There are many ways of analyzing a business. Perhaps one of the best ways to do this is by creating a SWOT – that is, Strengths, Weaknesses, Opportunities, and Threats -- analysis. This sheds light on the good and bad points of a business in terms of its strengths and weaknesses, which are mostly internal in nature; as well as opportunities and threats, which are external in nature.

Here is a SWOT analysis of Sony Corporation (NYSE: SNE), which once was the undisputed leader in the consumer electronics space. Let's take a brief look at the results for Sony.

Strengths

  • Sony has built a brand. This is highlighted by the fact that the company was tagged in a 2011 survey as Asia's most valued brand.
  • The company is synonymous with technological excellence and has a rich heritage of technological expertise. Besides creating the Trinitron Color television, VCR, and Walkman, the company helped develop the magnetic recording tape, the compact disc, and the Blu-Ray disc, used today as a medium for high-definition video playback. Its latest innovation, a Crystal LED television, was well received at the Consumer Electronics Show in Las Vegas.
  • Out of all its products at present, Sony's success with the Playstation is most noteworthy -- it has been successful since inception, and still sees tremendous consumer demand.
  • A strong foothold in the entertainment industry with Sony Music and Sony Pictures has been beneficial to the company by offsetting losses in its consumer-products division.  
Close-up of hands holding a video game controller

Image source: Getty Images.

Weaknesses

  • The high cost of media production, especially in its television business, has affected the company's pricing strategy. Its television business has lost an equivalent of $6.3 billion for eight years in a row. It's also losing market share to manufacturers, such as LG and Samsung.
  • While diversifying into too many business segments, the consumer electronics giant has shifted its focus from its core competency -- making great consumer-electronic products. This has resulted in a distortion in Sony's brand. Apple, which is also in the consumer electronics space, has managed to focus on just a few products, build competency, and make them incredibly successful.

Opportunities

  • The company can take advantage of its movie and music business along with its experience in the gaming space to deliver value-added content to support and integrate its product line. It has talked about doing this with a four-screen strategy, which looks like a good concept.
  • The company lately bought off its entire Sony Ericson joint venture. This should give Sony the opportunity to act independently and innovate in the booming smartphone and tablet market.
  • The company has the opportunity to enter the healthcare-imaging sector in a significant way through a possible acquisition of a 30% stake in Olympus.

Threats

  • Sony faces price competition from competitors such as Samsung and LG, who are gaining traction with lower-cost products such as televisions and mobile devices.
  • If rumors are to be believed, Apple can give a tough time to Sony by introducing its own version of the television, Apple TV. Moreover, Apple is seeing a significant appreciation in its brand value compared to Sony on a global basis, according to Interbrand's Rankings.
  • Sony's online network faces threats from hackers. The company's Playstation network was hacked, resulting in leakage of customer information, such as credit-card data.

The Foolish bottom line
Sony has many positive points to its credit but it seems to have lost its magic charm in the past few years. If the company uses its innate strengths and opportunities judiciously, it should have the potential to revive its past glory.

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