Question 3: What do you identify as Sony’s resources, capabilities and core competencies? Does Sony have a sustainable competitive advantage?
Sony Corporation is considered one of the world’s most successful companies, operating in the “electronics, games, music, films and financial services” industry (Hanson et al, 2001). Sony is known for creating “products that stimulate the senses and refresh the spirit” (Sony, 2007). Effectively managing a combination of its resources, capabilities and core competencies, has allowed Sony to create a strong sustainable competitive advantage.
Resources refer to “factors that a company owns, controls and uses for the purpose of creating value” (Hill et al, 2007). Sony’s numerous tangible and intangible resources help to determine its distinctive competency, thus leading to maintaining a competitive advantage.
When identifying Sony’s resources, both its tangible and intangible assets are included. “Tangible resources include assets that are financial in nature, or have physical properties” (Hill et al, 2007). In 2007, Sony recorded a sales and operating cash flow of $70,303 million, an increase of 10.5 percent from 2006 (Sony United, 2007), as part of its financial resources. Land, buildings, machinery, and equipment are also part of Sony’s tangible resources, and are worth approximately $14 million (Sony United, 2007).
“Intangible resources include those non-physical assets that the company uses to produce goods or provide services, or expects to generate future productive benefits” (Hill et al, 2007). The Sony brand is considered “one of the world’s most recognisable and trusted brands” and was “ranked 21st in the Business Week/Interbrand list of the World’s 100 Most Valuable Brands with an estimated value of US$14 billion” (Singh et al, 2005). The Sony brand is associated with “superior quality, innovation and style” (Sony United, 2007), in the minds of its customers.
Also, as a result of effective marketing efforts and product launches, Sony has managed to create “several successful sub-brands… such as Trinitron, Walkman, WEGA and VAIO” (Singh et al, 2005). In addition, the Sony slogan “like no other” is also one of the most well-known taglines in the world.
Sony also has a wide range of skills, expertise and knowledge available from its 163,000 employees worldwide. By carefully coordinating the staff in various areas of the company, and allowing them to actively exchange ideas, Sony has been able to effectively utilise its human resources, which has been reflected in their delivery of quality products and services (Sony United, 2007).
Sony has also engaged in “soft alliances” such as that with Philips to create the compact disc. By being involved in the growing number of alliances “between hardware designers and creative game-software developers”, Sony has recognised and taken advantage of this “valuable means of growth” (Singh et al, 2005). These alliances contribute to Sony’s relational resources.
The combination of Sony’s various tangible and intangible resources has allowed it to sustain and maintain a distinctive competency among competitors, which in turn adds to its sustainable competitive advantage.
Capabilities can be “defined in terms of the types of activity that companies perform to create value” (Hill et al, 2007). Sony performs a wide variety of activities, in order to create value for its customers, which in turn contributes to its competitive advantage.
“Organisational capabilities may be thought of as a hierarchy of knowledge integration” (Hill et al, 2007). At the lowest level, Sony’s employees maintain individual capabilities in their specialised knowledge of the area they are involved in, from electronics to music. Sony then utilises this knowledge and the skills of its employees, to manufacture and market its products, thus creating value for its customers (Hill et al, 2007).
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