Savvy

entrepreneurial firm
Ali Tehraninasr 1071200112 Reza Sigari Tabrizi 1071200031 Payam Ansari 1071200084 Supervisor: Dr. Anisah Multimedia University , Malaysia

Milestones of Sony
Establishment of Tokyo Telecommunications Engineering Corporation by Masaru Ibuka and Akio Morita 1946
1958

Company name changed to Sony Corporation Sony Corporation of America was established

1960

1967

The first factory in abroad was opened in Taiwan

Milestones of Sony
1989

Sony purchased Columbia Pictures Sony computer entertainment was established Sony Ericcson Mobile Communications established

1993

2001

2004

Sony BMG Music Entertainment established

Sony today
158,500 employees 64 billion $ annual sales

Wide product range

Strong brand image

Sony is one of the most important companies in the world of business

TV & Audio Equipment

Mobile Phones & Music

Financial Services

Movie & Video Equipment

Product Range
Computer

Game Consoles

Electronics Industry Analysis

Porters five forces model (a framework for analyzing a particular industry)

Porters Five Forces Model of Competition

Threat of Threat of New New Entrants Entrants

Threat of New Entrants (Low)

Economies of Scale

Barriers to Entry

Product Differentiation
Capital Requirements Switching Costs Technology, Know-how and Innovation Government Policy

Bargaining Power of Suppliers (Low)

Suppliers exert power in the industry by: * Threatening to raise prices or to reduce quality Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases

Big global supply chain management (Suppliers are not concentrated) Suppliers are forced to cut their prices or go out of business Direct negotiation with suppliers in order to encourage: Reliable supply Faster delivery Lower prices Many OEMs start to produce their own components in-house

Bargaining Power of Buyers

(Rather High)
Products are fairly undifferentiated Buyers face few switching costs Online shopping has increased the bargaining power of buyers Buyers are price sensitive and demand high quality Buyers compete with the supplying industry by:
* Bargaining down prices

* Forcing higher quality

Threat of Substitute Products (Low)

There are few substitutes from other industries, if any. Products with similar function limit the prices firms can charge Most of them seem to be obsolete or have one foot out of door. For example: Digital Camera in the place of Film Camera Fax machines in place of overnight mail delivery

Porters Five Forces : Model of Competition

Threat of Threat of New New Entrants Entrants

Bargaining Power of Suppliers

Rivalry Among Competing Firms in Industry

Bargaining Power of Buyers

Threat of Substitute Products

Rivalry Among Existing Competitors (High)

Numerous and rather equally balanced competitors
Short product life-cycle High R & D costs

Lack of differentiation or switching costs

Imitation of technology Counterfeit products Low profit margins High exit barriers

Threats for Electronics Industry

Intense competition
Numerous and diverse competitors Short product life-cycle

Expected slow down in global economy especially in the US

and Japan

What Sony is doing to deter the threat

What Sony is doing to deter the threat

(Conglomerate Diversification)

Sony
Games Music
Entertainment Electronics
Networking & Financial Services

What Sony is doing to deter the threat

Ongoing process/product innovation and Advanced R & D
Strengthening Profits (through lower materials cost and

greater operational efficiency)

Forming joint-ventures (e.g. Sony-Ericsson)

Two other companies that are in industries that are subject to the strong bargaining power of buyer Is profitability of these firms being suppressed by the strong bargaining power of their buyer?

What can these firms do to neutralize this threat ?

Dell
Factors influencing the bargaining power of buyer Buyers are powerful in the markets of servers, storage and networking because of:

Small size of market & concentrated buyers Standard products High competition

buyers are also powerful in other computer markets

because:

Dell's products are not unique Number of competitors are high Switching costs are low

Dell
Reducing the bargaining power of buyers Increasing their loyalty through selling directly to customers Increasing the inherent or perceived value of its products by adding innovative features

FedEx
Factors influencing the bargaining power of buyer in

courier industry
Significant pressure from corporate buyers Low switching costs contribute to buyers bargaining power Strong competitors like UPS , DHL National postal services

FedEx
How FedEx managed to reduce the bargaining power of

buyers:
FedExs ability to leverage new technologies that add

operational efficiencies and impose switching costs upon buyers The supper tracker system

To improve operational efficiency by lowering costs and decreasing package delivery time. Customers who implement this technology into their environment would face the costs of retraining employees if they decide to change shipping software.

The FedExs introduction of Powership3

FedEx
How FedEx managed to reduce the bargaining power of

buyers:
Innovation leader in the courier industry

Its ability to find unfilled opportunities in the market before competitors Its ability to identify technologies that strengthen the companys strategic position

Recommendation
Dell Concentric diversification of products Wider range of available hardware options Establish service kiosks in shopping malls FedEx Expansion its warehousing and logistics divisions

Positioning strategy
Sonys electronic segment: Cutting edge technology company Game: Play station 3 Leading-edge computer entertainment systems

Positioning strategy
Sony-Ericson Most attractive and innovative global brand C 702 . Any angle. Any weather
C 902 . Getting the picture W 760i . Fill it up with songs Z780a . The web is where you are

Positioning strategy: BCG Matrx

High

Semiconductor
LCD DVD player play station Digital Camera Music Player CRT-TV PC Sony-Ericson VAIO

Industry sales Growth Rate

CD player
Low High Market Share

Walk man
Low

What single industry do you think suffers the most from the bargaining power of buyers?

How about the bargaining power of suppliers?

Are entrepreneurial start-ups able to enter these industries? If so, how?

Who are the Powerful Customers?

Customers (buyer groups) are powerful when
They purchase a LARGE portion of an industrys total

output (Sonys initial customers at 1946). The sales of the product being purchased account for significant portion of the sellers annual revenue.
e.g. Some of the automakers suppliers

They could switch to another product at little, if any, cost.

e.g. Airline industry

Bus Makers Industry (Specifically city-bus Makers)

There are few dominant buyers and many sellers in the

industry The buyers:

Government, Travel agencies, Organizations.

The sellers:
Volvo(Sweden), Scania(Sweden), Iveco(Italy), Mercedes-Benz(Germany), Alexander Dennis(UK), Drgmller Karosserien(Germany), Leyland Bus(UK), Quebec(Canada), Neoplan (Germany),

 Products are standardized

 The switching cost is very low Suppliers do not threaten to integrate forward into the

buyer's industry :
The buyers industry is totally different and unrelated to the suppliers. In most countries the biggest customer of this industry is Government!

Who is a powerful Supplier?

A supplier group is powerful when :

It is dominated by a few large companies and is more concentrated than the industry to which it sells. Satisfactory substitute products are not available to industry firms. Industry firms are not a significant customer for the supplier group. Suppliers goods are critical to buyers marketplace success. The effectiveness of suppliers products has created high switching costs for industry firms. The threat of forward integration.

CPU Manufacturing Industry

There are many buyers and few dominant suppliers

The buyers:
All the players computer industry.

The dominant suppliers:

Intel, AMD

 There are undifferentiated, highly valued products

 They threaten to integrate forward into the industry

 There is not any substitute product!

And also So

Suppliers goods are critical to buyers marketplace success.

There is a high switching cost for buyers in this industry.

How Can an Entrepreneur Enter to These Markets?

Finance point of view: Accessibility to financial resources, Appropriate NWC Marketing management point of view: Increase market share through Aggressive Advertising, Promotions, After sale service, etc. Operation management point of view: Mass production, Lean production Strategic management point of view: Cost Leadership Strategy Blue Ocean Strategy (e.g. Ford model T, Cirque de Soleil) Strategies which can reduce customers & suppliers bargaining power (M&A, Gorilla Attack)

Thank You!