Sony PlayStation 3: Game Over Harvard Case Solution & Analysis

Bargaining Power of Buyer

Sony is targeting a small group of people through PS3 who have sufficient knowledge of technology and are addicted to console gaming. These people have easy access to the information about the product and competitors product so the bargaining power of consumers remains moderate as they can switch, but loyalty is a factor that favors Sony. On the other options are available in the segment, and people can prefer the product that offers better features and services and is highly integrated with innovative use of technology.

Bargaining Power of Suppliers

As the company has a range of options in terms of suppliers that indicates that in the industry suppliers are not in power to bargain. Furthermore, there are small firms who are responsible for supplying major materials in the industry. On the other hand, Sony is highly dependent on few suppliers for its highly integrated softwares which make the power of suppliers bargain to some extent high. But overall the industry is not facing any threat from suppliers, and they have low power to bargain.

Threat of New Entrant

New entrants may not have the opportunity to excel in this industry, although the industry is highly lucrative and showing rapid growth. On the other hand, high initial and operating cost is required to set up a business in this industry, which is a very discouraging factor for new entrants. Secondly, gaining a market share is very difficult as brand loyalty plays a major role in restricting new players from entering the market. Furthermore the learning curve in the industry is very complex for new players and it will require decades for them to settle in the market. The overall view suggests that new entrants are neither encouraged nor welcomed in the industry, which keeps the threat at its minimal.

Threat of Substitute

Substitutes for console gaming are growing, but with the innovations, companies are adopting in launching new products has kept the threat at moderate. Although still people have other options as a substitute for console gaming, for example, computer games or mobile phone games, but products like PS3 have evolved into multi-media platforms providing a unique experience to consumers.

Furthermore, the industry has transformed into multi-media platforms for console gaming that means substitutes have also increased, but the uniqueness in these multi-media platforms give them an advantage. PS3 provides gaming along with access to different social media websites and picture sharing, etc., which attracts consumers to get variation in feature in one device.

Competition

The competition in the market is very intense and fierce, and the two major competitors of Sony include Nintendo and Microsoft, which are two or three steps ahead of Sony. Nintendo through its Wii has outnumbered PS3 in terms of sales in many countries through exceptional and better features than the PS3, which is the main source of differentiation in the industry. Similarly, Microsoft has also grabbed a greater market share than Sony through its Xbox and has made the competition more intense. The intense competition has made the survival of Sony difficult in the industry, and the company needs to come up with a strategy to overcome this issue and to reestablish itself in the market.

Opportunities

The company can utilize Blue-Ray, which may become the new standard for high-definition in the industry and can come up with features like voice controller that can give the company an image of differentiation. Secondly, Sony can synergies its PS3 with other products of Sony and can give introduce something different in the market that its competitors are not capable of doing. Furthermore, an opportunity for introducing more exciting and innovative games always exist and the company can launch new games first before its competitors to gain a first mover advantage.

Threats

Wii of Nintendo has the advanced features of the controller and is expected to take the market away from PS3 by completely raping PS3 out from the market. In order to sustain its position in the market Sony has to make healthy relationships with game publishers and build a large network to stay in the market. On the other hand, consumers may get confused from the mixing of Blue-Ray player and images of game console and can switch to Wii and Xbox. On the other, the hacking of the PS3 has raised concerns in the mind of consumers, and the lack of trust may cause damage to the survival of the product.............................

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