Sony PlayStation 3: Game Over Harvard Case Solution & Analysis

Environmental Analysis

An environmental analysis will be conducted using the PEST model which will highlight the key political, economic, social and technological factors regarding the environment in which PS3 is operating.

Political Factors

Government has the authority to mold regulations at any time, and this can greatly affect Sony’s ambition. Sony and its competitors, both have to have face similar challenges and opportunities arising due to political factors that mean that Sony should focus on planning strategies in order to stay ahead of competitors. New international policies and trade barriers may cause hinders for Sony as a company deeply favors trade. Furthermore, changes in wage rate, taxes and the introduction of new taxes from the government can affect Sony in launching PS3. Since Sony is present worldwide, so the company has to face different challenges in different political environments.

Economic Factors

The company has to face a global challenge as the world is currently facing a recession, and people have put a hold to their expanding. Sony manufactures console games and electronic items, and PS3 is considered as a secondary good and people are not ready to expand extra money on such items until or unless they are brand loyal or addicted to it. On the other hand, Sony is a global player, so exchange rate also plays a vital role in shaping strategies for Sony. On the other hand, the company is using Asia as the place for manufacturing as Asia is a place where labor is cheap, and companies save costs by establishing manufacturing capacities in Asia. Sony can use this cost saving factor and can go for mass production and global distribution.

Social Factors

The social environment is very important for Sony as it involves people who buy the product. Sony has been successful in communicating with its consumers through different methods that have played a vital role in the overall success of the company. Secondly the company should use the same approach for PS3  as well as the launch has not only taken place in Japan but worldwide and understanding consumers' expectations is an important aspect. The product offerings should be based on the needs of the consumer, but the needs and wants changes with the changes in lifestyle. Sony has established good relationship with its consumers, but the global recession has changed the way people live and restricted them in their expenses. This factor along with other factors like norms and traditions in the culture of different countries are also important and should be considered before launching a product.

Technological Factors

Technology is the most important factor as the industry Sony is operating is highly dependent on technology. Innovations and change sin technology play a vital role in giving edge to companies in order to launch a new and innovative product and stay ahead of competitors. Sony has utilized innovations in technology quite effectively and has shown immense improvement is shaping its product especially PlayStation series. From PS1 till PS3 a lot of changes have been in order to attract new consumers and provide current consumers more features and something new every time with the launch of the PS3. The journey of PS started as a console game, but with the passage of time and innovations in technology evolved as a multi-media system.

Industry Analysis

The PlayStation of Sony is operating in a console game industry, although the company is operating in various other industries, but the console game industry is totally different from other industries Sony is operating. The market for console gaming, or interactive video gaming is growing rapidly and has turned into an entertainment with an expected growth of 4% every year. Although the recession has restricted people to expand, but brand loyalty, technology lovers and people addicted to gaming are increasing, especially in technology, efficient countries like Japan, USA, Germany, etc.

The three major competitors in this industry include Sony, Nintendo and Microsoft, who is facing intense and fierce competition from each other. Furthermore, due to rapid changes in technology the substitutes are also increasing for console gaming and people are expected to shift treating companies from losing great amounts in revenues. The industry analysis is done using Porter’s Five Forces that shape strategy in order to get a broader view of the industry.......................

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The contours of the challenges facing Sony with the launch of its three PlayStation. Information about the 2006 and 2007 holiday seasons and the success of rival consoles described. In addition, in the case study allows costs and revenues related to a business model based on selling hardware and game titles. Can be used with "Home Video Games: Generation Seven." (505-072), which provides additional information on the field of "Hide
by Elie Ofek Source: Harvard Business School 26 pages. Publication Date: March 10, 2008. Prod. #: 508076-PDF-ENG

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