Sony in the New Millennium

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SONY CASE STUDY

QUESTION

Outline and evaluate Sony’s strategic position at the end of the case study, including its management of change. What strategic changes (if any) would you now recommend to Sony’s Management?

Introduction

1.1Sony’s fate through the 1990s has been characterised by grave vagaries of events in its fifty years of operation. Enormous successes from 1946 has been attributed to the collaborative venture between Masaru Ibuka and Akio Morita whom due to health issues had to retire from the scene for another generation of management. Diversification into the US saw Sony’s biggest demise in the year 1995 to the tune of US$3.3 Billion. Sony’s conglomerate incorporation of multimedia facilities into its stream of entertainment business is till date yielding sizable profits from the bumper shares of the new economy E business. Currently, the company’s innovative foresight into the future of digital electronics is peaked by fierce competition from US consumer electronic magnate Apple and South Korea’s Samsung Electronics on the international front hence Sony needs to revamp its strategic positioning and restructuring activities to cut cost drastically as an attempt to sustain profits in the face of an economic turmoil judged by a US$10 Billion loss within 8 years of operation till date with a further US$6.4 Billion loss recorded for March 2012 and announced in May 2012. This analysis seeks to evaluate Sony’s various strategies with a SWOT analysis and consider Sony’s Annual Reports and Accounts Statistics from the year 1989 to 2009. Strategic recommendations for the ailing company will also be asserted at the end of the analysis

SWOT ANALYSIS on PRODUCT-BASED

SONY’s STRENGTHS

1.3One of Sony’s greatest achievements is set from its game business with the PlayStation game console launched in December 1994. Even with precedence by Sega and Nintendo as well as antagonistic debunking of the idea by a section of Sony’s management including Michael Schulhof, it still yielded successful blockbuster sales of 50 million units worldwide by 1998, with its advanced innovation and processor power. This captured 55% of world games market, with a 10% and 42% of total revenue and profits respectively for Sony.

Sony’s November 1995 strategic partnership with US Intel saw a surge in its strength in the PC Industry through the 1997 introduction of Sony VIAO products as a computer business pace booster. This corroborated Idei’s e-Sony vision into the digital future. The VIAO products featured a desktop mini-tower and a laptop which made fairly successful sales largely in Japan and is still enjoying a sustained advantage till date amidst competition from Apple’s Mac book among others.

“Interconnectivity” among Sony’s various devices also strengthened its growth since most people bought products as a complementary use in view of its interconnected designed purpose . Thus products has effective corresponding features used to modify one another for example, Sony handycam is connected directly to the VIAO to facility electronic music sharing via cable or wireless connections.

The Joint venture between Sony and Swedish mobile phone company Ericsson saw a great strength in commercial success. With Ericsson’s active telecom and wireless operations and Sony’s dexterity in consumer electronics and marketing, the combined effect resulted in the 2005 walkman branded phone W800 development which featured the mobile phone, walkman music player, FM radio and digital camera all incorporated into one shell. In all, the product yielded profits of €206million plus a €2.3billion sales revenue.

SONY’s WEAKNESSES

1.4In recent years, there has been a significant fall in the market share of Sony Ericsson’s subsequent mobile brands after the W800 bumper profit in 2005. Given fierce competition from Samsung and Apple, the onetime mobile giant Sony has been relegated...
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