The electronics and media giant Sony was struggling through the late 1990s and early part of the 2 century. With each disappointment, it seemed that Sony鈥檚 management launched another restructure鈥?of the company. By 2003, commentators were beginning to ask whether restructuring was part of the solution or part of the problem. How should Sony be managing its strategic renewal? (by Using the SWOT and the five forces)
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As conditions change, Sony has to change accordingly, because their conventional strategy won鈥檛 transcend to the internet-enabled model.
Mitchell Levy, author of
The Value Framework
Introduction
For the first quarter ending 30 June 2003, Japan- based Sony Corporation (Sony) stunned the corporate world by reporting a decline in net profit of 98 per cent. Sony reported a net profit of 9.3 mil lion compared to 楼1.1 billion for the same quarter in 2002. Sony鈥檚 revenues fell by 6.9 per cent to Y1.6 trillion the corresponding period. Analysts were of the opinion that Sony鈥檚 expenditure on its restructuring initiatives had caused a significant dent in its profitability. In the financial year 2002鈥?3, Sony had spent a massive 楼100bn on restructuring ( 拢5OOm; 鈥?鈧?50m). Moreover, the company had already announced in April 2003 about its plans to spend another 1 trillion on a major restructuring initiative in the next three years.
Analysts criticized Sony鈥檚 management for spending a huge amount on frequent restructuring of its c electronics business, which accounted for nearly two-thirds of Sony鈥檚 revenues. In 2003, the sales of the consumer electronics division fell by 6.5 per cent. Notably, Sony鈥檚 business operations were restructured five times in years. Analysts opined that Sony鈥檚 excessive focus on the m consumer electro (profit margin below 1 per cent in 2002鈥?3), coupled with increasing competition in the consumer electronics industry was severely affecting its profitability. t
However, Sony鈥檚 officials felt that the restructuring measures were delivering the desired result: According to them, the company had shown significant jump in its profitability in the financial year 2002-2003. Sony reported a net income of 鈥? 15.52bn in the fiscal 2002鈥?3 compared to Y15.3lbn in 2001鈥?2. (See 鈥榯able I for Sony鈥檚 key financials in the past 13 years.) A statement issued by Sony said, 鈥楾he improvement in the results was
Partly due to I its electronics business especially in the components units
At the beginning of the new millennium, Sony faced increased competition from W and foreign players (Korean companies like Samsung and LG) in its electronics and entertainment businesses. The domestic rivals Matsushita and NEC were able to capture a substantial market share in the internet-ready cell phones market. Analysts felt that the US-based software giants like Microsoft and Sun Microsystems and the networking major Cisco system posed a serious threat to sony鈥檚 home entertainment business.
Background
On 7 May 1946, Masaru Ibuka (Ibuka) and Akio Electronics, Entertainment and Insurance and Morita (Morita) co-founded a company called F, (see Table 2). Each business division was Tokyo Tsushin Kogyo Kabushiki Kaisha (Tokyo cn into product groups. The electronics Telecommunications Engineering was split into four product with an initial capital of Y190, 000 in the city of Nagoya, Japan. They gave importance to product innovation and decided to offer innovative high quality products to their consumers.
The founders introduced many new products division consisted of Sony鈥檚 life insurance and like the magnetic tape recorder, the 鈥榩ocket able finance business. pro- radio and more. By the 1960s, the company had established itself in Japan and changed its name to Sony corporation. During the 1960s, the company focused on globalization and entered the US and European markets. During this period, Sony developed and introduced the Walkman, which was a huge success. It significantly boosted Sony鈥檚 sales during the 1 By the mid-1980s, Sony鈥檚 consumer products were marketed in Europe through subsidiaries in the UK, Germany and French.
In 1989, Norio (Ohga) took over as the chairman and CEO of sony from Morita. Under Ohga, Sony began to place greater emphasis on process innovations that improved efficiency and controlled product costs. By 1994, Sony鈥檚 businesses were organized into three broad divisions 鈥?Electronics; Entertainment and insurance and Finance. Each business division was in turn spilt in to four product group which produced a wide variety of products. The entertainment division, which consisted of innovation and decided to offer, high groups, which produced a wide variety of products. The music group and the pictures group, made quality products to their consumers. Music videos and motion pictures. The finance division consisted of sony鈥檚 life insurance and finance business. The company鈥檚 growth was propelled by launch of innovative products and by its foray into the music and films business.
Restructuring of electronics business
(1994)
Under Ohga鈥檚 leadership, Sony witnessed negligible growth in sales during 1990 and 1994. Sales and operating revenues improved by only 2 per cent during that period. However, the net income and operating income registered a drastic fall of 87 per cent and 67 per cent respectively. Analysts felt that the stagnation in the electronics industry coupled with factors such as the recession in the Japanese economy and the a appreciation of the yen against the dollar led to the deterioration in the company鈥檚 performance. It was noticed that in the electronics business the revenues of the video and audio equipment businesses were coming down or were at best stagnant the television and other groups were showing signs of improvement. The 鈥極thers鈥?group, which consisted of technology intensive, product such as computer products; video games鈥?semiconductors and telecom was performing very well and had a growth rate of nearly 40 per cent. In order to focus on the high growth businesses, Sony announce major changes in the structure of its electronics business in April] 1994.
Sony鈥檚 management felt that the 鈥楪roup鈥?structure which had fuelled the company鈥檚 growth in 1980s, was proving to be edundant_44dynamic business environment of the new structure, the product groups of the electronics businesses were regrouped into eight divisional companies. The eight companies were the Consumer Audio & Video Products company, the Recording Media & Energy Company, the Broadcast Products Company, the Business Industrial Systems Company, the InfoCorn Pro-ducts Company, the Mobile Electronics Company, the Components Company, and the Semiconductor Company. The restructuring exercise laid special focus on the products that formed the
鈥極thers鈥?group.
Each divisional company had its own goals and was responsible for all its operations (production, sales and finance). The presidents of the divisional Companies were authorized to decide upon the investments to be made up to a prescribed limit. They could also take decisions regarding the HR issues for all employees up to the level of divisional director. In addition, they were made responsible for the financial performance of the companies headed by them. Sony鈥檚 presidents were expected to perform a role similar to that of CEOs and were accountable to shareholders. The restructuring of Sony鈥檚 electronics business was aimed at improving the company鈥檚 focus on high potential products and expediting decision making process to make the company more responsive to changing market conditions, following the restructuring, the number of layers in the decision-making process was reduced from six to a maximum of four layers. Commenting on his responsibilities within the new structure, Ohga said, 鈥楩irst of all, I would like for the divisional presidents to run their companies as if they were reporting to shareholders once a year at a share-holders鈥?meeting. My role will be to review their
Strategies, examine any points I feel should be questioned and provide advice when and where necessary.鈥?The main goals of Sony鈥檚 newly formed organization system were explained in a memorandum entitled 鈥楾he Introduction of the Company within a Company System. Ohga said, 鈥楤y revitalizing its organization, Sony aims to introduce appealing products in the market in a timelier fashion while further strengthening cost-competitiveness companywide.鈥?In 1995, after the implementation of the divisional company structure in the electronics business, changes were announced in Sony鈥檚 management structure. Under the new framework, Sony was to be led by a team of executives at the top management level. The team included the鈥?Chairman & CEO, Vice Chairman, President &company Operating Officer (COO), Chief Officers and the presidents of divisional companies. Analysts felt that Sony鈥檚 management took this measure to reduce the company鈥檚6 on a single leader. In March 1995, Nobuyuki Idei (Idei) was appointed the President and Chief Operating Officer of Sony.
Despite the organizational changes, the financial performance of Sony deteriorated in 1995. For the fiscal year ending March 1995, Sony reported a huge net loss of 293.36bn. The write off of goodwill during 1994, the poor performance of the Pictures group and the strength of the yen were regarded as major reasons for this loss. During 1994, the yen was at an all-time high against the dollar, making Sony鈥檚 exports uncompetitive. Ana lysts also felt that Sony鈥檚 consumer electronics business lacked new, innovative products.
Given this poor financial performance, the top management of Sony decided td integrate the company鈥檚 various domestic and global business functions such as marketing, R&D, finance, and HR. The functions of its numerous divisional companies were thus brought under the direct purview of headquarters. Idei also decided to strengthen the existing eight-company structure and to lay more emphasis on R&D in the IT field. He felt that Sony needed to focus on developing IT-related businesses. Accordingly, Sony鈥檚 management reorganized the existing structure to create a new ten-company structure.
The ten-company structure (1996)
In January 1996, a new ten-company structure was announced, replacing the previous eight-company structure (see Table 5). Under the new structure, the previous Consumer Audio & Video (A&V) company was split into three new companies 鈥?the Display Company, the Home AV Company and the Personal AV Company. A new company, the Information Technology Company, was created to focus on Sony鈥檚 business interests in the PC and IT industry. The Infocom Products Company and the Mobile Electronics Company were merged to create the Personal & Mobile Communications Company. The other companies formed were the Components & Computer Peripherals Company (formerly called the Components Company), the Recording Media & Energy Company, the Broadcast Products company the Image & Sound Communications Company (formerly called the Business & Industrial Systems Company) and the Semiconductor Company.
In order to devise and implement the corporate strategies of the Sony Group, an Executive Board was created. 鈥榣 hoard was chaired by ldei. The other members of the board included the Chief Human Resources Officer, the Chief Production Officer, the Chief Marketing Officer, the Chief Communications Officer, the chief Technology Officer, the Chief Financial officer, the Executive Deputy President & Representative Director and the Senior Managing Director.
In an attempt to consolidate the marketing operations of Sony, the marketing divisions that belonged to the previous organizational setup were spun off to create three new marketing groups 鈥?the Japan Marketing Group (.JMG) the international Marketing & Operations group (IM&O) and the Electronic Components & devices Marketing Group (ECDMG). The 1MG was responsible for all marketing activities in Japan for five companies 鈥?the Display Company, the 1-lome AV Company, the Information Technology Company , the Personal AV Company arid the Image & Sound Communications Company. The INI&O was responsible for supporting all overseas marketing efforts for these companies. The ECDMG oversaw the world wide marketing operations for the Semiconductor Company and the Components & Computer Peripherals Company. Analysts felt that this consolidation was done to separate Sony鈥檚 Japanese marketing operations from its worldwide operations so that the company could operate in a focused manner.
To centralize all the R&D efforts of Sony, the previous R&D structure (in which each company had its own R&D division) was revamped and three new corporate laboratories were established. The laboratories were the Architecture Laboratory (responsible for carrying out R&D for software, network and IT-related technologies), the Product Development Laboratory (R&D for product development in AV businesses) and the System & LSI Laboratory (R&D for LSI and system design, the basic components of hardware products). In addition, a new D21 laboratory was established to conduct long-term R&D for future oriented technology intensive products.
Sony also gave emphasis to grooming young, talented people to take up top management positions. The company also introduced the concept of 鈥榲irtual companies鈥?鈥?temporary groups consisting of people from different divisions for launching hybrid products. Sony applied this idea when developing the latest generation M For the financial year 1995.-96 Sony registered a 15 per cent increase in revenues and became profitable again.
in April 1998, a new organization, Corporate Information Systems Solutions (CISS), was established to realign and upgrade Sony鈥檚 information network systems and its global supply chain. The CISS comprised an advisory committee of individuals from management consultancy firms and Sony鈥檚 CISS representatives. The committee members advised the President on technological and strategic issues related to CISS. Representatives of the CISS were placed in all divisional companies to accelerate the implementation of corporate IT projects.
During early 1998, Sony formed Sony Online Entertainment in the US to focus on internet- related projects. In May 1998, Sony changed the composition of its board of directors and established the new position of Co-Chief Executive Officer (Co-CEO). Idei was appointed Co-CEO Idei鈥?reshuffled the management system to facilitate speedy decision making, improve efficiency, and provide greater role clarity to managers. The new system separated individuals responsible for policy-making from those who were responsible for operations.
Under the new system, Idei as responsible for planning and designing鈥榮 strategies and
supervising the growth of e-business. Along with Ohga , he -had to supervise the performance of the entire Sony group. president Ando was made responsible for overseeing Sony鈥檚 core electronics business while Chief Financial Officer (CFO) Tokunaka was made responsible for the company financial strategies and network businesses. In addition, the top management positions of Sony鈥檚 global subsidiaries, which were previously called Corporate Executive Officers, were redesigned Group Executive Officers. Explaining the rationale for these changes, a Sony spokesman said, 鈥楾hese changes are aimed at making Sony鈥檚 management more agile.
The implications
From 1995 to 1999, Sony鈥檚 electronics business (on which the restructuring efforts were focused) grew at a compounded annual growth rate (CAGR) of 8.55 per cent (see Table 6). The music business had a CAGR of 10.5 per cent while the pictures business had a CAGR of 17 per cent. Significant gains were, however, recorded by the games and insurance business. The games business registered a CAGR of 215 per cent, while the insurance business registered a CAGR of 31 per cent.
In the late 1990s, Sony鈥檚 financial performance deteriorated. For the financial year 1998鈥?9, its net income dropped by 19.4 per cent. During that period, Sony was banking heavily on its PlayStation computer game machines. It was estimated that the PlayStation (Games business) accounted for nearly 42 per cent of Sony鈥檚 operating profits and 15 per cent of total sales for the quarter October鈥?December 1998.
In the late 1990s, many companies across the world were attempting to cash in on the internet boom. At that time, Sony鈥檚 management felt the need to establish a link between its electronics business (TVs, music systems, computers) and its content-related businesses (music, video games, movies and financial services) by making use of the internet. The management felt that in future, the revenues generated by internet-related businesses might even surpass those earned through the consumer electronics business. It wanted to use the internet as a medium for selling its electronic products as well as its content (music, movies and so on).
In order to achieve this, Sony announced another reorganization of business operations.
Analysts felt that Sony was in a good position to exploit the opportunities offered by the internet sTi-ice the company already had an established position in the electronics and content-related businesses.
The unified-dispersed management model
In April 1999, Sony announced changes in its organizational structure. Through the new frame work, the company aimed at streamlining its business operations to better exploit the opportunities offered by the internet. Sony鈥檚 key business divisions 鈥?Consumer Electronics division, Components division, Music division and the Games division 鈥?were reorganized into network business This involved the reduction of ten divisional companies into three network companies, Sony Computer Entertainment and the Broadcasting & Professional Systems (B&PS) Company (see Exhibit 1). SCE Company was responsible for the PlayStation business while the B&PS Company supplied video and audio equipment for business, broadcast, education, industrial, medical and production related markets. The restructuring aimed at achieving three objectives 鈥?strengthening the electronics business, privatizing three Sony subsidiaries, and strengthening the management capabilities. The restructuring also aimed at enhancing shareholder value through 鈥榁alue Creation Management鈥?
Strengthening the electronics business
The three network companies created were the Home Network Company, the Personal IT Network Company and the Core Technology & Network Company. Each network company was governed by a network company management committee (NCMC) and a network committee board (NCB). The NCMC was responsible for developing management policies and strategies. Its members included the officers and presidents of the concerned network company. The NCB was responsible for managing the day-to-day operations of the network company while keeping in mind the overall corporate strategy of the entire organization. Each NCB was chaired by the concerned company鈥檚 President & CEO, Deputy President, President and Representative Director, two Executive Deputy Presidents and Representative D, and Corporate Senior Vice President.
The new structure aimed at decentralizing the worldwide operations of the company. The corporate headquarters gave the netw5 companies the authority to function as ai entities in their corresponding businesses. To facilitate more functional and operational autonomy, the corporate headquarters also transferred the required support functions and R&D labs to each network company.
To give a further boost to Sony鈥檚 electronics business, the management created Digital Net work Solutions (DNS) under the purview of head quarters. The role of DNS was to create a network business model by charting strategies and developing essential technologies for exploiting the opportunities offered by the internet. The basic aim of creating DNS was to develop a network base that would provide customers with digital content (such as music and movies) and financial services.
Privatizing Sony鈥檚 subsidiaries
As part of its strategy to promote functional and operational autonomy and to devote more attention to units which contributed significantly to its revenues and profits, Sony decided to convert three of its companies 鈥?Sony Music Entertainment a (Japan), Sony Chemical Corporation (manufactured printed circuit boards (PCBs), recording media ; and automotive batteries), and Sony Precision
Technology (manufactured semiconductor inspection equipment and precision measuring devices) into wholly owned subsidiaries of Sony. In addition, Sony converted SCE, which was jointly owned by Sony and Sony Music Entertainment (Japan), into a wholly owned subsidiary of Sony.
Strengthening the management capability
To strengthen the management capability, Sony clearly demarcated the roles of headquarters and the newly created network companies. Accordingly, distinction was made between the strategic and supp Sony鈥檚 headquarters was split into two separate units 鈥?Group Headquarters and Business Unit Support.
The role of Group Headquarters was to oversee group operations and expedite the allocation of resources within the group. The support function such as accounting, human resources and general affairs, were handled by the network companies so that they could enjoy more autonomy in their operations. Significant long-term R&D projects were directly supervised by the headquarters, while the immediate and short-term R&D projects were transferred to the concerned network companies. In order to evaluate the performance of the net work companies, a value based performance meas urement system was introduced.
The implications
While pursuing its restructuring efforts, Sony started developing products which were compatible with the internet. Its electronic products, such as digital cameras, personal computers, music systems; and Walkman, were made web compatible.Through its website, www.sony.net, consumers could participate in popular television game shows listen to music, and ,d songs and movie trailers, Sony also venture into e-business with the acquisition of Sky Perfect Communications. While focusing on offering internet-enabled products, Sony also attempted to increase internet penetration by offering internet connection at lower cost and higher speed to consumers in urban areas.
Sony鈥檚 restructuring efforts in 1999 were well received by investors. Following the announcement of the restructuring programme, Sony鈥檚 stock- prices nearly tripled. This positive trend continued even in 2000. By March 2000, its stock prices were at a high of $152. Having already offered its PlayStation game console on the internet, Sony鈥?launched its PlayStation 2 (PS2) video game console in Japan in March 2000. The PS2 sold 980,000 units within the first three days of its launch.
However, Sony still faced problems since its other businesses, ii hiding electronics, movies, personal computers, and mobile telecommunications, were not performing well. Analysts felt that the low internet penetration rate in Japan (estimated to be 13 per cent in 1999) was proving to be a major hurdle for Sony.
Consequently,Sony鈥檚 financial performance deteriorated by the end of 1990s. For fiscal1999鈥?000, Sony鈥檚 net income fell to Y121.8 compared to Y l 79bn in the fiscal 1998鈥?9. This resulted in a major fall in its stock prices. By May2000, Sony鈥檚 stock prices fell by 40 per cent to$89. Analysts were quick to criticized Sony鈥檚 efforts towards transforming itself into a web-enabled Company. They commented that the company had created more hype rather than taking a few significant steps in this regard.
In response financial problems, Sony announced a reshuffle in its top management. Idei became the Chairman and Chief Executive Officer of Sony. Ando, who headed Sony鈥檚 PC division,was made the President, while Tokunaka, who previously headed the PlayStation unit, was made the Chief Financial Officer of Sony.
Sony also undertook a massive cost-cutting exercise. Its global manufacturing facilities were reduced from 70 in 1999 to 65 in 2001. Sony planned to further bring down the number of manufacturing facilities to 55 by the end of 2003.This move would result in the elimination of17,000 lobs. While implementing these measures, the company had to deal with severe resistance from employee unions and local governments (in areas where jobs would be eliminated).
Despite the above measures, Sony鈥檚 financial condition did not show any significant improvement in 2001. The company was severely affected by the slowdown in the IT industry during2000鈥?1, which led to a decline in the demand fore computer-related products. As a result, in spite of a 9.4 per cent increase in revenue in the fiscal2000鈥?1 (mainly due to the improved sales of the PlayStation games console) Sony鈥檚 net income dropped significantly from l21.83bn in the fiscal1999鈥?000 to y16.75bn in the fiscal 2000鈥?1.
Analysts commented that sony required a new business model. The company had immediately to take concrete measures to increase its net income. Sony鈥檚 management also felt that with the emergence of net-compatible devices like cellular phones, audio and video gadgets and laptops, PCs were losing their charm, It felt that in the emerging age of 鈥榖roadband鈥?the demand for the above products was likely to increase in future. Sony鈥檚 management felt that in order to boost profitability and exploit opportunities offered by the broadband era, there was a need for yet another organizational restructuring.
Restructuring efforts in 2001
Sony announced another round of organizational restructuring in March 2001. The company at transforming itself into a Personal Broadband Network Solutions company, by launching a wide range of broadband products and services for its customers across the world. Explaining the objective of the restructuring, Idei said, 鈥楤y capitalizing on this business structure and by having businesses cooperate with each other, we aim to become the leading media and technology company in the broadband era.鈥?The restructuring involved designing a new headquarters to function as a hub for Sony鈥檚 strategy, strengthening the electronics business, and facilitating network based content distribution.
New headquarters to function as a hub for Sony鈥檚 strategy
Under the new structural framework Sony鈥檚 headquarters was revamped into a Global Hub centered on five key businesses 鈥?electronics, entertainment, games, financial services and internet/communication service. The primary role of the Global Hub (headed by the top management) was to devise the overall management strategy of the company.
Sony鈥檚 management decided to integrate all the electronics business related activities under the newly created Electronic Headquarters (Electronics HQJ). In order to achieve the convergence of Audio Video Products with IT (AV/IT convergence), Sony devised a unique strategy called 鈥? Network Gateway鈥? Under this strategy, the games and internet/communication service businesses were combined with the electronics hardware business so that innovative products could be developed and offered for the broadband market. The three businesses were under the supervision of Ando.
In order to provide support services or the entire group, a management platform was created, which consisted of key support functions in diverse fields such as accounting, finance, legal, intellectual copyrights, human resources, information systems, public relations, external affairs and design. The management platform was later split into the Engineering, Management and Customer Service (EMCS) Company and the Sales Platform (which comprised the regional sales companies and region-based internet direct marketing functions).鈥橳he management platform was headed by the Chief Administrative Officer, a newly created position.
Sony鈥檚 management also converted the product- centric network companies into solution-oriented companies by regrouping them into seven companies. Group resources were allocated among the network companies on the basis of their growth potential.
Strengthening electronics business
To enhance the profitability of the electronics segment, Sony鈥檚 management decided to give emphasis to product development efforts. The management felt it was also essential to enhance the quality of the electronic devices manufactured. In order to achieve this, Sony鈥檚 management devised an innovative business model called the Ubiquitous Value Network,鈥?which connected the company鈥檚 existing hardware, content and services through an agency of networks. Sony planned to develop a wide range of products which could be connected through this network.
Network-based content distribution
Like the electronics, games and internet/communication service businesses, the entertainment and financial services businesses were also developed in a network compatible mariner to facilitate electronic content distribution. In the entertainment business, music and movies were converted into a digital format and distributed over the internet (apart from being distributed through traditional channels such as music stores and theatres). In Japan, Sony Music Entertainment launched online music through its website. This website allowed customers to download popular songs for a fee. In the financial services business, Sony Life Insurance Japan launched the 鈥楲ife Planner鈥?consultancy sys tem which offered personalized financial services online to its customers. Sony Life Assurance Japan also went online and started selling its insurance policies over the internet.
The implications
Soon after the reorganization, Sony launched some innovative products to cater to the broad band market. For instance, in 2001, the company launched a series of internet-compatible mobile phones. However, the product was unsuccessful (owing to problems in the software used in the mobile devices) and in early 2002 Sony had to recall three batches of phones sold to Japanese companies. In consequence, Sony had to write off $ 110 m in the quarter ending June 2002.
In April 2003, Sony announced another major restructuring exercise (to be carried out in the next three years) in order to strengthen its corporate value (see Exhibit 3). Following this announcement, Sony was reorganized into seven business entities 鈥?four network companies and three business groups (see Exhibit 4). These business entities were given the authority to frame short-term and long-term strategies.
According to analysts, the company鈥檚 financial performance did not improve in spite of the frequent restructuring by Sony鈥檚 management. For the financial year 2001鈥?2, Sony鈥檚 operating income fell by a significant 40.3 per cent while its revenues registered a marginal increase of 3.6 per cent. According to a Business Week report, sales of Sony鈥檚 most profitable products 鈥?the PlayStation and the PS2 game consoles 鈥?were likely to fall (see Exhibit 5).
Due to Sony鈥檚 poor financial performance, the management planned to further reduce the number of manufacturing facilities and shift some production activities out of Japan. Analysts also criticized Sony for being a diversified business conglomerate engaged in several businesses from semiconductors to financial services. They felt that the company should focus on a few highly profit able businesses like games, insurance, and audio- video equipment and hive off the unprofitable businesses.
Analysts felt that spending huge amounts of money on restructuring was not justified, particularly since the restructuring exercise had not yielded the expected results. In 2001, restructuring efforts had cost the company fl00bn; and the proposed restructuring in April 2003 was expected to cost another Yl 4Obn.
Analysts also felt that the convergence of consumer electronics, PCs and the internet was not only opening up new opportunities for Sony but also creating more competition for its core businesses. As Sony took steps to strengthen its networking capabilities, the company faced new forms of competition in both domestic as well as foreign markets. For instance, in the US, software giants like Microsystems (as well as a few startups) were planning to enter the home entertainment market. Even Cisco Systems, which provided network solutions, had started manufacturing consumer electronics products. A Business Week report said that Sony lacked any distinctive competencies in the internet-related businesses. It was neither an aggregator of content like Yahoo!, nor a limited-product vendor with an efficient distribution network such as Dell.
distinctive competencies in the internet-related businesses. It was neither an aggregator of content like Yahoo!, nor a limited-product vendor with an efficient distribution network such as Dell. Sony should do SWOT(Strength,Weakness,Opportunity,Threa... analysis to improve itself. What makes SWOT particularly powerful is that with a little thought, it can help you uncover opportunities that you are well placed to take advantage of. And by understanding your weaknesses, you can manage and eliminate threats that would otherwise catch you unawares.
Discussion about Sony's strategy.
Sony's Strength is its brand name capitalise on it & technical know-how
Weakness-Not learning from competitors.
Opportunity-State of the economy is growing & overall rate of growth is healthy.Middle-class sector has risen now there is a shift in the attitudes towards consumption.
Threat-Products from the other firms comparsion with substitutes in terms of quality,price,appeal & functional performance & Marketing policies & Practices.
As per my knowledge"Discover new opportunities.
Manage and eliminate threats." hi check this link its good
http://buyingandsellingshares.blogspot.c...
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