BCG Matrix of SONY Corporation

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What is the BCG matrix?

The BCG matrix or the Boston Consulting group Growth Share matrix is a planning tool used internally by management to decide which products are the most profitable and which ones to invest in as well as which ones to sell or divest. The matrix includes a graphical representation of the company’s products and product categories in the form of a four-square matrix.

Stars :

Stars are products in high growth markets with a large market share. These are the products that the company can further invest in to cement its position in the industry and markets. They are located in the upper left quadrant of the matrix. While they generate huge amounts of income for the company, they also consume cash in huge volumes. Stars can eventually become cash cows if they can remain market leaders and when the market’s growth rate falls.

Cash Cows:

Cash cows are the products in low growth markets but where the company holds a significant market share. A company must milk its cash cows for profits for as long as possible. Generally, cash cows are market leaders in mature markets. The profits these products generate are typically higher than the market growth rate and are good for a company from the cash flow perspective. It is why companies need to take advantage of their cash cows for as long as possible.

Question Marks:

Question marks are like opportunities with an unclear or questionable future. These products are in high growth markets but without a large market share. They are in the upper right quadrant of the BCG matrix. These products can grow fast, but they also consume the company’s resources in huge amounts. Companies need to analyze these products regularly and closely to check if they are worth maintaining. If the company does not see much potential in them after watching regularly, it must not keep them.

Dogs:

Dogs are products in low growth markets and with low market share. These products may sometimes prove to be cash traps that keep consuming the company’s resources, including cash and other resources. Because of their low market share and little to no growth, such products hardly generate cash for the company. Such products need to be sold out or liquidated, or repositioned. However, they can also keep the company’s funds tied for long periods of time if they are not divested. Companies should watch dogs closely to see if they are only consuming resources and divest them instead of wasting more time and resources.

SONY Corporation BCG Matrix:

SONY has a highly diverse product portfolio. While some of them have remained significant sources of profits for long periods, like its Play Stations and Televisions, the time and consumer dynamics are changing. As such, the company may need to liquidate or divest some of its least profitable products as it did with SONY VAIO laptops. It is the right time to analyze the company’s portfolio to check out which of its products may need repositioning and which ones are worth keeping.

STARS:

The imaging and sensing solutions of SONY corporation are the leading stars in its product portfolio. Apart from being in a high growth market, the company is also a market leader in this sector and owns a large market share. The imaging and sensing solutions segment of the company experienced stellar growth in fiscal 2019. It was also why the company could successfully retain a lot of its growth momentum and profitability. In contrast, many other profitable product segments of the company experienced a significant decline.

CASH COWS:

SONY’s biggest Cash Cow is its PS4 hardware and gaming software. While several of its consumer electronics products were also its cash cows, their future seems to be bleak due to the heavy competition and Chinese players’ entry. The Chinese brands sell competing products at lower prices globally. In fiscal 2019, the sales of PS4 hardware also dropped significantly, but it remained among the company’s largest sources of revenue. The gaming segment of the company remained its second-largest source of revenue.

QUESTION MARKS :

Several of SONY’s cash cows have become question marks in recent years since their sales have kept dropping steadily due to the growing competition and heavy price pressure. As a result, SONY’s margins from these products have also kept shrinking. Its sales of audio and video systems and digital cameras have kept dropping steadily, and their future has grown bleaker with increasing competition in the industry.

DOGS:

SONY’s Xperia smartphones are experiencing higher competition globally from many brands, including the Chinese, South Korean, and American brands. As a result, their sales have kept falling year on year. SONY’s revenue and profits from its smartphones have also reduced significantly.

A few last words:

Overall, SONY’s business is in quite a good shape except for a few products that seem to be losing their sheen in the face of increased competition. The pandemic also affected the sales of SONY’s PlayStation hardware and televisions. While SONY’s television business is also experiencing reduced demand, it is still in a lot better shape than SONY’s smartphone business. If SONY cannot resurrect its smartphone business that has been losing its appeal among the consumers who can buy Chinese smartphones with similar features at much lower prices, it will be forced to divest its smartphone business.

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