Sony Corporation Executive Summary 1680
Sony Corporation Executive Summary 1680

Sony Corporation Executive Summary 1680

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  • Pages: 6 (3074 words)
  • Published: November 3, 2018
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Sony’s current

financial difficulties are tied into its corporate culture which

were stated over 30 years ago. With such a large

multinational corporation, greater planning and more use of

strategies should be pursued. Sony could start with the

implementation of a new mission statement, with profit and

benefits of the company tied more closely to everyday

operations. Internally, the four forces, the management, the

designers, the production and the marketing should achieve

better communication and cooperation. Alliance and

cooperation between competitors should also be actively

sort after in order to create standards in new fields. Sony

should aim at being the leader instead of being the

maverick. As for cost cutting, Sony should seriously

consider setting up operations in other Asian countries in

order to take advantage of the cheap labour and the

budding markets. Finally, diversification, instead of pursuing

the fast changing and easily imitated consumer goods

market, Sony should use its technological know-how for

high-end business and office equipment. With SWOT

analysis and Porter’s competitive forces model, we can

view that the market is much more competitive with less

profit margins and lead-time for product innovation. The

conclusion is that change is needed in Sony. However,even

with strategirial and structure change, the Sony spirit of

innovation should remain intact because that is what made

Sony grow and would make it stay strong. Introduction

The first thing that comes to peoples minds of the company

and products of Sony is its

high-technology-filled-with-gadgets electronic goods and

innovation. It was also th

...

is innovation that make Sony the

greatest company that started in post-war Japan. Sony has

used its innovation in building markets out of thin air,

created a multibillion, multinational electronic empire with

products such as the transistor radio, the Trinitron, the

Walk-in and the VTR. that changed everyday household

lives forever. However, this consumer targeted quest for

excellence and constant innovation instead of targeting

mainly at profit also has a lot to do with current crisis Sony

is facing – sales and profits are down or are slowing down,

capital investment cost and R&D are climbing, competitors

are moving in with copycats, the battle between VHS and

Beta and the search for a smash hit product such as the

Trinitron or the Walk-in. This volatility and emphasis (or

gambling) on new products instead of concentrating on

profit and loss statements have always been a part of Sony

since its beginning days. For each successful product (i.e.

transistor radio and Trinitron), R&D cost often ran so high

that the they pushed the firm to the verge of bankruptcy.

This can also be seen through the eyes of the investor in

which although sales have increased tremendously

throughout the past twenty years, the stock price has

remained relatively low. History and Culture The current

Sony corporation has a unique culture which is firmly

rooted in her history especially in relationship to her two

founders, Masaru Ibuka and Akio Morita. Ibuka and

Morita were both dedicated electrical engineers and

geniuses above their business talents. Both gave insights

and visions in what the company should make and how it

should be made. Ibuka, especially

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gave constant advice

and suggestions to the engineers involved in projects from

the earlier on transistor radios to Walkmans. This created

the umbrella strategy in which Sony operates under where

the top management, especially Ibuka, Morita and now

Norio Ohga gave the general direction in which the lower

engineers actively learned, developed and improved on the

vision/idea. Therefore, although there is a planned direction,

the actual product development through launching is

emergent with great flexibility. Although the research and

development section of Sony differs greatly from other

companies with its great flexibility, Sony, in its essence is

still a traditional Japanese company in many ways. There is

life-time employment, with strong norms and values which

in turn create strategies through their actions. Status is given

(the crystal award) instead of bonuses (not significant

amount) for superior achievement. There is also the strong

seniority system such as the mentor and apprentice

relationship that is typical of a Japanese firm. All this can be

classified as the cultural school in which strategy formation

is of collective behaviour. Collective vision and stress on

human resource, which is typical of many Japanese, can be

clearly seen in the mission statement “Management

Policies”. Weaknesses and Threats Referring to Exhibit 1,

sales has slowed down considerably since the beginning of

the 80s. In the domestic market, sales actually decreased

by 7.22%. The overseas market expanded both in real

terms and relative to total sales, but slowed down to

around 10% a year. This can be seen as the vacuum period

between one hit product, the Walkman, and its succession.

As mentioned by Ibuka, business is conducted in a ten year

cycle. However, in the eighties, the product might still take

a few years to develop, but the time reaping the results and

profits might be much less. As seen in the VTR example,

both the VHS and Beta were developed by Sony.

However, in a short time, Matsushita could come up with a

competitive product based on Sony’s technology.

Therefore, it is fair to say that other electronic firms would

be able to copy Sony’s technology in a much shorter time

while offering more competitive prices. The margin for

technology advancement is therefore diminishing.

Associated with innovation is the capital expenditure cost

and return on investment ratio. As seen from Exhibit 1,

capital expenditure has risen dramatically, especially in

1981, due to the automation of plants. However, the return

on investment has decreased. Spending around 10% of

sales on capital investment is by all company standards an

extremely high figure. The question is that does this high

rate of investment represent corresponding growth in

profitability? As mentioned above, the diminishing returns

from product innovation is apparent. However, the internal

dimension also poses as much of a problem. With its great

freedom, research and development are divided into small

teams which are free to pursue their interest with little

reference to “how it will fit into a market, what the product

can do, how well it will function or how it could be used by

customers.” Secret projects without management knowing

about them until “secret reports” are

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