Sony Threats and Opportunities
Porter’s Five Forces Analysis
1. Threat of Substitute Products (LOW)
The possibility threat of substitutes is moderately low; since there are few substitutes from other industries (if any); and most of them are seemed to be obsolete or have on foot out of the door, e.g. digit camera in the place of film camera and fax machines in place of overnight mail delivery. Consider that Sony has built a good reputation and strong customer loyalty, it effectively position the company’s products against product substitute to some extent; this is a surplus for the company.
2. Bargaining Power of Buyers (HIGH)
The power of buyer is high due to almost no switching cost for customers to switch from one brand to another. The access to the internet also allows customers to have all the information on prices charged by the different companies. The possession of this information may cause price sensitive buyers to switch to buying from companies that offer cheaper prices. On-line shopping has also increased the bargaining power of buyers.
3. Bargaining Power of Suppliers (LOW)
The suppliers do not have an upper hand (low bargaining power) due to large number of suppliers and customers. Moreover, Sony operates in big global supply chain management and its suppliers are not concentrated. Comparatively, they are also much small in size and thus normally have weak bargaining power. Sony usually engages indirect negotiation with its suppliers in order to secure reliable supply at lower prices.
4. Threat of New Entrants (LOW)
Threat of new entrants is low as the entry into the industry requires high capital, economies of scale, product differentiation as well as technology and innovation know-how. Moreover, the industry is regulated that every potential entrant is required to obtain approval from the relevant authority of the particular country before the company is allowed to be operated. Every new entrant that infringed into the big players’ territories can expect strong
1. Threat of Substitute Products (LOW)
The possibility threat of substitutes is moderately low; since there are few substitutes from other industries (if any); and most of them are seemed to be obsolete or have on foot out of the door, e.g. digit camera in the place of film camera and fax machines in place of overnight mail delivery. Consider that Sony has built a good reputation and strong customer loyalty, it effectively position the company’s products against product substitute to some extent; this is a surplus for the company.
2. Bargaining Power of Buyers (HIGH)
The power of buyer is high due to almost no switching cost for customers to switch from one brand to another. The access to the internet also allows customers to have all the information on prices charged by the different companies. The possession of this information may cause price sensitive buyers to switch to buying from companies that offer cheaper prices. On-line shopping has also increased the bargaining power of buyers.
3. Bargaining Power of Suppliers (LOW)
The suppliers do not have an upper hand (low bargaining power) due to large number of suppliers and customers. Moreover, Sony operates in big global supply chain management and its suppliers are not concentrated. Comparatively, they are also much small in size and thus normally have weak bargaining power. Sony usually engages indirect negotiation with its suppliers in order to secure reliable supply at lower prices.
4. Threat of New Entrants (LOW)
Threat of new entrants is low as the entry into the industry requires high capital, economies of scale, product differentiation as well as technology and innovation know-how. Moreover, the industry is regulated that every potential entrant is required to obtain approval from the relevant authority of the particular country before the company is allowed to be operated. Every new entrant that infringed into the big players’ territories can expect strong