Sony Corporation applies its generic strategy (Porter’s model) for competitive advantage and profitability in the electronics, gaming, entertainment and financial services markets. An organization’s generic competitive strategy, based on Michael Porter’s model, establishes how the business competes against other firms. Also, Sony adjusts its intensive growth strategies to continually grow the business despite changes in markets. An intensive strategy specifies the approaches used to ensure business growth. As one of the biggest companies in the industry, Sony’s case is an example of effective implementation of a generic strategy and intensive growth strategies appropriately developed based on business needs and market conditions.
Sony’s generic competitive strategy (Porter’s model) focuses on product uniqueness. Intensive strategies that aim to grow Sony’s business through increased market share are relevant in the electronics, gaming, entertainment, and financial services markets.
Sony’s Generic Strategy (Porter’s Model)
Sony Corporation uses differentiation as its generic strategy for competitive advantage. Differentiation involves products that are unique in comparison to other products in the market. In applying this generic strategy, Sony integrates features that make its products attractive and profitable. For example, novelty and uniqueness were among the factors that lead to the success of the PlayStation. In using the differentiation generic strategy, Sony must continue innovating novel product features to maintain competitive advantage against competitors like Nintendo.
The differentiation generic competitive strategy highlights the importance of product uniqueness in ensuring profitable business. In applying differentiation, a strategic objective is to increase the rate of innovation to boost Sony’s competitive advantage. A financial objective based on this generic strategy is to minimize production costs in all segments of the business. Fulfilling this objective contributes to competitive advantage by increasing Sony’s business efficiency and corresponding profitability.
Sony’s Intensive Strategies (Intensive Growth Strategies)
Market Penetration (Primary). Sony Corporation’s primary intensive growth strategy is market penetration. This intensive strategy aims to grow the business by increasing sales in markets where the company currently operates. For example, Sony grows its business by intensifying its marketing campaigns to sell more PlayStation units. The objective is to attract more customers and obtain a larger market share. Sony uses its differentiation generic strategy to create competitive advantage to support market penetration. In implementing the market penetration intensive growth strategy, product uniqueness enables the company to attract and retain more customers. A strategic objective linked to this intensive strategy is to flexibly adjust marketing campaigns to ensure Sony’s competitiveness against other firms in the financial services, entertainment, gaming, and electronics markets.
Product Development (Secondary). Product development is applied as a secondary intensive strategy to grow Sony’s business. In this intensive growth strategy, the goal is to develop products better than the competition. For example, Sony continues to innovate its gaming products, which are a key growth driver that outperforms competitors. This intensive growth strategy supports the generic strategy of differentiation in terms of product design. Sony’s innovation efforts ensure that novel and unique products features are emphasized. A strategic objective based on the product development intensive strategy is to grow the company by rolling out new breakthrough products. These products must possess competitive advantage based on novel features or design that embody Sony’s mission statement and vision statement.
Market Development. Sony Corporation uses market development as a supporting intensive growth strategy. The company grows by entering new markets or market segments in implementing this intensive strategy. For example, Sony can introduce its products to developing markets where it still does not have major presence. The company can also find a new application for its products to create a new market for them. Sony’s generic competitive strategy of differentiation supports this intensive strategy by making products attractive to new target customers. Based on market development, a strategic objective is to grow the company by entering new market segments.
Diversification. Diversification is the least significant among Sony’s intensive growth strategies. Growth through new business development is the goal of this intensive strategy. Diversification’s significance has decreased because of Sony’s decision to focus on fewer products. These products have the highest competitive advantage in the product mix (Read: Sony’s Marketing Mix). For example, the company now focuses on three main businesses: (1) Devices, Game and Network Services, (2) Pictures, and (3) Music. The generic strategy of differentiation is applied in this intensive strategy in terms of using product uniqueness to create competitive advantage necessary to grow Sony’s core businesses. This intensive growth strategy leads to the strategic objective of finding new business opportunities to expand the company.
References
- Dess, G. G., & Davis, P. S. (1984). Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy of Management Journal, 27(3), 467-488.
- Glazer, R. (1999). Competitive Advantage Through Information-Intensive Strategies. Handbook of Services Marketing and Management, 409.
- Merchant, H. (2014). Configurations of governance structure, generic strategy, and firm size. Global Strategy Journal, 4(4), 292-309.
- Parnell, J. A. (1997). New evidence in the generic strategy and business performance debate: A research note. British Journal of Management, 8(2), 175-181.
- Sony Corporation – Form 20-F.
- Spry, A., & Lukas, B. A. (2016). Brand Portfolio Architecture and Firm Performance: The Moderating Impact of Generic Strategy. In Looking Forward, Looking Back: Drawing on the Past to Shape the Future of Marketing (pp. 866-867). Springer International Publishing.
- Varadarajan, P., & Dillon, W. R. (1982). Intensive growth strategies: A closer examination. Journal of Business Research, 10(4), 503-522.