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 - – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, there is backlash against globalization, central banks are concerned over increasing inflation, increasing energy prices, technology disruption, increasing commodity prices,
wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
Highly skilled collaborators
– Game Theory has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Pricing Games: Sony PlayStation and Microsoft Xbox HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
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.
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.
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.
Ability to lead change in Sales & Marketing field
– Game Theory is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Game Theory in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
Learning organization
- Game Theory is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Game Theory is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Pricing Games: Sony PlayStation and Microsoft Xbox Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Cross disciplinary teams
– Horizontal connected teams at the Game Theory are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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 -
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Pricing Games: Sony PlayStation and Microsoft Xbox has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Game Theory 's lucrative customers.
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.
High cash cycle compare to competitors
Game Theory has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Game Theory is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Pricing Games: Sony PlayStation and Microsoft Xbox can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
No frontier risks strategy
– After analyzing the HBR case study Pricing Games: Sony PlayStation and Microsoft Xbox, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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.
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 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.
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 -
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Game Theory to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Loyalty marketing
– Game Theory has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, 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.
Better consumer reach
– The expansion of the 5G network will help Game Theory to increase its market reach. Game Theory will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Game Theory can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
Building a culture of innovation
– managers at Game Theory can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
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.
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.
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.
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 -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Game Theory in the Sales & Marketing sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Game Theory has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Game Theory needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Game Theory is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Increasing wage structure of Game Theory
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Game Theory.
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.
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.
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.
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.
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.
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.
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.
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.
