Resource Based Audit

Porter’s Value Chain Analysis

In this section the value chain analysis of Sony will be conducted. Value chain analysis
is an effective tactic which enables visual representation of various key activities of a
business and determine how competitive advantage can be attained (Zamora, 2016).
Following is the analysis of primary and support activities of Sony’s business
operations:

Figure: Value Chain Analysis of Sony

Primary Activities
Primary activities of Sony involve inbound logistics activities such as retrieval of raw
materials and storing them for internal distribution among different manufacturing and
R&D departments. Sony’s game and gaming network service PlayStation is the most
profitable product or business segment of the company (Statista, 2021a). Therefore,
procurement of materials to manufacture PlayStations is part of their inbound logistics
activities. Their operations involve the transformation of the raw materials into value
propositions such as PlayStation, Smartphones, DSLR cameras. Apart from which
marketing activities and post sales services are also other operations of the company.
Outbound logistics activities are related to the delivery of the value proposition or their
products to the customers through different intermediaries as well as processing of
orders and warehousing of products. In their marketing and sales activities Sony
conducts advertisements and promotional activities such as sales events. Service
involves pre- and post-sales servicing to the customers to ensure customer loyalty.

Support Activities
In the support activities firm’s Infrastructure management is a key activity and within
such Sony engages into technological infrastructure management as well as quality
management for their products. Skilled labour procurement and skill development as
well as ensuring employee satisfaction are also part of their human resource
management activities. In technological development, continuous R&D activities to
ensure innovation and integration of automation within existing products in order to
enhance value propositions are key activities. Finally, procurement involves purchase
of machineries or equipment and collection of market data to determine industry trends.

Activity Systems Mapping

 Figure: Activity Systems Map of Sony’s Operations

Activity systems mapping tool has been utilised to visually represent the core activities
or operations of Sony. As previously identified, gaming industry presence is a key
source of revenue for the company, therefore, it has been considered as a key activity.
Apart from which their presence in other electronic products such as smartphones and
digital cameras and presence in the entertainment industry are also considered as key
activities. Furthermore, R&D activities are another key activity of Sony Corporation as
well. Through these customer satisfaction oriented internal and market activities Sony
can be perceived to be actively pursuing brand identity development and brand loyalty
development. Affran et al. (2019) states that brand identity or value and customer
loyalty are the key to competitive advantage and which can be observed through the
activities of Sony as well.

Business Models Analysis

 Figure: Business Model Canvas of Sony Corporation

Based on the understanding of Sony’s products and service offerings in the market and
identification of their activities through the activity systems mapping the above business
model canvas of Sony have been prepared. Business model canvas is a tool which
helps with the summarisation of strategic details of an organisation (Ladd, 2018).
Following is the critical analysis of Sony’s business model using the business model
canvas tool:

● Key Partners: Key partners are the organisations who allow an organisation to
produce products or services for their target customers. Sony’s key partners are
raw material suppliers, hardware manufacturers, processing and computing units’
suppliers as well as packaging items suppliers. For example, Sony has partnered
with AMD in order to power their newly launched PlayStation 5 hardware with
efficient graphics processors (Locke, 2020).
● Key Resources: Key resources for Sony are their skilled human resources who
allows them to produce value propositions for their customers. Furthermore, the
technology items such as the raw materials and their R&D division are key
resources which helps Sony to attain competitiveness in the market.
● Key Activities: Sony’s key activities are related to the hardware manufacturing,
offering of digital services such as PS Now as well as their entertainment content
marketing such as games, movies and music.
● Value Proposition: Value propositions are the unique offerings which allows an
organisation to attract the target customers and establish a unique brand identity
(Payne et al. 2017). Sony’s value proposition is related to their high quality and
reliable gadgets or innovative products.
● Channels: Sony uses retail stores to reach their target customers as well as also
conducts celebrity endorsements-based promotions in order to continuously
reach their customers.
● Customer Relationship: Customer relationship is crucial for any business
because it allows them to retain their existing customer base (Dal Bó et al. 2018).
 Sony uses both their physical store-based presence as well as their social media
presence and press conferences to maintain their customer relationship.
● Customer Segments: Sony’s primary target customer segments are the end-
users or mass-market customers. However, they also offer their services to
corporate or government organisations within their B2B business segment as
well.
● Cost Structure: Cost structure of the company is related to their manufacturing
and marketing activities as well as other operational costs such as employee
payrolls. Furthermore, Sony also makes significant investments in R&D activities
as well, in 2019, Sony invested US$4.59 billion in R&D (Statista, 2021b).
● Revenue Streams: Sony’s revenue stream generates from hardware sales,
entertainment item licensing and subscription fees for their digital services such
as PS Now.
Reference
Affran, S., Dza, M. and Buckman, J., 2019. Empirical conceptualization of Customer
loyalty on relationship marketing and sustained competitive advantage. Journal of
research in marketing, 10(2), pp.798-806.
Dal Bó, G., Milan, G.S. and De Toni, D., 2018. Proposal and validation of a theoretical
model of customer retention determinants in a service environment. RAUSP
Management Journal, 53(2), pp.202-213.
Ladd, T., 2018. Does the business model canvas drive venture success?. Journal of
Research in Marketing and Entrepreneurship.
Locke, J., 2020. What graphics card will be used in the PS5?. [online] Android Central.
Available at: <https://www.androidcentral.com/what-graphics-card-will-be-used-
playstation-5> [Accessed 17 February 2021].
Payne, A., Frow, P. and Eggert, A., 2017. The customer value proposition: evolution,
development, and application in marketing. Journal of the Academy of Marketing
Science, 45(4), pp.467-489.
Statista, 2021a. Sony sales share by business segment 2019 | Statista. [online] Statista.
Available at: <https://www.statista.com/statistics/279272/proportion-of-sonys-sales-by-
business/> [Accessed 17 February 2021].
Statista, 2021b. Sony R&D expenses 2011-2019 | Statista. [online] Statista. Available
at: <https://www.statista.com/statistics/739101/sony-research-and-development-
expenses/> [Accessed 17 February 2021].
Zamora, E.A., 2016. Value chain analysis: A brief review. Asian Journal of Innovation
and Policy, 5(2), pp.116-128.