Sony Ps4 Strategic Management

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The Challenge Of Maintaining Greatness in the Gaming Industry Strategic Management Professor : Yuri Mishina 12-12-2013 1 Table of Contents Executive Summary....................................................................................................................................... 3 Industry Analysis ........................................................................................................................................... 3 Threat of New Entrants ............................................................................................................................. 4 Power of Suppliers…show more content…
(Yahoo Finance, 2013). Figure 1 Figure 2 (Parker, 2013) (D’Angelo, 2013) 3 Threat of New Entrants The three dominant players have taken the early mover advantage to grow their businesses. High level of adoption and efficient production are essential in this industry because consoles are traditionally sold at a loss and revenues are made up by licensing games to developers. This makes it very a difficult industry for new entrants. New technology incurs high cost of capital in research and development (R&D) and low product differentiation requires advertising and marketing. Their brand establishment, together with their capabilities to make high investments in required fields have helped the three firms to gain industry specific expertise, fast paced technological capability, and strong brand loyalty which keep the threat of new entrants moderately low (Wingfield, 2013). Power of Suppliers Each firm generates revenues from the profit margins on hardware (gaming consoles) and software (game) sales, both suppliers are therefore integral. Suppliers of the main hardware components, such as AMD and Foxconn, supply to all three companies but also to other industries e.g. for personal computers and smartphones. While not solely dependent on the industry, gaming currently represent the majority of

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