SONY PC
TEAM 6
Alejandro Portales ٠ Dong Hun Yi
Jerrica Tan ٠ Kevin Colas-Moerman ٠ Niral Patel
Sony Corporation
٠ Founded May 7, 1946 with headquarters in Tokyo, Japan
٠ Consolidated 2005 annual sales $64 billion
» 158,500 employees
» 936 worldwide subsidiaries
٠ Major businesses:
» Electronics, Game, Music, Pictures, Financial Services
Game
10%
Music
3%
Electronics Pictures
67% 10%
Financial
Services
Other 7%
3%
Source: Financial Highlights from www.sony.net
Global Industry Overview: 2002
٠ Personal Computer (PC) industry
» Consistent growth
» Maturity stage
» Price & profit erosion
Sales by Region Worldwide Sales
$70,000 $250,000
$60,000
$200,000
$50,000
$150,000
$40,000
$30,000
$100,000
$20,000
$50,000
$10,000
$0 $0
1990 1995 2000 2002 2004* 2007*
North America Western Europe Asia Pacific Others Worldwide
Sony’s Dilemma: 2002
Objectives
٠ Introduction of new VAIO desktop line
» Multimedia station
» High-end market
٠ Integration of multimedia
» Sony Electronics + Sony Music + Sony Pictures
“SONY DREAM WORLD”
What are the limitations?
What should Sony do?
USA Industry Overview: 2002
٠ Dell is #1 with annual
sales of $13.2 billion
٠ Sony fastest growing
and most successful
Japanese PC firm CONFIRMATION
» Success of VAIO laptop
line ENRICHMENT
RESTORATION
٠ Migration from desktop
to laptop
٠ Growth in consumer BUILDING
(home-user) segment
Source: Concept adoption from “Heineken N.V.: Global Branding & Advertising” by HBS (9-596-015)
SWOT Analysis: Sony PC
Strengths Weaknesses
٠Brand name ٠Not known as PC brand
٠Innovative design ٠Expensive (“high-end”)
٠Strong distribution channels ٠Indirect sale method
٠Quality focus ٠Allocation of resources
٠Customer service focus ٠No server product line
Opportunities Threats
٠Dynamic market ٠Fierce competition
٠Demand for design & style ٠Low-pricing trend
٠Success in other industries ٠Cyclical industry
٠Spillover effect to corporate ٠Low penetration in US
٠Combined features ٠Direct sale method
Market Ranking
٠ North America (US and Canada)
» Highest PC penetration
» High level of infrastructure
» Low level of usage barrier
٠ Western Europe
» High purchasing power – immediate opportunity
٠ Asia Pacific
» China & India – future growth market
» South East Asia – current growing market
٠ Others
» Latin America, Eastern Europe, Middle East
Evaluation of PC Market
MARKET EVOLUTION
USA Japan
Wester
n South
Europe Korea
Asia
Pacific
Latin
America
Easter
n
Middle Europe
East
Embryonic Take-off Growing Mature Declining
STAGE OF DEVELOPMENT
Marketing Expansion Strategy
CORPORATE OBJECTIVE HOME MARKET - JAPAN
Global Integration of Limited Growth Potential
Multimedia Saturation of Sony Brand
CORPORATE RESOURCES PRODUCT/MARKET FACTORS
Global Positioning & Brand Regional Diversification
Expertise Product Concentration
Offensive Strategy into
Competitors’ Markets
“BROAD SWEEP”
Entry Mode
Global
Integration
MATURE - Sony Music
- Sony Pictures
- Sony Electronics
US subsidiary VAIO expansion
- Desktop failure - Design
GROWTH - Keep presence - Features
in electronics
EMERGING
ENTRY DEVELOPMENT CONSOLIDATION
1992 - 1995 1995 - 2001 2002 - present
Competitive Analysis: USA
MARKET PLAYER
FACTORS VARIABLES
STRONGEST WEAKEST
Market Commercial
Segment Consumer
Small Business
Product Laptop
Category Desktop
Server
Distribution Indirect
Strategy Direct
Product Low-end
Characteristics High-end
Reliable
Good service
Features & Design
Pricing
Product Strategies
٠ Focus on the high-end market
» Compete on innovation & design NOT PRICE!
٠ Low volume & high margin
٠ Integration of multimedia features
٠ Focus on excellent customer service
2002: Vaio W Model 2006: Vaio L Model
Market Strategies
٠ Maintain positioning in US market
٠ Diversification on growth opportunities
» Western Europe – Competitive advantage
» Asia Pacific – Market attractiveness
CHINA
“All-Out Attack”
INDIA SOUTH EAST ASIA
“Observation” Manage Brand Image
Exhibits – Market Ranking
Market Attractivness
FACTORS Weight North America Western Europe Asia Pacific Others
Size 42% 10 4.20 8 3.36 6 2.52 4 1.68
Growth 41% 6 2.46 6 2.46 9 3.69 7 2.87
Penetration 17% 9 1.53 8 1.36 7 1.19 8 1.36
TOTAL 100% 8.19 7.18 7.40 5.91
Competitive Advantage
FACTORS Weight North America Western Europe Asia Pacific Others
Concentration 37% 4 1.48 4 1.48 4 1.48 8 2.96
Usage barriers 16% 9 1.44 7 1.12 8 1.28 6 0.96
Infraestructure 26% 9 2.34 9 2.34 8 2.08 6 1.56
Adaptation Requirements 21% 10 2.10 9 1.89 8 1.68 6 1.26
TOTAL 100% 7.36 6.83 6.52 6.74
Exhibits – Market Ranking
10.0
9.5
9.0
8.5
MARKET ATTRACTIVENESS
8.0 NA (7.36, 8.19)
7.5 AP (6.26, 7.82)
7.0 WE (6.83, 7.18)
6.5
6.0
5.5 OT (6.74, 5.91)
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0
COMPETITIVE ADVANTAGE
Exhibits – PCs In Use Trend
250 180
160
200 140
120
(Millions)
150
(Millions)
100
80
100
60
50 40
20
0 0
1995 2000 2001 2007*
NA Home WE Home AP Home
NA Business WE Business AP Business
Exhibits – PCs versus Internet Use
400 700
350 600
300
500
250
(Millions)
(Millions)
400
200
300
150
200
100
50 100
0 0
2000 2001 2007*
NA PC WE PC AP PC
NA Internet WE Internet AP Internet
Exhibits – Product/Market Ranking
Product / Market Ranking North America Asia-Pacific Western Europe Others
1. Response to marketing effort Concave Concave Concave S-Curve
2. Growth rate Low High Low High
3. Sales stability High High High Low
4. Competitive Lead time Low Low Low High
5. Spillover effect High High High High
6. Product adaptation Low Low Low Low
7. Communication adaptation Low Low Low Low
8. Cost of distribution Low Low Low Low
9. Program control requirement Low Low Low Low
10. Constraints Low Low Low Low
CONCLUSION Diversification Diversification Diversification Diversification
Exhibits – Entry Mode Analysis
Target Region Characteristics NA AP WE Others
1. Restrictions
- Import duty L L M L
- Regulatory compliance
2. Risk
- Economic volatility L M L H
- Political volatility
3. Conditions
- Infrastructure H M H L
- Capability of users
Industry Development Characteristics NA AP WE Others
1. Concentration
H M M L
- Major player in the market
2. Uncertainty
- Industry outlook (expectancy in M M M M
future)
3. Competition
H H M L
- Number of competitors/market size
Organization Characteristics
1. Size H
2. Experience H
3. Resources M
Marketing Strategy Characteristics
1. Centralization of management L
2. Product life cycle L
3. Global presence H
Exhibits – Competitive Analysis
Topic Variables SONY DELL HP COMPAQ GATEWAY IBM
Market Segment Commercial 2 2 1 -1 -1 2
Consumer 1 1 2 2 2 -1
Small Business 0 2 1 2 1 2
Product Category Laptop 2 2 1 1 1 2
Desktop 1 2 2 2 2 -1
Servers 0 2 1 2 1 2
Sales Strategy Indirect 2 0 2 2 1 1
Direct 1 2 0 0 2 0
Products Caracteristics Low end 0 2 2 2 1 0
High end 2 1 1 1 1 1
Reliable 2 2 1 2 1 2
Good Service 2 2 -1 -1 1 1
Features & Design 2 1 1 1 2 1
Total 1: Pricing Excluded 17 21 14 15 15 12
Pricing 1 2 2 2 2 1
Total 2: Pricing Included 18 23 16 17 17 13
-1 Present and unsuccessfull
0 Non present
1 Present
2 Present and successful
Exhibits – Macroeconomic Data
GDP Foreign
direct
GDP Growth investment
Population GDP Capita GDP Rate Net
(thousands) ($billion) ($) ($billion) (2000 Inflow
(2004) ~2004) (billions)
North America 312,970 10,514 33,596 12,678 21% 387.4
Asia-Pacific 2,874,200 7,819 2,720 9,599 23% 221.7
Western Europe 372,667 7,808 20,951 11,971 53% 777.7
Latin America & Caribean 515,100 2,000 3,883 2,000 0% 79.3
Middle East & North Africa 278,400 448 1,607 548 22% 4.1
Central Europe & Central Asia 471,700 954 2,022 1,800 89% 30.1
* Modified data from World Bank
* North America: USA, Canada
* Pacific Asia: Japan, Korea, China, India, Hong Kong, ASEAN(Except Brunei), Australia, Newzeal Land
* Western Europe: European Monetary Union, UK, Sweden