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PESTLE analysis revolves around six major factors, which are political, economic, sociological, technological, environmental, and legal elements (Perera, 2017). In the case of the former, Sony is experiencing significant political benefits and support from the Japanese government in the form of improved data security (ITA, n.d.). Sociological factors are manifested in gaming becoming the main source of revenue for the company, which means that the demographic of the market is shifting (Sony’s revenue worldwide by segment fiscal years 2012 to 2019, 2020). Environmental factors are rooted in the recent shift in consumer concerns regarding the ecological elements, where 33% of customers are willing to pay more for less pollution, which is another opportunity for Sony (Mortimer, 2020). In the case of legal factors, the implementation of stricter e-waste regulations poses a threat to the company (Zeng et al., 2017). Porter’s Five Force are comprised of the threat of new entrants, the threat of substitution, buyer power, supplier power, and competitive rivalry (Anastasiu, Gavris, and Maier, 2020).
Since Sony’s gaming market is exceedingly increasing and electronic products are relatively stationary, the focus needs to be put on the former (Sony’s revenue worldwide by segment fiscal years 2012 to 2019, 2020). The threat of new entry is unlikely due to the need for brand establishment and resource demands. The threat of substitution comes from the PC industry because PC gaming is peaking with shortages of video cards, and thus, the booming gaming market of Sony consoles could be replaced by this rival (Molloy, 2021). Buyer power is mainly lowered by the pandemic across all markets (Roy, 2020). Supplier power is a threat due to the fact that lockdowns hindered the shipment of key materials from China or India (Exhibit 1.01, 2016). VRIO is comprised of four main elements, which are values, rarity, imitability, and organization (Chatzoglou et al., 2018).
The company is able to utilize the opportunities and neutralize dangers by focusing on its brand and product quality. Therefore, the company needs to double down and specifically focus on the gaming market since there are only two major competitors, and Sony is already dominating over Microsoft. In order to stay dominant in the electronic industry, Sony should use its economies of scale to lower the price.
References
Anastasiu, L., Gavris, O., and Maier, D. (2020) ‘Is human capital ready for a change? A strategic approach adapting Porter’s five forces to human resources’, Sustainability, 12(6), p. 2300.
Chatzoglou, P. et al. (2018) ‘The role of firm-specific factors in the strategy-performance relationship: revisiting the resource-based view of the firm and the VRIO framework’, Management Research Review, 41(1), pp. 46-73.
Exhibit 1.01 (2016). Web.
ITA. (n.d.) Japan – cyber security. Web.
Molloy, D. (2021) ‘The great graphics card shortage of 2020 (and 2021)’, BBC News. Web.
Mortimer, G. (2020) ‘Climate explained: are consumers willing to pay more for climate-friendly products?’, The Conversation, 20 September. Web.
Perera, R. (2017) The PESTLE analysis. Avissawella: Nerdynaut.
Roy, S. (2020) ‘Low-income countries are more immune to COVID-19: a misconception’, Indian Journal of Medical Sciences, 72(1), pp. 5-7.
Sony’s revenue worldwide by segment fiscal years 2012 to 2019 (2020). Web.
Zeng, X. et al. (2017) ‘Innovating e-waste management: from macroscopic to microscopic scales’, Science of The Total Environment, 575(1), pp. 1-5.
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