Danish Afroz, Ryan Chua, Ryan Mosher, Shaun Silveira, Phillip Tripp

Agenda

Recap of Sony’s Value Creation Issues

Q&A

Alternative #2 – Co-opetition

Relevant Criteria for Evaluation

Alternative #1 – Change Scope

Implementation Plan

7

6

5

4

3

2

1

Recommendation – Revive Differentiation

Quick Recap of Value Chain and Stakeholder AnalysisSony’s Problems

Failure to address definitive stakeholders:

Customers: Generated less value in consumer devices

Employees: layoffs, silo effect

Shareholders: 30% share price drop in 2 years

Competitors: Apple, Nintendo consume market share

Stakeholder Analysis

Firm Infrastructure – competition between BUs prevented synergy.

HRM – Engineer-led product development lead to high costs, redundancies and a lack of focus.

Technology Development - Hardware and software offering failures.

Operations and Procurement – Focus on innovation lead to bloated cost structures.

Sales and Marketing – Failure to market products and create value adding distribution channels for content.

Value Chain

1 2

04/07/2011

Evaluation Criteria

• Cost reductions• Increased revenues

Profitability

• BRIC countries• New industries and markets

New Customers and New Geographies

3• Quick Reaction to Market

Changes• Product Development based on

consumer insight• Differentiation

Business Process Innovation

Overall goals of the future strategy :

1.) Embrace convergence

2.) Focus on user experience rather than high technology

3.) Drive a return to profitability

4.) Support open technologies and social networks

2

1

• User experience is key1. Online Services – Combine Qriocity, (movies, music) PSN, Ebooks,

2. Smart TV

3. 3D revolution

• Differentiation across all product lines to charge a premium price• PARTS Model – Adding Value to devices• Stakeholders:

– Customers– Employees

• Reaches many countries at once• Shift from engineer led development to customer focused

development Creating product for a job

RecommendationRevive differentiation – User Experience

• Break up content and hardware operations• Spin off: B2B hardware division• Sell: Life Insurance and Financial Services

Divisions• Focus on Consumer Devices• Marketing, Marketing, Marketing• Game theory – change scope by severing

linkages between games

Alternative #1Change Scope – Disaggregate and Spin/Sell Off units

• Engage Microsoft to change the game • Developing videogame platform is increasingly expensive

– $20-30 million for a video game for current generation– Estimates for next generation double current costs– R&D costs can approach hundreds of millions for consoles

• Reduce product development costs by releasing a super console

• Network effects• PARTS model – Change players

Alternative #2Co-opetition – MS SONY Partnership

Your Logo

Implementation Plan

• Plan was guided by support activities comprising porter value chain• Strengthen each aspects: firm infrastructure, HR mgmt, tech development,

procurement• Step 1 – Internal Communication and buy-in• Step 2 – Set Financial goals• Step 3 – Figure out what the ideal user experience is (marketing survey)• Step 4 – Assess requisite human capital and technology needs• Step 5 – Establish Programme Management office to oversee 3D, online services,

and Smart TV products• Step 6 – Implement appropriate systems and processes• Step 7 – Market communication• Step 8 – Monitor and review

Differentiation

THANK YOU!

Your Logo