Preliminary Strategy Audit

Preliminary Strategy Audit

Abstract

Auditing is a critical requirement in determining the success factors in firms. Auditing is done strategically and using a given process to arrive at specific evaluations. Arriving at evaluations usually depends on the choices made by the organizations being audited or analyzed. While auditing involves the evaluation of an organization, auditors are required to consider aspects like materiality, especially in audit planning and in the assessment of an organization’s position. All analyses have to conform to the right accounting and audit principle. This paper entails the preparation of a report, which includes preliminary strategy audit. The organization of choice in this case is the Sony Corporation. The report analyzes the company’s value proposition, its market position, as well as its competitive advantages, including a scan on its external environment using current environment and the five forces analysis. The paper also identifies the critical strategic issues that could be facing the Sony Corporation. The company is currently doing well although it was surpassed by some other companies such as Samsung due to strategy failures. Sony operates within a global market and faces a number of challenges. It can be found that Sony Corporation has been facing some challenges besides its top and high innovative products. The best option is to looks for the best strategies and implements them accordingly.

Table of Contents

Abstract2

Table of Content 3

Introduction to the Sony Corporation 4

Value Proposition 4

Market Position5

Competitive Advantage6

External environmental scan (The Five Forces Analysis)7

Strategic Issues10

Summary, key findings and recommendations11

References12

Introduction to the Sony Corporation

The Sony Corporation is synonymous with chiefly consumer electronics. The corporation operates globally under various success factors despite some key weaknesses that need to be eliminated or minimized strategically. The major aspects requiring consideration is this report include the company’s value proposition, its market position, competitiveness, and its business environment among other factors. The corporation targets a wide range of consumers through the establishment of different business units. The company has business segments that include Imaging Products and Solutions, Games, Mobile Products and Communications, Home Entertainment and Sound, Devices, Music, Pictures, Financial Services as well as other product and service segments. The company faces competition mainly from other companies offering the same products and services. It has remained a strong and competitive company for many years but it seems to have been surpassed by Samsung, with LG being a key threat and a major competitor as well. The company also faces competition from other mobile producing companies especially Apple Corporation, Nokia, Samsung, LG, RIM, and Google among other mobile manufacturers and marketers (Alan, 2013). This aspect suppresses its electronics and mobile phone markets around the world. Running an analysis of the corporation would help in establishing the company’s problems with respect to its value proposition, the immediate market position, its competitive advantage, the external environment using the Porter’s Five Forces Analysis, and the strategic issues facing the Sony Corporation.

Value Proposition

Value proposition could be described as the promise of value made by a company to deliver quality products and goes concurrently with customer beliefs the promise on value would made. Sony products are highly trusted by its product consumers. The major problem facing the company’s value proposition could be within the marketing strategies employed. The company leads in a number of product segments, which translate to the value proposition of the entire organization. With a range of high valued products like mobile phones, laptops, music electronics, and other appliances, the company strategizes much on value proposition (Anderson, Narus, & Rossum, 2006). The company’s strategies are based on differentiated value propositions of customers. To enhance its value proposition, the Sony Corporation could make application of a value proposition builder, which involves about six stages.

First the company should look at the market for its products and establish the market for which the value proposition is being created. Consideration of customer experience should be considered in terms of what the market values the most. This information could be gained through customer and employee feedbacks. The company could consider the products and services being offered. It is also good to consider the market benefits obtained from delivering the products or services. There could be alternatives and differentiation mechanisms to find out the alternative options that the market could have. Finally, Sony Corporation should use proof or evidence to substantiate its value proposition. The key idea in this case is that satisfying customers would ultimately be the sustainable value creation source (Anderson, Narus, & Rossum, 2006).

Market Position

In the case of its mobile phone product segment or business unit, Sony still lags behind some other companies such as Samsung and Nokia. The company’s share however seem to be growing larger due to the production of superior products as compared to its competitors. According to Alan (2013), the market position of Sony mobile products is currently better than that of Apple, a key competitor. Mobile products such as the Sony Xperia Z have initiated this market trend, making Sony get back to its feet in terms of market position. This is mainly seen in the company’s local market although Apple surpasses it in only a few markets within the global market. Currently, the market share for its local market accounts for 36% of Sony products and 25% of Apple products (Alan, 2013). The other 39% is shared among other competing organizations. Enhancement of Sony’s market position is helped by the initiation of a discount promotion campaign (Brace, 2012). This is done from it country’s leading carrier with at least 60 million people out of a population of 127 million subscribing to the carrier, NTT DoCoMo (Alan, 2013). In terms of the world market share, Sony takes up to 4.5% of the mobile phone market share. The company’s market position is however not fixed especially due to increasing innovativeness and competition (Alan, 2013). The company remains far behind companies like Samsung. Its emergence is taking portions of other companies’ market shares especially Apple and Samsung (Alan, 2013).

Competitive Advantage

Sony Corporation is a large company that targets consumers using various product and services. The company’s competitive advantage is highly based on the nature of its products and the scope of its business and market operations. Again, the company’s competitive advantage is based on the high innovation applies in its production processes (Brace, 2012). The company is proud of its rich history in imagination and innovation in various industries depicted by its business segments. Its technology could be marked to the World War II after taking over the transistor technology and making sure that they kept the lead and popularity in transistor radio. Other competitive advantages are based on its history in manufacturing TV set, being an early developer of the video tape technology. Given such inventions and innovations, consumers have no doubt on its products and many people could prefer Sony products to equivalent products from other manufacturers. The company is again able to sell its products at a low price level than most of its competitors (Brace, 2012). Application of marketing strategies like discounted prices still makes the company’s products a choice to many consumers. The company could however face most of its competition from rival competitors due to their strength in marketing campaigns.

External environmental scan (The Five Forces Analysis) the Current EnvironmentSony is currently operating within an extremely competitive business and market environment with Samsung and Apple being the top competitors. Samsung and Apple are mainly fighting to acquire the largest share of the global market. Sony on the other hand is striving to take over some of the markets owned by these two top competitors especially in the phone and computer industry. Currently, Sony is making a serious move to achieve its goals since after launching some of its top mobile phone products especially the Sony Xperia series; it is quickly taking over some of the markets owned by the two top giant competitors. The process is promoted by the company’s low operating costs. The company has set to unify its offerings that the company intends to bring to the market (Alan, 2013). While the recent and the current achievements still count and holds to the company’s recent success in market growth, Sony still remain under the two top competitors. Other emerging companies like Google still pose threat to its current and future market environment, especially in the mobile phones and computer industry.

The Porters Five Forces Analysis of the Company

Sony is a huge company with good production, management, and marketing grounds. The company’s environment could be analyzed to bring out the possible problems that bar its progress. The analysis of the company considers aspects of competitive and marketing environments such as threats of new entries, bargaining power of the buyers, bargaining power of suppliers, threats of substitute products, and the intensity of rivals.

Threats of new Entries

Sony faces low threat from new entries. The company is heavily established making it possible for new entrants to take its market share. The company deteriorated at some point but it is currently getting back into its original track. Most of the top competitors have been in existence since the Sony Corporation’s history. New entrants are barred by aspects like high operational costs, constant innovations, and government policies. Sony has therefore little chances of losing its market to new entrants.

 

Bargaining Power of Buyer

For the Sony Corporation products, the bargaining power of its buyers is extremely high. This aspect is initiated by the fact that there are no switching costs among brands. Again, the market is full of competing products making consumers have a wide variety of choices. The market is based on perfect competition, with information technology being applied to offer consumers with adequate information on the range of alternatives available. In the mobile phone industry, various companies offer superior products and consumers understand which products are best in terms of performance and prices. In this case, their bargaining power is very high.

Bargaining Power of Supplier

Sony generally experiences low bargaining power of suppliers. This happens because the corporation has a large number of suppliers from different parts of the world willing to offer their products to the company at its dictated price level. This makes the suppliers have no significant power over the company. The suppliers lack adequate bargaining power due to their aspect of being in the form of comparatively small entities. The company has more power over its suppliers due to its ability to negotiate directly with them. This way, Sony Corporation is able to obtain low priced products but of high quality.

Threat from Close Substitutes

In general, the Sony Corporation produces some products that lack close substitutes. In this case, the company faces little threat from close substitutes. The company has a good reputation for its products especially large electronics, household items, and music equipments. The company’s mobile phone and computer business segment however produces products with close substitutes thereby having some significant threat of close substitutes.

Intensity of Rivalry

The intensity of rivalry is relatively high, especially for the company’s phone and computer business segments. The mobile phone and computer industry has intense competition involving high costs associated with innovating, research, and advertisement. Current, there are over ten strong competitors with the company facing stiff competition from companies such as Samsung, Apple, Nokia, RIM, and Google.

Strategic Issues

Sony Corporation has a number of strategic issues. The strategic issue can be concluded to be the major reason why the company records a declining profit.

Inefficient Manufacturing structures

One of the strategic issues is inefficient manufacturing structures. This strategic issue has contributed to the decrease in the company’s product quality. The implication of this is a destroyed reputation leading to the decrease in its products competitiveness (Yasu & Ozasa, 2012).

Failure to respond efficiently to Market Demand Shifts

Sony Corporation has been in a bad strategic position to respond to sufficiently to shifts in market demands. This failure has contributed to the company’s loss of its competitive advantage. One of the reasons for failing to meet the prevailing market demands is the existence of manufacturing problems (DeWit & Meyer, 2004).

Poor Management and Strategic Decisions

Sony has recently implemented a number of strategies in order to secure its business and market share. Such strategies only contributed to failure rather than recovery. Such strategies include the selling of some of its business ventures and the emergent strategies. These strategies only work at limited capacities. Divided management could be one of the reasons for some of its products being perceived as of lower quality (Yasu & Ozasa, 2012).

Reputation Issues

Due to quality deterioration of some of its products and services, Sony Corporation went through a system of mistrust by consumers as far as its products are concerned. The problem could be seen in some of its superior products such as the Sony Xperia Z, which despite being better in almost all aspects that its competitors’ products, the products is only strongest in its local market.

Failure of miniaturization

Sony had failed through this strategic issue since it had failed to bring miniaturization to the Sony products. The management did not ensure that the needs of customers require understanding from all specialists including technologists, marketers, and engineers. Such an understanding could enhance the company’s reputation and thus adequate trust from customers.

Summary, key findings and recommendations The Sony Corporation is strongly established company dealing in a variety of products. The company faces different forms and types of competition with respect to each of its business units. It is leading company in many aspects especially those related to large electronic, household equipment and appliances, and music equipments. For the mobile industry, the company is still among the top companies in innovation. Its top products however face some stiff competition from the key competitors especially Samsung and Apple. Sony Corporation needs to learn from its different mistakes. The company need o strategize on the best marketing mechanism that would convince people from different regions of the superiority behind its products. The company has been concentration of quality product and innovation. The company could only implement more strategies that are effective and efficient. It is now the time to turn to the global market in order to broaden the market for its great innovations.

References

Alan, F. (2013, June 19). Thanks to major discounting, Sony’s market share now leads Apple’s share in Japan. Retrieved October 19, 2013, from phonearena.com/news/: HYPERLINK “http://www.phonearena.com/news/Thanks-to-major-discounting-Sonys-market-share-” http://www.phonearena.com/news/Thanks-to-major-discounting-Sonys-market-share-now-leads-Apples-share-in-Japan_id44242

Anderson, J. C., Narus, J. A., & Rossum, W. V. (2006). Customer Value Propositions in Business Markets. Harvard Business Review, 84(3) , 90-99.

Brace. (2012, December 9). How can Sony Regain Its Competitive Advantage? Retrieved October 19, 2013, from HYPERLINK “http://financialaffirmations.tumblr.com/post/37586273838/how-” http://financialaffirmations.tumblr.com/post/37586273838/how-can-sony-regain-its-competitive-advantage

DeWit, B., & Meyer, R. (2004). Strategy: Process, Content, Context,3rd Edition. Thomson International Business Press. .

Yasu, M., & Ozasa, S. (2012). Sony, Sharp Losing $11 Billion Leaves Investors Let Down. Bloomberg.