Sony's Internal Rivalry

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Five forces allow industries to identify their external environment. We use Porter’s Five Forces to conduct an industry and competition analysis for Sony. We find that Sony faces high internal rivalry, high buyer power, low supplier power, and high threat from substitutes. The electronics and game industry has high barriers to entry. We are going to discuss each as follows: Internal Rivalry Sony operates in several industries, and thus faces intense competition across sectors. Sony’s main market segments include Electronics, Game, Pictures, Financial Services, wireless Mobile Mirroring/ Paring, and Joint Ventures. While no other business deals with all five segments, the most prevalent competitors in these industries are Samsung, Apple, Canon,…show more content…
Fortunately for Sony, the threat of new entrants is relatively low due to economies of scale, product differentiation, capital requirements, technology knowledge, incumbency advantages, and government policy all play a role in protecting Sony from new entrants. Economies of scale indicate that companies can decrease costs when increasing output, which new entrants cannot accomplish without years of experience. Sony, on the other hand, has already gained this advantage. Capital requirements to enter are high, as these products are high-end, expensive luxury goods. Again, Sony has already raised the capital required to innovate. Those entering Sony’s industries need a complex set of technological skills. Sony’s team of experts has acquired this knowledge through years of production and innovation. Clearly, patent protection and government regulation keeps the threat of new entrants low. If there threat of entry were high, Sony’s market share would drop significantly, especially because the company does not hold the customer loyalty needed to ensure consumers continue to buy Sony products in the face of intense rivalry. (,…show more content…
Buyers in these industries have substantial power. A potential buyer’s ability to gain information is very easy with online reviews of products. With this information, a buyer can switch from one brand to another without high switching or transaction costs. Especially if consumers buy online, which is becoming increasingly popular, transaction costs practically drop to zero. While the size of each individual order may not be substantial, price sensitivity is high, as buyers have the ability to influence companies by choosing a better-priced substitute. Sony tries to separate their product with better technology and graphics, but in general, products in these industries are fairly undifferentiated. This difficulty in differentiation leaves price elasticity high and buyer power

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