8,259.9 Billion Yen.
Net Income (2019) 622.3 Billion Yen.

About Sony Corporation.

SONY is a leading brand of consumer electronics, gaming products, music, movies, and imaging
solutions. The company is renowned worldwide for its high-quality products and focus on
customer satisfaction. Its growth worldwide has been driven by its continuous dedication to
innovation. Apart from the other things, the company has focused on creating an ethical and
customer-friendly image. However, the company is also facing intense competition from many
brands, including industry-leading brands like Apple and Samsung and LG Electronics, and other
consumer electronics brands. SONY makes, markets, and sells a large portfolio of products. It
has divided its business into five main segments.

The company is headquartered in Japan, which is also its leading market. However, the company
also generates a large portion of its revenue from the United States market. In fiscal 2019, the
company experienced a decline in net sales and revenue due to reduced demand and sales of Play
Stations, televisions, and digital cameras. The pandemic has also hurt its business worldwide.
The impact was severe on SONY’s supply chain like many other brands worldwide.

However, the company is steadily growing its focus on innovation to capture a larger market
share and open new vistas of growth. The company also experienced a sharp rise in net sales and
operating income from its imaging and sensing solutions. SONY’s growth in the coming years
depends on its ability to innovate since a large number of competing brands have introduced
products at lower prices, causing the profit margins of SONY to reduce.

STRENGTHS of SONY CORPORATION

1. Brand Image:-
SONY has achieved the image of a quality-focused, customer-friendly and ethical brand. Its
brand image is a key driver of sales and revenue growth for the company worldwide. Millions of
customers around the globe trust SONY for its great quality products.

While SONY is not counted among the industry’s best marketers, its brand image is still strong
support for the company driving faster revenue growth and market expansion. While SONY
products are generally priced higher than the competitors, its distinguished quality still drives
higher sales. The company has achieved a distinguished position in the global markets and the
industries in which it operates.

SONY’s focus is not just on quality and innovation but also on sustainability and business ethics.
All these factors are important for businesses that want to achieve a strong social image.
Particularly, CSR and sustainability have been recognized as among factors that help build a
strong social image. SONY’s brand image helps it achieve higher customer loyalty and easy
brand recall.

2. Diverse product portfolio:

SONY makes and sells a large and diverse product portfolio that includes products and services
like consumer electronics, music, movies, imaging, and sensing solutions, and more.

The company has divided its business operations into five major segments: Game & Network
Services, Music, Pictures, Electronics Products, and solutions, as well as imaging and sensing
solutions. The company has continued to diversify its product portfolio for market expansion and
to grow its profitability.

In recent years while the market for SONY televisions and digital cameras has shrunk, its
imaging and sensing solutions have experienced faster growth in sales. The demand for its
imaging and sensing solutions has grown among smartphone makers, leading to growth in this
business segment’s profitability. In 2019, while its gaming and network services and electronics
products and solutions segments experienced a decline in sales and revenue, the music and
pictures segments and the imaging and sensing solutions segment experienced growth. The
reason was that apart from a reduction in sales of televisions and digital cameras, the company
also experienced reduced sales of PlayStation 4 hardware. However, due to its diversified
product portfolio, the company was able to substantially reduce the negative impact of the
pandemic and the reduced demand for its gaming and electronics products.

The company is also investing in other latest technologies to gain inroads into new business
areas.

3. Product quality:
SONY has remained a leading name in the consumer electronics industry mainly because of its
focus on quality. The company is known to make and sell premium quality televisions, music
players, speakers, and other products. Its products are also differentiated from its competitors on
the basis of quality. Its continued focus on quality has also resulted in higher customer loyalty as
well as strong sales worldwide.

Despite the growing competition from several players including Samsung and other consumer
electronics brands like LG and Panasonic, the company has not let its focus on quality dwindle.
Moreover, its focus on quality is not limited to just a few leading products but to almost all
business areas in which SONY operates. From digital cameras to televisions and music players
as well as movies, the company is famous for its exceptional focus on quality. However, the
growing price competition has also led to reduced profit margins for the brand. Despite that
SONY has managed to retain its quality level and that has helped it manage its strong market
share in key industry sectors.

4. Technological Innovation:
Another major strength of the company is its focus on product innovation. SONY is known for
having introduced several groundbreaking products and technologies. Its products are known to
be of superior quality and differentiated from competing products and brands. Its focus on
innovation has helped the company introduce several innovative products to the market that offer
a superior customer experience. Whether, it is about SONY televisions or digital cameras, or its
other products and solutions, its focus on technological innovation has helped it introduce
products that are exceptional in terms of performance and quality.

5. Customer Loyalty:
SONY is a leading name globally in various industry sectors including consumer electronics,
music, movies and other sectors. However, the company has acquired a large and loyal base of
customers through its relentless pursuit of quality. Throughout the world it has a very large and
loyal base of Play Station customers. Apart from that, SONY is a highly trusted brand globally.
The company, apart from remaining dedicated to quality and innovation has also remained
dedicated to ethics. These factors have helped it build a superior brand image and achieve strong
customer loyalty.
WEAKNESSES:
1. Falling PS4 Sales:
The company is experiencing a reduction in PS4 sales which had remained a key driver of
revenue for the company. Due to the heavy reduction in sales of PS4 hardware during fiscal 2019
as well as reduced sales of televisions and digital cameras, the company experienced a fall in its
overall operating revenue. PS4 is facing heavy competition from other players including online
gaming channels and makers of gaming devices like Xbox and Nintendo.

In fiscal 2019, the company sold only 13.6 million units of PS4 hardware compared to 17.8
million units in fiscal 2018. Apart from the negative impact of the pandemic and supply chain
disruption, the competitive factors were also responsible for the decline in sales of PS4 hardware
in fiscal 2019 (ending March 31, 2020)

Not just the PS4 hardware, but SONY also experienced a decline in sales of its televisions and
digital cameras during fiscal 2019, which also caused its operating revenue for the fiscal to
decline.

SONY sold only 9.3 million units of televisions in fiscal 2019 compared to 11.3 million units in
fiscal 2018. Sales of digital cameras declined to 2.9 million units in 2019 compared to 3.6
million units in fiscal 2018. The sales of SONY smartphones also dropped to less than half of the
previous fiscal in 2019. SONY sold only 3.2 million smartphones in fiscal 2019 compared to 6.5
million units in fiscal 2018.

2. Lack of focus on marketing:

While SONY is known as a highly innovative brand and exceptional in terms of quality, the
company has not been as exceptional in terms of marketing as the brands it is pitted against in
the market. The decline in sales of consumer electronics products made by SONY can also be
attributed partially to the lack of a focused marketing strategy.

SONY is facing intense competition in the global market. Several brands have introduced a large
number of products that even if not as great in terms of quality, come loaded with the latest
features and appeal to a large group of customers looking for quality products available at
affordable prices. From televisions to smartphones and digital cameras, the company is known
for its exceptional quality but has been losing market share to rivals because of poor marketing
as well as premium pricing.

The company needs to develop a focused global marketing strategy to retain its market share in
key industry sectors and for retaining its large and loyal customer base from around the world.
 3. Price pressure:-
The company is facing heavy price pressure. The continued loss of market share and a decline in
sales and profitability during fiscal 2019 can be attributed mainly to the company’s premium
pricing strategy.

Many companies have entered the fray, including companies based in South Korea, Japan and
several more based in China. The Chinese companies, especially those with access to cheaper
resources, including cheaper labor, have introduced products at much lower prices. The result is
that while profit margins have shrunk for SONY, the company also has to spend more on
marketing and research, and development to maintain its market position and market share.

The company experienced a sharp decline in sales of key products in 2019 that have remained
the leading source of revenue for it for years. Some of the decline in sales was caused mainly due
to the premium pricing of SONY products. The problem is that if SONY wants to maintain its
products’ quality, it cannot price them lower since it has to invest a lot in raw materials,
marketing and R&D. Pricing them lower can also lead to a perception of lower quality products
among the customers worldwide. Overall, while price competition is ruining SONY’s sales in
various corners of the world and particularly, in the emerging economies where increasingly the
Chinese brands are gaining market share, the company does not have a great option before itself
apart from rethinking its marketing and business strategies.

4. Low share in the smartphone market

SONY’s market share in the global smartphone market has kept shrinking over time. Apart from
its premium pricing, lack of innovation is also an important factor that has caused sales to fall.
The company sells premium Xperia phones that are priced higher than most smartphones
available in the market. As a result, these smartphones are positioned against premium phones
like the iPhone or the upper range models in Samsung’s Galaxy range.

India has grown into the second-largest smartphone market surpassing the US in 2019. However,
in the same year, dwindling sales forced SONY to exit this highly lucrative market. The reason
was that apart from Apple and Samsung, the best-selling brands in the Indian market are from
China. These brands have brought a large range of products that are priced competitively and as
a result, acquiring sales is much easier for them.

Apart from that, SONY also lacks in terms of marketing. Where other smartphone brands have
been marketing their products quite aggressively in India and other smartphone markets like
China and the US, SONY’s marketing approach has not changed a lot over the years. The
company does not have any entry-level or mid-range phones either to offer that can drive sales
higher. However, while SONY is currently among the bottom players in the global smartphone
industry, it has not totally exited it. The company might introduce new models that are priced
competitively to spur sales again.
OPPORTUNITIES:
1. Latest technologies:
SONY’s opportunities lie in the latest technologies. The company has already entered the
automobile sector with its Vision-S. According to Wikipedia, SONY Vision-S is an all-electric
concept sedan that was first unveiled at the 202 consumer electronics show. The company has
developed this Sedan in collaboration with many automobile companies including Magna
International, Continental AG, Elektrobit, Bentlee and Bosch.

The car features SONY’s latest technologies related to the automobile sector including
autonomous driving technology, sensory devices, as well as, always-on connectivity. The car
also comes loaded with immersive entertainment features.

In 2020, the car included a drive assistance system like Tesla’s called the Safety Cocoon. It had
33 sensors onboard including CMOS, solid state Lidar, and time of flight cameras. SONY has
grown its focus on research and development so it can expand its business into new areas
including AI, Cloud technology and other latest technologies like machine learning.

If SONY’s automobile project (Vision-S) is successful, it could prove to be a driver of revenue

for the brand. Due to its shrinking share in consumer electronics industry, the company needs to
focus more aggressively on latest technologies to sustain its market position and growth
momentum.

2. Digital marketing:-
While SONY is recognized globally as a great consumer electronics brand, it has kept lagging
behind its American and South Korean counterparts with regards to marketing. Its Xperia phones
compete with Apple’s iPhone and other high-end smartphones made by brands like Samsung and
One Plus. However, when it comes to marketing, SONY has mainly relied on its loyal customer
base for word of mouth and to maintain sales.

Without developing a new marketing strategy or adopting improved customer retention methods,
the company cannot expect to grow the sales of its key products including televisions, cameras,
and smartphones.

In the 21st century, CRM has become a key area of focus for businesses. Technology and
consumer electronics businesses have to particularly focus heavily on customer relationships if
they want to avoid losing market share. The focus has shifted from great quality products to great
quality customer experience and from marketing to sales and after-sales service, the focus is
always on customer satisfaction.
While SONY is still a highly trusted consumer electronics brand worldwide, if it is losing market
to its South Korean and Chinese rivals, the reason is that the company did not focus enough on
marketing.

Compared to SONY, Apple and Samsung have done a much better job. However, it does not
mean that SONY has totally lost the game. It must focus on reaching out to customers using
digital marketing methods. Social media marketing could also help the company grow its reach
and penetration in the emerging markets. SONY moved rater lousily in this area, and the result
was that the market for SONY products, despite their quality, kept shrinking. If the situation
persists, SONY risks losing its most loyal customers. The company must use digital channels
like Facebook and YouTube for digital marketing and video marketing and engage its customers.
While in the short term, it can help the company drive sales higher, in the longer term, it will
help the company acquire its lost market share in key market regions. The company can combine
its digital marketing capabilities with its existing strengths to expand its global customer base.

3. Emerging economies:
The emerging economies present the most significant opportunities before the consumer
electronics brands like SONY. A large number of Chinese and South Korean brands have been
focusing aggressively on growing their penetration of emerging economies like India, Malaysia,
Brazil, Indonesia, and others.

Currently, the two largest markets for SONY products are Japan and the United States. However,
while the company has been building great products and has a great product strategy, it does not
seem to be focusing on creating strategies tailored for specific market regions.

Apart from local economic and political developments, the pandemic has also affected SONY’s
business in several markets. The rivals were able to exploit the opportunities in the emerging
markets successfully where SONY failed and in some cases was forced to exit.

SONY must focus again on markets like India, China, Brazil, Malaysia and Indonesia where it’s
most significant opportunities lie. While these economies have enjoyed higher economic activity
in recent years, the growing middle class in these economies also presents a significant
opportunity for the consumer electronics companies.

4. Acquisitions and diversification:

SONY’s revenue fell in fiscal 2019 compared to the previous fiscal. The company need to focus
on methods of creating new channels of growth and achieving market expansion. Acquisitions
can help the company diversify into new business areas. They can also help the company
strengthen its position in the existing areas. For example, in fiscal 2019, the company acquired
AT&T Inc.’s minority stake in Game Show Network, LLC and acquired Silver gate Media
Group through which Sony aims to cement its position as a leader in the U.S. TV game show
business (SONY form 20f, fiscal 2019).

The company can acquire smaller businesses to enter into new areas in emerging fields like AI,
machine learning, etc. Its recent acquisitions like the Game Show Network, Bili and Epic Games
(SONY holds a small stake in both Bili and Epic games) were mainly related to entertainment
and video games. The company should shift its focus towards latest technologies to make its
business more future ready compared to its rivals.

5. Customer focused innovation:

While SONY is known as an innovative company, it has missed one key area that is
understanding the evolving customer needs and preferences. It is why SONY must be focused on
innovation that customers love or making products that suit their customer needs better.

The key thing is to understand how customers’ needs are evolving with time and create products
accordingly. Until now, the company has been making innovative products, but it cannot rely
solely on the quality of these products to sell them. The company must understand customers’
needs and design products accordingly to drive sales higher. The secret to achieving higher sales
and winning more customer loyalty is to focus on innovation that suits the customers’ needs.

SONY’s rivals seem to have mastered this art but SONY itself seems to be missing the more
important side of the coin. The question is not just to innovate but to innovate for customer’s
satisfaction. This could also help SONY add more life to its existing products and grow their
appeal for the customers. Differentiation has already become difficult for consumer electronics
companies because of the heavy competition in the market. The rival brands are also investing
heavily in research and innovation but the winner is the one that understands customers’ needs
and caters to them better.

Let’s take Apple’s example. The company does not just create products but multidimensional
experiences. Apart from that, it offers regular updates and also engages customers using various
marketing channels. It is why customers love Apple. This is how companies like Apple achieve
higher customer engagement. They know their customers’ needs and how to fulfill them.

Samsung also followed the same route to win customers’ hearts. However, while SONY kept
making great products, it seems the company missed the track long back and since then was also
forced to discontinue some of its most attractive products like SONY VAIO laptops. It also
applies to SONY’s smartphones and televisions. Understanding customer needs will allow
SONY to differentiate its products further from the rival brands that are continuously expanding
their market share. The company missed important innovations by a thin margin.
THREATS:-
1. Heavy competition:
One of the biggest threats before SONY’s market position is the heavy competition, the company
faces from brands based in the US, China, and South Korea. In the smartphone market, while it
is pitted against Apple, Samsung, Xiaomi, and One Plus, in the consumer electronics market too,
the company is facing strong competition from Samsung, LG, Panasonic, and other brands.

Its market share of consumer electronics products has kept shrinking. While the company has
grown its focus on research and development, in the coming years, its operating expenses could
grow faster due to the growing competitive pressure. Apart from its production-related costs and
R&D expenses, the company’s marketing expenses are also expected to grow faster in the future.
Competition has hit SONY hard mostly in its core business areas. Its rivals like Samsung, Apple,
Xiaomi, One Plus, LG, and others are also focusing aggressively on innovation which has
become key to success. Many of these brands have adopted highly competitive pricing strategies
to gain market share faster. They have adopted aggressive moves including adopting thin profit
margins in many cases to win market share.

Its result is that they easily grew their market shares in important economies like India and China
and SONY was forced to quit or remain satisfied with a much smaller market share. SONY
could have easily ruled the market if it could early realize how competition could ruin its market
share and growth rate. Customers have switched to other brands because it proved profitable for
them.

2. Coronavirus pandemic:-
The coronavirus pandemic has hit large and global businesses very hard. Apart from shutting
down their supply chains and stifling the movement of goods across borders, it has also hit
economies very hard including some of the biggest economies like the US and the UK. It led to
lower purchasing by consumers in various economies as well as heightened pressure on
hardware brands like SONY that experienced lower sales of PS4 and televisions.

The company had started gathering momentum before the pandemic but several of its plans
received an unexpected blow as the pandemic forced supply chains to shut down and the release
of new music and movies got stalled. The impact of the pandemic is expected to last long. The
use of digital channels for shopping and entertainment has grown which also reflected in
SONY’s sales in the Pictures and music segment but the impact has clearly been harsh on the
consumer electronics and gaming products.

After the pandemic, SONY may be able to realize several of its important goals but for now the
pandemic seems to have forced the company to hit the pause button.
In a March, 2020 press release, SONY quoted that its music releases were going to be delayed
due to the disruptions caused by the novel coronavirus.

3. Economic fluctuations:-
SONY is a premium brand, and the fluctuations in the global economy directly impact its
business. Economic factors directly impact SONY’s business since the company’s sales depend
on the purchasing power of the consumers worldwide. Japan and the US are the two most
important markets for SONY products, followed by China and Europe. However, the pandemic
has affected the US economy bringing sales of nonessential products down in the market.
Similarly, fluctuations in currency exchange rates also harm SONY’s profits, which was again
clearly felt at the end of fiscal 2019 (ending March 31, 2020) of SONY Corporation.

When the level of economic activity in key markets across the globe is high, brands like SONY
enjoy higher sales and profits as people spend more on entertainment and consumer electronics.
Before the pandemic, the company enjoyed strong sales and had made plans for the future related
to market expansion. However, the pandemic and the resulting decline in economic activities
worldwide applied brakes on SONY’s growth by stalling production and bringing sales down
sharply.

Millions of people worldwide were rendered jobless after the pandemic and spending across
various economies went down sharply. While in some economies like the US, China, and UK,
economic stimulus provided by the government may work to stimulate economic activity,
SONY’s plans in other markets may need to wait.

CONCLUSION.
In this SWOT analysis we have analyzed the key strengths and weaknesses of SONY apart from
the opportunities and threats before the brand. The company is a leading manufacturer of
consumer electronics apart from a leading name in the world of music and movies. However, the
company’s imaging and sensing business has also expanded fast and has become a leading
source of revenue for the company.

The industry dynamics and consumer needs and preferences have changed fast in recent years.
Sony is facing intense competition in several areas including consumer electronics and gaming.
The company’s Xperia smartphones have been experiencing a steady decline in sales caused due
to competition among other factors. Sony makes only premium products and the growing
competition in the industry has caused sales of key products to decline and SONY’s profit
margins to shrink. The price pressure has kept growing and since the company cannot risk its
image if it tried to compromise on the quality of its products, it cannot price them lower as its
Chinese rivals do.
However, the company has gathered strong growth momentum, and if not for the negative
impact of the pandemic, the company is otherwise doing well. Its business is in strong shape, and
the company is investing in new areas, including AI and autonomous driving, to create new
growth channels. The company is also investing in research and development to grow the appeal
of its product portfolio. In 2019, SONY invested 499.3 billion Yen or more than 4.75 billion
USD in Research & development compared to 481.2 billion Yen or around 4.6 billion USD in
fiscal 2018 (Sony form 20f, 2019).

One key area where SONY will need to focus more is marketing. Digital marketing can help the
company grow its influence in the industry and help bring life back to some of the SONY
products that are otherwise losing their appeal faster. Compared to its American and South
Korean rivals, SONY has maintained a less aggressive marketing approach. Its previous
marketing approach is insufficient in the current hypercompetitive market scenario. The
company must also focus on maintaining stronger customer relationships to reduce the
competitive pressure and the growing risk of market share loss.