Sony continues its global success by addressing external factors and related issues in the remote or macro-environment of its business. The PESTEL/PESTLE analysis model identifies such external factors in the political, economic, sociocultural, technological, ecological, and legal aspects. This PESTEL 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 analysis can increase the suitability of Sony’s strategies to the business environment.
This PESTEL/PESTLE analysis of Sony 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. The suitability of strategies to the external environment shown in this PESTLE analysis enhances the business competencies and strengths identified in the SWOT analysis of Sony.
Political Factors Affecting Sony’s Business
Political conditions affect the markets where Sony operates. This aspect of the PESTEL analysis considers the influence of governmental activity on the remote or macro-environment of the company. The following political factors are significant in Sony’s case:
- Political stability of the biggest markets (opportunity)
- Increasing governmental support for data security (opportunity)
- Increasing governmental support for online business (opportunity)
Sony benefits from political stability in the biggest markets. In the PESTLE analysis context, 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 PESTLE analysis, Sony has growth opportunities based on the political stability of the biggest markets.
Economic Factors Important to Sony
Sony’s performance depends on economic trends. This aspect of the PESTEL analysis identifies the economic conditions significant to the business. Sony needs to consider the following economic 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 based on the economic growth of 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 incomes worldwide. In the PESTLE analysis model, this external factor creates opportunities for the electronics and gaming company to grow its revenues. For example, Sony’s marketing mix (4P) can include more aggressive advertising campaigns to promote the PlayStation, based on the expectation that customers are increasingly capable of buying the product. Based on this aspect of the 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 analysis determines the effects of social or sociocultural conditions on the remote or macro-environment of businesses. The following sociocultural factors are relevant in the case of Sony:
- 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 video game consoles. In addition, Sony can boost its sales revenues based on the 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 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 PESTLE analysis. Sony must address the following technological factors:
- Increasing dependence on digital technologies (opportunity)
- High rate of adoption of mobile technologies (opportunity)
- High rate of R&D activity (threat & opportunity)
Sony has growth opportunities based on the increasing dependence on digital technologies. In the PESTEL analysis context, 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 for the company. Nonetheless, based on the same external factor, Sony has opportunities to grow its electronics, gaming, entertainment, and financial services businesses. For instance, R&D investments can focus on developing core competencies to support Sony’s generic competitive strategy and intensive growth strategies. In this aspect of the PESTEL 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 PESTLE analysis covers the effects of ecological trends and conditions on firms’ remote or macro-environment. In Sony’s case, the following ecological factors are significant:
- Increasing emphasis on business sustainability (opportunity)
- Increasing demand for environmentally friendly products (opportunity)
- Increasing availability of recycling facilities (opportunity)
This aspect of the PESTEL analysis of Sony shows that the company 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. Also, Sony can innovate to make its products more environmentally friendly. Sustainable and green products can 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 analysis, there are notable opportunities for business improvement, and Sony’s corporate social responsibility strategy and stakeholder management can support business growth based on these opportunities.
Legal Factors
Sony must satisfy legal requirements appropriate to its remote or macro-environment. This aspect of the PESTLE analysis determines the effects of regulations on firms. Sony must consider the following legal factors:
- Improving patent protection (opportunity)
- Increasing regulations on e-waste (threat & opportunity)
- Increasing product regulation (threat & opportunity)
Improving patent protection highlights governmental and intergovernmental efforts to protect patents. In the PESTEL analysis model, 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. Moreover, 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 advantages. In this aspect of the PESTEL analysis, Sony has considerable threats and opportunities in its remote or macro-environment.
Key Points & Actions – PESTLE/PESTEL Analysis of Sony
This PESTLE analysis of Sony reveals 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 increase its efforts in product innovation to improve environmental impact and competitive advantages, 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. This enhancement should embody the business purpose and goals of kando, which is emphasized in Sony’s mission statement and vision statement. Another recommendation is for expanding the business in developing markets to maximize Sony’s revenues. As shown in this PESTEL/PESTLE analysis, these concerns are determinants of the company’s performance in its industries and markets.
References
- Phan, S. (2021). The effect of PESTLE factors on development of e-commerce. International Journal of Data and Network Science, 5(1), 37-42.
- Sony Group Corporation – Businesses & Products.
- Sony Group Corporation – Form 20-F.
- U.S. Department of Commerce – International Trade Administration – Media and Entertainment Industry.
- U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry.