Detailed SWOT Analysis for Sony Corporation, SNE

Strengths

  • Strong brand image – Sony has a well-established brand which is highlighted by being regarded as highly valued brand in Asia.
  • High innovation – Sony is known for its excellence in technology as well as expertise in technology which has enabled it to create VCR, Trinitron Color TV and Walkman as well as the compact disc, magnetic recording tape and the Blue-Ray disc. Despite the challenges, Sony has continued to develop groundbreaking products which satisfy customers. Its re-entry into the robotics field will result in increased profitability as it will generate $4.86 billion for the March 2018 financial year (Nerella, N.p).
  • Innovative products – out of all the products at present, it has achieved noteworthy success with its PlayStation; it has been extremely successful since it was introduced and it is still being demanded by consumers.
  • Strong footholds within the entertainment industry – Sony’s products and services such as Sony Pictures and Sony Music have enabled it to be successful. They are beneficial to the company because they offset losses from the consumer-driven division (Fatakia, N.p).
  • Excellent corporate structure – This has helped Sony in splitting its diversified products into business units thereby ensuring clearly attributable responsibility and accountability. Such reforms in the company’s structure increase the strength of its operations as well as enhancing its profitability by attracting huger customer base (Nerella, N.p).
  • Excellent global framework for employee talent development – this enables Sony in attracting and developing talented employees who bring in capabilities into full play thus increasing the company’s innovation.
  • Reassessment of its corporate strategy and adapting of its operational structure – Sony is able to re-examine its fluctuating sales and profits using this strategy in its core electronics business. This will shift its focus to its core competency of producing excellent consumer electronics products which will help in offsetting its losses (Fatakia, N.p).
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Weaknesses

  • High product pricing policies – Sony’s cost of producing media is high in its TV business thus greatly affecting its strategy of pricing its products and services. This has made the company to lose close to $6.3 billion in 8 years in a row as well as market shares to its manufacturers like Samsung and LG.
  • Shift of focus – The Corporation has massive diversification into different business segments thus taking its focus away from the core competencies it used to enjoy, which is producing excellent consumer electronics products. The move has led to the distortion of its brand (Nerella, N.p). However, Apple has been incredibly successful because it focuses on few products thus building competency.
  • Less promotional activities – Sony has not been able to reach a wider market because they have less promotional activities. This has resulted in the loss of revenue and market shares to the competitors like Apple and LG who have put more emphasis on promoting their products.
  • Change in management style – Sony has adopted new western management style which has led to cultural clash among the lifetime tenured employees. This has prohibited them from aggressively moving towards growth and efficiency thus losing on market share and revenue (Fatakia, N.p).

Opportunities

  • Multinational company – Sony has diverse experience in the gaming space as well as music and movie business which they can take advantage of in delivering content that value-added supporting and integrating the company’s product line. Sony has the opportunity of doing this using the four0screen strategy which is a good concept (Nerella, N.p).
  • Occupied Ericson’s share in mobile segment – Sony has lately acquired the whole joint venture of Sony Ericson and this could offer them the chance to act alone thus innovating in the lucrative market for tablets and smartphones. There is a rising demand for smartphones which creates high demand for its Smart products.
  • Diversification to the medical field – it has the opportunity of entering the healthcare-imaging sector significantly by acquiring 30 percent stake in Olympus. Sony has new opportunities for innovation due to the growing emergence of telehealth (Fatakia, N.p).
  • Virtual reality – its virtual reality hardware has potential for its comeback as it will offer high-quality and affordable products with excellent virtual experience.
  • Increasing demand for HD TVs – customers constantly need new and improved video game console products which provide Sony with the potential for continuous future growth in innovation and improvement in technology.

Threats

  • Stiff competition in all segments- it faces price competition from rivals like Samsung and LG that have consistently gained traction using products that are of lower-cost like TVs and mobile devices (Fatakia, N.p).
  • Faster technological advancement and change – being in the electronics industry, Sony faces the threat of keeping up with the constant and faster advancement in technology. Therefore, to remain competitive, it has to seek constant innovation and adapt to the changing technological trends (Nerella, N.p).
  • New coming brands – Sony faces the threat of other competitors venturing into the products it offers. For instance, the rumor that Apple will introduce its own version of TV, Apple TV, will give Sony a tough time.
  • Online network being hacked – The online network of Sony faces the threat of cyber-attack. Its PlayStation network was hacked which brought about the leakage of its customer information, for instance, credit card data.

Questions

Question 1: Would you place a personal deposit of $1 million or more in the publicly traded stock of this company?

I would invest in the publicly traded stock of Sony Corporation. It is viable to invest in the Sony’s future or long-term because it has a steady growth and will realize higher returns in the future. In addition, I would invest in the company’s stock because it has paid dividends continuously and this assures some returns every year. Also, the stock price of the company has been rising implying that it is a good investment. On the other hand, is highly leveraged and this will magnify the shareholder returns. Sony has several opportunities as indicated by the SWOT analysis such as development of business I the medical field which is capable of generating more revenue as well as it future growth.

Question 2: Would you invest $500,000 in the debt (bonds) of this company?

I would invest the amount in the Sony’s debt or bonds because its steady reduction in interest expense implies that it is a low risk investment. This is evident in its very high interest coverage ratio. Although the company is highly leveraged, it has excellent prospects for future growth as evidenced by its continued effort to establish its business to adapt to the trends of the Consumer Electronic industry. In addition, it has good credit rating because according to Morningstar, it has intermediate and middle credit quality (Morningstar). The earrings of Sony are capable of continuing to be strong in the long run which will ensure that it meets it debt obligation and therefore will make principal and interest repayment with lots of ease.

 

Work cited

Fatakia, Keki. “Sony Corporation: Strengths, Weaknesses, Opportunities, Threats — The Motley Fool”. The Motley Fool. N.p., 2017. Web. 19 Feb. 2017. Retrieved February 19, 2017, from https://www.fool.com/investing/general/2012/03/02/sony-corporation-strengths-weaknesses-opportunitie.aspx

Nerella, V. Is Sony Turning Around? Retrieved February 19, 2017, from http://strategymanager.blogspot.com/2012/07/is-sony-turning-around.html