Sony Case Study – Resources, Capabilities and Core Competencies Essay Example

and style” (Sony United, 2007), in the minds of its customers.

Also, as a result of effective marketing efforts and product launches, Sony has managed to create “several successful sub-brands… such as Trinitron, Walkman, WEGA and VAIO” (Singh et al, 2005). In addition, the Sony slogan “like no other” is also one of the most well-known taglines in the world. Sony also has a wide range of skills, expertise and knowledge available from its 163,000 employees worldwide.By carefully coordinating the staff in various areas of the company, and allowing them to actively exchange ideas, Sony has been able to effectively utilise its human resources, which has been reflected in their delivery of quality products and services (Sony United, 2007). Sony has also engaged in “soft alliances” such as that with Philips to create the compact disc.

By being involved in the growing number of alliances “between hardware designers and creative game-software developers”, Sony has recognised and taken advantage of this “valuable means of growth” (Singh et al, 2005). These alliances contribute to Sony’s relational resources. The combination of Sony’s various tangible and intangible resources has allowed it to sustain and maintain a distinctive competency among competitors, which in turn adds to its sustainable competitive advantage.

Capabilities

Capabilities can be “defined in terms of the types of activity that companies perform to create value” (Hill et al, 2007). Sony performs a wide variety of activities, in order to create value for its customers, which in turn contributes to its competitive advantage. Organisational capabilities may be thought of as a hierarchy of knowledge integration” (Hill et al, 2007).

At the lowest level, Sony’s employees maintain individual capabilities in their specialised knowledge of

the area they are involved in, from electronics to music. Sony then utilises this knowledge and the skills of its employees, to manufacture and market its products, thus creating value for its customers (Hill et al, 2007). Sony’s electronics products made up 66. 8% of total sales for 2007 (Sony United, 2007), the largest segment area of its product operations. It “is comprised of televisions, video, audio, information and communications equipment, component, semiconductors and other products” (Sony United, 2007). Among Sony’s most successful and famous electronics products includes the first transistor radio and television, the world’s first VCR, the world’s first personal audio tape player (the Walkman), the compact disc, the video camera, the mini disc, flat panel and high definition televisions, digital cameras, and digital versatile discs (DVDs)(Singh et al, 2005).

Sony has since penetrated the computer market with its launch of the “VAIO line of multimedia-capable personal computers” and the “CLIE series of handheld computers in 2000” (Singh et al, 2005). In 2001, Sony entered the mobile phone industry by combining with LM Ericsson to create the Sony Ericsson product line of mobile phones (Singh et al, 2005). Sony’s entrance into the gaming industry in 1994 has also proved to be one of their strong capabilities. It launched the Playstation game console in a head on attack “on established played such as Nintendo and Sega, subsequently dominating the market” (Singh et al, 2005). Sony has since continuously upgraded this console, with its latest development being the Playstation 3.

Among Sony’s other capabilities is their expansion into the music and film industries, with the launch of Sony Music Entertainment and Sony Picture Entertainment. Both of these

divisions have been successful with the “record label boasting artists such as Michael Jackson, Bruce Springsteen, Jennifer Lopez, Celine Dion and Mariah Carey”, and “the film making division was behind blockbusters such as Spiderman, Men In Black, Air Force One, Charlie’s Angels and many hit television shows” (Singh et al, 2005). The combination of Sony’s various capabilities with its numerous resources, helps to create its sustainable advantage since they are valuable, rare, costly to imitate and non-substitutable. This has also allowed Sony to maintain its distinctive competency, and create value for its customers.

Core competencies A company’s core competencies are defined as “the central set of knowledge in a company that, when applied, allows the company to create superior value than can competitors” (Hill et al, 2007). They may be either internal or external, but must be unique and apply to a “wide range of markets” (Kandampully et al, 2001). While Sony’s core competencies consist partly of “its ability to innovate and come up with revolutionary products” (Singh et al, 2005), and its ability to achieve product differentiation, its main competency is its ability to miniaturize. By continuously shrinking the size of electronic products, Sony has managed to create convenience for its consumers, thus creating value. Sustainable competitive advantage Competitive advantage is “when a company is able to outperform its rivals, as commonly measured by the attainment of profits above the industry norm” (Hill et al, 2007). It is the combination of the generic building blocks of superior efficiency, superior quality, superior innovation and superior customer responsiveness, which “influence a company’s ability to build and sustain a competitive advantage” (Hill et al, 2007).

In Sony’s case, it

has achieved superior efficiency by joining the WWF Climate Savers Program to take a proactive approach in reducing carbon dioxide emissions from its productions and focusing on developing energy efficient products (Sony Corporation, 2007). Another way Sony has worked to achieve efficiency is with its recent signing of a memorandum, together with Toshiba Corporation, “to strengthen manufacturing capabilities for high-performance semiconductors” (Sony Corporation, 2007). Sony has demonstrated superior quality in the reliability of its products, and differentiation-based competition, such as being “the only company to participate in the entire high definition value chain, from the lens to the screen” (Sony United, 2007). By continuously developing existing and launching new products to present value for the consumer, Sony has shown superior innovation. It has also demonstrated customer responsiveness by taking customer feedback, and altering their products to suit the changing needs and wants of consumers. For example, once it launched the new Playstation 3 console, Sony found sales were not as high as expected due to the premium pricing, so it reduced the price of its newest console.

Overall, it can be seen that Sony has effectively managed the combination of its resources, capabilities and core competencies, to achieve a sustainable competitive advantage and provide value to its customers.

References

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