Sony Corporation continues its global success by addressing the external factors and related issues in the remote or macro-environment of its business. The PESTEL/PESTLE analysis identifies such external factors in the political, economic, sociocultural, technological, ecological and legal aspects. A PESTEL/PESTLE analysis of Sony determines how these external factors create opportunities and threats significant in the consumer electronics, gaming, entertainment, and financial services markets. The company must effectively consider these factors in its strategic decision-making. Including the results of the PESTEL/PESTLE analysis can increase the suitability of Sony’s strategies with regard to the remote or macro-environment of the business.
A PESTEL/PESTLE analysis of Sony Corporation considers the external factors in the remote or macro-environment of the company’s business in the electronics, gaming, entertainment and financial services markets. Investors and managers can use the analysis in evaluating Sony’s strategies.
Political Factors Affecting Sony’s Business
Political conditions affect the markets where Sony operates. This aspect of the PESTEL/PESTLE analysis considers the influence of governmental activity on the remote or macro-environment of the company. The following political external factors are significant in Sony’s case:
- Political stability of biggest markets (opportunity)
- Increasing governmental support for data security (opportunity)
- Increasing governmental support for online business (opportunity)
Sony Corporation benefits from the political stability in majority of the biggest markets. This stability corresponds to the minimization of political barriers in the remote or macro-environment, thereby presenting opportunities for business expansion. In addition, Sony has the opportunity to grow based on the increased governmental support for data security. Governments are now increasing their efforts for data security, which supports the growth of businesses with online operations. In relation, governments are developing additional measures to support online business. This external factor creates opportunities for Sony to enhance its online operations. For example, the company can expand its online services in relation to its gaming products. In this aspect of the PESTEL/PESTLE analysis, Sony has growth opportunities based on the political stability of the biggest markets.
Economic Factors Important to Sony Corporation
Sony’s performance depends on economic trends. This aspect of the PESTEL/PESTLE analysis identifies the economic conditions significant to the business. Sony needs to consider the following economic external factors in its remote or macro-environment:
- High growth of developing markets (opportunity)
- Economic stability of developed markets (opportunity)
- Increasing disposable incomes (opportunity)
Sony has the opportunity to grow alongside the economic growth in developing markets. These markets have the highest growth rates, which can boost the company’s overall revenues. In addition, the economic stability of developed markets presents opportunities for Sony to enhance its operations, while experiencing minimal market-based risks. Another consideration is the increasing level of disposable income worldwide. This external factor creates opportunities for Sony to grow its revenues. For example, the company can market the PlayStation more aggressively, based on the expectation that customers are increasingly capable of buying the product. Based on this aspect of the PESTEL/PESTLE analysis of Sony, economic conditions present opportunities in the remote or macro-environment.
Social/Sociocultural Factors Influencing Sony’s Business Environment
Social trends affect the responses of customers to Sony’s products. This aspect of the PESTEL/PESTLE analysis determines the effects of social or sociocultural conditions on the remote or macro-environment of businesses. The following sociocultural external factors are relevant in the case of Sony Corporation:
- Increasing adoption of online gaming (opportunity)
- Improving wealth distribution (opportunity)
- Increasing openness toward leisure (opportunity)
The increasing adoption of online gaming and the improving wealth distribution create more opportunities for Sony to increase its revenues from the sale of its gaming products. For example, the company can expect potential increases in PlayStation sales revenues, as more people are likely to purchase the product. In addition, Sony can boost its sales revenues based on increasing openness toward leisure. This external factor highlights the benefit of marketing gaming and entertainment products to address the leisure needs of target customers. This aspect of the PESTEL/PESTLE analysis shows that sociocultural conditions lead to significant growth opportunities in Sony’s remote or macro-environment.
Technological Factors in Sony’s Business
Sony depends on technologies used in its business, and technologies that facilitate the use or consumption of its products. The effects of technological trends and conditions on the remote or macro-environment of firms are considered in this aspect of the PESTEL/PESTLE analysis. Sony must address the following technological external factors:
- Increasing dependence on digital technologies (opportunity)
- High rate of adoption of mobile technologies (opportunity)
- High rate of R&D activity (threat & opportunity)
Sony Corporation has growth opportunities based on the increasing dependence on digital technologies. This external factor points to increasing individual and organizational demand for digital technologies. For example, the integration of digital technology in smart homes presents new markets or market expansion opportunities for Sony. In relation, the company can exploit the high rate of adoption of mobile technologies by innovating its mobile devices for higher competitiveness and revenue generation. On the other hand, the high rate of research and development (R&D) activity among firms increases their competitiveness against Sony. This external factor is a threat because it creates more challenges against the company. Nonetheless, based on the same external factor, Sony has opportunities to grow its electronics, gaming, entertainment and financial services businesses. For instance, the company can use its R&D investment to develop competitive advantage to support the differentiation generic strategy (Read: Sony’s Generic Strategy & Intensive Growth Strategies). In this aspect of the PESTEL/PESTLE analysis, there are major opportunities for growth and competitiveness in Sony’s remote or macro-environment.
Ecological/Environmental Factors
The conditions of the natural environment affect Sony and its markets. This aspect of the PESTEL/PESTLE analysis covers the effects of ecological trends and conditions on firms’ remote or macro-environment. In Sony’s case, the following ecological external factors are significant:
- Increasing emphasis on business sustainability (opportunity)
- Increasing demand for environmentally friendly products (opportunity)
- Increasing availability of recycling facilities (opportunity)
Sony Corporation has growth opportunities based on the increasing emphasis on business sustainability. For example, the company can enhance its brand image by increasing its sustainability efforts. In relation, Sony can innovate to make its products more environmentally friendly. Such products could attract more customers. Another consideration is the increasing availability of recycling facilities. This external factor improves the potential success rate of Sony’s efforts to address product end-of-life concerns. For instance, the company can take advantage of the availability of such facilities to implement more comprehensive recycling programs. Based on this aspect of the PESTEL/PESTLE analysis of Sony, there are notable opportunities for business improvement based on external factors in the remote or macro-environment.
Legal Factors
Sony Corporation must satisfy legal requirements appropriate to its remote or macro-environment. This aspect of the PESTEL/PESTLE analysis determines the effects of regulations on firms. Sony must consider the following legal external factors:
- Improving patent protection (opportunity)
- Increasing regulations on e-waste (threat & opportunity)
- Increasing product regulation (threat & opportunity)
The improving patent protection highlights governmental and intergovernmental efforts to protect patents. This external factor presents opportunities for Sony to grow its business while expecting minimal challenges in protecting its proprietary information and designs. On the other hand, the increasing regulations on e-waste are a threat in terms of the additional efforts and expense of reducing the environmental impact of the company’s consumer electronics and gaming products. Nonetheless, Sony has opportunities to strengthen its brand image by proactively improving its products to minimize environmental impact. In relation, the increasing product regulation threatens the company by requiring additional expenditure for compliance. For example, Sony must increase its R&D investment to satisfy additional regulations on product safety. Still, this same external factor creates opportunities for the company to continually improve its products to ensure compliance and build competitive advantage. In this aspect of the PESTEL/PESTLE analysis, Sony has considerable threats and opportunities in its remote or macro-environment.
Recommendations based on Sony’s PESTEL/PESTLE Analysis
This PESTEL/PESTLE analysis of Sony Corporation reveals a number of significant opportunities and threats that shape the electronics, gaming, entertainment and financial services markets. Most of these external factors present opportunities that Sony can take. A recommendation is that the company must increase its efforts in product innovation to improve environmental impact and competitive advantage, while addressing concerns regarding product regulation. Sony can focus more on enhancing its mobile devices to take advantage of opportunities based on the high rate of adoption of mobile technologies. Such enhancement should embody kando, which is emphasized in Sony mission and vision statements. Another recommendation is to expand the business in developing markets to maximize Sony’s revenues. As shown in this PESTEL/PESTLE analysis, these concerns are crucial determinants in the company’s remote or macro-environment.
References
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