Milestone 1
Courtney Franklin
Business and Leadership
Regent University
Dr. Jeff Bajah
ECON 230 Macroeconomics
September 3, 2022
Introduction
Sony is a technological company that is constantly innovating the future of technology. Sony frequently puts out new innovative ways to better our lives and entertain us. The company has a comparative advantage over most of their rival companies. Sony is one of the leading companies in the gaming industry, putting out the leading product PlayStation plus the games and services that come with the product. Sony’s supply and demand pattern rises and falls correlating with the seasonal holidays. The GDP of Sony’s home country can have a negative impact on the production of it’s products.
Comparative Advantage
The entertainment products and network services provided by the Sony Company gives them the comparative advantage over most of their competitors. The gaming segment of their company makes up one-third of Sony’s income (2022). Currently, Sony has sold over 18 million PlayStation 5s despite supply problems plaguing Sony while Microsoft has only sold over 13 million as of March 2022 (2022). This gives Sony the edge over its biggest competitor, Microsoft. Compared to other products Sony creates, it is more lucrative for the company to continue to create gaming consoles, televisions, and video game accessories.
Key Product and the Supply and Demand
Sony’s key products are their games, game consoles, and network services such as PlayStation Network (2022). The demographic of young children and teens are the customers responsible for the rise of the gaming technology of Sony, being over 80% of the consumers (2018). The supply and demand of Sony’s products mostly center around these key products and fluctuate with cultural holidays, such as Christmas. Seasonal sales and new product quotas are made around this time which causes prices to lower and demand for these products to rise, which also causes supplies to rise. However, since the release of Sony’s PlayStation 5 console the company has been struggling to keep up with the demands of the consumers. This issue has improved since 2021, but the improvement is still slow.
GDP and It’s Effects
Sony’s home headquarters is based is Tokyo, Japan. Japan’s recent GDP is 4.94, which is a significant drop from the past 10 years (accessed 2022). This could negatively impact the production of Sony’s products with less money and resources to go around. Japan’s falling GDP is very telling about the impact of the COVID-19 pandemic on the economy, however the fall had been happening for quite some time. The fall could be impacted because of shrinking workforce. This would explain the supply issues Sony has with their production of the PS5. This could be remedied by cutting production of not so successful products and bringing those resource to the production of Sony’s key products.
Conclusion
Sony must cut production of some of their less notable products and move these productions to their key products to combat the falling GDP of Japan. This can improve the company’s struggling supply and demand chain, which has been an uphill climb since the release of the PlayStation 5. Sony should focus more on their more lucrative key products to improve their income numbers. This will help them keep a comparative advantage over their competitors.
Resources
D’Angelo, William. (2022, Apr. 17). PS5 vs Xbox Series X|S Sales Comparison - March 2022 – Sales.
VGChartz. https://www.vgchartz.com/article/453293/ps5-vs-xbox-series-xs-sales-comparison-march-2022/
Khan, Zarmena. (2022, Feb. 02). PS5 Has Shipped 17.3 Million Units but Supply Issues Remain. Evolve
Media. https://www.playstationlifestyle.net/2022/02/02/ps5-sales-cross-17-million-dec-2021/
Laricchia, Federica. (2022, Aug. 5). Sony-Statistics and Facts. Statista
https://www.statista.com/topics/1917/sony/
UKEssays. (November 2018). Influences On The Consumer Decision Process Sony Playstation Marketing
Essay. UKEssays. https://www.ukessays.com/essays/marketing/influences-on-the-consumer-decision-process-sony-playstation-marketing-essay.php?vref=1)
World Bank data, The. (accessed 2022). GDP (current US$) – Japan. The World Bank.
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?idc=135&locations=JP
Courtney, I appreciate the thoughts that you shared in your post. Sony has certainly been one of the leaders in technology sales for years now. Data from Statista shows that Apple is number one overall in consumer electronic companies with sales of $378.7 billion, but Sony is a close second "with over $244 billion U.S. dollars in sales the same year" (Laricchia, 2022, para. 1). As the data shows, Apple certainly has a dominant lead in the category. Sony, however, is remaining very competitive. As you mention, they have big advantage in the gaming category. Playstation has been a major money maker for them for years now. Being able to meet the demand for the product by increasing the quantity supplied would enable the company to increase their revenues even more. An area where Sony could really look to improve in order to gain ground on Apple would be improving the quality of its phones. This is an area where Apple, and Samsung, have major competitive advantages. And with the market for phones being so large. Being able to increase their market share would greatly benefit Sony's bottom line.
References:
Laricchia, F. (2022). Sales of the Leading CE Companies Worldwide 2022. Statista. Retrieved from https://www.statista.com/statistics/431431/sales-of-the-leading-ce-companies-worldwide/