Vertical Integration at Sony

Topics: Sony, PlayStation 3, Sony Pictures Entertainment Pages: 3 (940 words) Published: September 10, 2008
Vertical Integration
Back in 2002, Sony geared themselves toward a vertical strategy as reported by Rob Weisenthal, VP and CFO of Sony Corp. of America, “Under the USA umbrella, we undertook a number of vertical initiatives for each operating division. These have already produced significant operational streamlining and financial performance improvements.” As discussed in his release, Weisenthal talked about Sony Pictures Entertainment and their strategy to restructure television operations, where core programming competencies were focused on. Film and television digitalization efforts have been expanded and have engineered a significant reduction in their corporate overhead. In addition, he mentionted that Sony Music has made long strides in manufacturing consolidation, overhead reduction and the huddling of international offices. Between the two sectors of operation Sony has saved an average of $125 million by integrating its operations in a vertical fasion. In addition to these vertical initiatives, under the Project USA umbrella, Sony has begun a set of horizontal initiatives across the operating companies that will result in the creation of several shared platforms. Each of our divisions will share in the scale economics for all common services. These platforms include (2002): - Logistics: The logistics platform will enable integrated supply chain management. All operating divisions are working towards greater consolidation of manufacturing, distribution, and transportation operations. - Purchasing: The purchasing platform will increase buying power through joint purchasing contracts. This initiative has already resulted in significant savings in expenses related to travel, part-time personnel, usage of external consultants and legal fees. - Media-Buying: With respect to media buying, Sony consolidated media planning and spending dollars of U.S. and Canadian operations for Electronics, Music, and Pictures divisions with Universal-McCann. Savings...
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