Business Strategy

The business strategy used for our company, Sony and its PlayStation, is differentiation. PlayStation differentiates its product in many ways. First it is the only gaming console to adapt to blu-ray technology, something that no other gaming console can say. Its sleek style and looks make it the most visually stunning system to date as well as the graphics are better than any other system. Its ability to reach the entire world and provide so many different uses in such a convenient and easy way is head over heels better than any other gaming console in the world.

5 Forces Model

Buyer Power for the consumers in the video game market is fairly low. Since only a few companies make video games and game systems there aren’t many choices to choose from. Consumers just have to pay the given price and don’t have any say if it’s too high. Supplier Power is the opposite of buyer power which makes the supplier power of the industry on the high side. Sony and its PlayStation have this power because there are not a lot of alternatives to choose from in the industry. They can set a price for their product and people will just have to pay if they want a PlayStation. The threat of substitute products for the PlayStation is quite low because there are only three main gaming systems on the market right now. There is also a switching cost in getting a new system because the games you purchase only work for one particular system. Also, the controllers and other accessories you invest in buying only work for that particular system. The threat of new entrants for the video game industry is quite low. It usually takes a large company and good financing to be successful which can be an entry barrier. If a small company attempted to get into the industry it would just get pushed aside by the three large companies currently in the market. Another setback is that it is difficult to get software designers and third party companies to make the software for the games themselves. Most game designers won’t work with a certain system if they don’t feel that their game will sell for that system. There is a strong rivalry among Sony’s PlayStation, Nintendo’s Wii, and Microsoft’s Xbox. These three companies have to make their products stand out over its competition. All three have been in the industry for a good amount of time and show no signs of leaving. Price cuts are one way these companies are currently trying to reach out to more consumers. Each system has their own product differentiation to make their system stand out.

Initiatives and Philosophy

(CEO Jack Tretton)

The four different business initiatives are Supply Chain Management, Customer Relationship Management, E-Collaboration, and Enterprise Resource Planning. Sony Play Station uses a mix of E–Collaboration and Enterprise Resource Planning system. The company uses technology to support work activities with integrated collaboration environments with virtual teams who are located all over the world. It uses a system with a collection of software for business management, accounting, finance, human resources management, project management, inventory management, service and maintenance, transportation, e business and also Supply Chain Management and Customer Relationship Management all together. Sony Play Station uses top line initiatives because their strategy is to increase revenues, and different ways to increase revenues used by them are reaching out new customers, offering new products, cross selling related products like accessories and offering complementary products. At the same time it the use some bottom line initiatives to keep the expenses at a minimum. Sony is considered to be one of the top leading manufacturers of audio-visual electronics and information technology products worldwide. Such success can be link with the type of IT organization and philosophical approach that Sony uses. The philosophical approach that is used by Sony is decentralized, also known as the early IT adopter’s philosophical approach. This approach has been used since the foundation of this corporation in the earlier 1940’s. Adopting this approach can be risky but it can also provide significant competitive advantage and a higher return if it proves to be successful. This fact can be proven by the success of PSP 3, which use advance technology like a High-Performance Processor and a Semiconductor Laser that gives them the advantage among their competitors and the preference of their customers. This success is achieved by the fully integrated approach within SCEA. This means that even if every function has its own department. The IT personal is placed within the other functional units. The approach gives the corporation a tremendous empowerment.

Other Strategies

(new design after price cut - image)

PlayStation uses e-commerce is a number of different ways. You can buy the PS3 console online at a number of different retailers including Amazon, PlayStation.com as well as number of different retailers like Best Buy etc. Another way that PlayStation uses e-commerce is through what’s called the PlayStation store. This store that is accessed through the bar when you turn your PlayStation on it sells a number of different items that correspond to PlayStation as well as other things. At this store you can download free demos of games coming out, you can buy old PlayStation 1 and 2 games and download and play them on your ps3, you can buy add-on's for games that you currently have and you can also rent movies and buy movies to download to your ps3 as well. So as you can see PlayStation does a lot to have e-commerce integrated into its lineup. For the most part Sony uses the B2B and B2C models. When Sony sells its games, systems, and accessories to retail stores this is selling to another business or company. Then from these other stores and businesses the consumers buy their products. Sony also sells its products directly to its consumers which would be B2C. Another way Sony products are sold are from people buying and selling products on eBay. This method does not involve Sony so it would be an example for C2C e-commerce. Sony registers with search engines to try to direct traffic to its website. When you do a Google search for "Sony" its homepage comes up as the second link. Anyone that searches the company will see it in the first few Google results. I have also seen online ads for Sony's video games when I have been on video game related websites. When Sony releases newer games or games that are expected to sell more you may see advertisements on other websites that are not video game related. Sony also has TV commercials for the Play Station and its games. Viral marketing is another way the word is spread about the PlayStation because its users always talk about it. The best thing about viral marketing is that it is free for the company because the consumers do the work. Sony does not really use the payments methods in the B2C e-commerce model. Depending on where the consumer orders its Sony products from, a financial cybermediary may be needed. For the most part Sony sells its gaming products through other electronic retail stores. The most common way games are sold using e-commerce is by online shopping from retail stores. Some of these stores have their own payment system, but others may need the financial cybermediary. PayPal is the best known financial cybermediary and is very user friendly.