Pricing Games: Sony PlayStation and Microsoft Xbox SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Pricing Games: Sony PlayStation and Microsoft Xbox
Economic game theory can be a tedious and difficult concept, but it doesn't have to be. This exercise allows students to learn about game theory via an entertaining medium - video games. After considering a pricing war between two video game giants, Microsoft and Sony, students are asked to calculate pricing strategies based off game theory predictions. Students must use a 2-by-2 simultaneous one-shot game (like the Prisoner's Dilemma framework) to determine if one or both companies will cut prices.
Swot Analysis of "Pricing Games: Sony PlayStation and Microsoft Xbox" written by Valerie Y. Suslow, Francine Lafontaine includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Game Theory facing as an external strategic factors. Some of the topics covered in Pricing Games: Sony PlayStation and Microsoft Xbox case study are - Strategic Management Strategies, Competitive strategy, Customers, Economics, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Pricing Games: Sony PlayStation and Microsoft Xbox casestudy better are - – challanges to central banks by blockchain based private currencies, there is backlash against globalization, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
increasing household debt because of falling income levels, technology disruption, etc
Introduction to SWOT Analysis of Pricing Games: Sony PlayStation and Microsoft Xbox
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pricing Games: Sony PlayStation and Microsoft Xbox case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Game Theory, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Game Theory operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Pricing Games: Sony PlayStation and Microsoft Xbox can be done for the following purposes –
1. Strategic planning using facts provided in Pricing Games: Sony PlayStation and Microsoft Xbox case study
2. Improving business portfolio management of Game Theory
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Game Theory
Strengths Pricing Games: Sony PlayStation and Microsoft Xbox | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Game Theory in Pricing Games: Sony PlayStation and Microsoft Xbox Harvard Business Review case study are -
Strong track record of project management
– Game Theory is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Game Theory has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Pricing Games: Sony PlayStation and Microsoft Xbox - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Game Theory in the sector have low bargaining power. Pricing Games: Sony PlayStation and Microsoft Xbox has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Game Theory to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Game Theory has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Game Theory to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Game Theory is present in almost all the verticals within the industry. This has provided firm in Pricing Games: Sony PlayStation and Microsoft Xbox case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Training and development
– Game Theory has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Pricing Games: Sony PlayStation and Microsoft Xbox Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Game Theory has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Game Theory has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Game Theory is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Valerie Y. Suslow, Francine Lafontaine can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Game Theory in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– Pricing Games: Sony PlayStation and Microsoft Xbox firm has clearly differentiated products in the market place. This has enabled Game Theory to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Game Theory to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Pricing Games: Sony PlayStation and Microsoft Xbox Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Game Theory is one of the most innovative firm in sector. Manager in Pricing Games: Sony PlayStation and Microsoft Xbox Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Pricing Games: Sony PlayStation and Microsoft Xbox | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pricing Games: Sony PlayStation and Microsoft Xbox are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Pricing Games: Sony PlayStation and Microsoft Xbox, is just above the industry average. Game Theory needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Valerie Y. Suslow, Francine Lafontaine suggests that, Game Theory is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Increasing silos among functional specialists
– The organizational structure of Game Theory is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Game Theory needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Game Theory to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Game Theory has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Pricing Games: Sony PlayStation and Microsoft Xbox, in the dynamic environment Game Theory has struggled to respond to the nimble upstart competition. Game Theory has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Game Theory has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– Game Theory has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Game Theory supply chain. Even after few cautionary changes mentioned in the HBR case study - Pricing Games: Sony PlayStation and Microsoft Xbox, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Game Theory vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Game Theory has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Pricing Games: Sony PlayStation and Microsoft Xbox should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Game Theory has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Pricing Games: Sony PlayStation and Microsoft Xbox HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Game Theory has relatively successful track record of launching new products.
Opportunities Pricing Games: Sony PlayStation and Microsoft Xbox | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Pricing Games: Sony PlayStation and Microsoft Xbox are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Game Theory can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Game Theory to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Game Theory is facing challenges because of the dominance of functional experts in the organization. Pricing Games: Sony PlayStation and Microsoft Xbox case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Game Theory has opened avenues for new revenue streams for the organization in the industry. This can help Game Theory to build a more holistic ecosystem as suggested in the Pricing Games: Sony PlayStation and Microsoft Xbox case study. Game Theory can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Game Theory can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Game Theory can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Pricing Games: Sony PlayStation and Microsoft Xbox suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Game Theory can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Game Theory can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Pricing Games: Sony PlayStation and Microsoft Xbox, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Game Theory can use these opportunities to build new business models that can help the communities that Game Theory operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Manufacturing automation
– Game Theory can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Game Theory has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Pricing Games: Sony PlayStation and Microsoft Xbox - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Game Theory to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Game Theory in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Game Theory in the consumer business. Now Game Theory can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Pricing Games: Sony PlayStation and Microsoft Xbox External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pricing Games: Sony PlayStation and Microsoft Xbox are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Game Theory can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Pricing Games: Sony PlayStation and Microsoft Xbox .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Game Theory.
High dependence on third party suppliers
– Game Theory high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Game Theory will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Pricing Games: Sony PlayStation and Microsoft Xbox, Game Theory may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Game Theory with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Game Theory can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Game Theory needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Regulatory challenges
– Game Theory needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Game Theory business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Game Theory in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Pricing Games: Sony PlayStation and Microsoft Xbox Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Pricing Games: Sony PlayStation and Microsoft Xbox needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Pricing Games: Sony PlayStation and Microsoft Xbox is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Pricing Games: Sony PlayStation and Microsoft Xbox is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Pricing Games: Sony PlayStation and Microsoft Xbox is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Game Theory needs to make to build a sustainable competitive advantage.