Why Did Sony Lose Its Leading Competitive Position
Why did Sony lose its leading competitive position?
One reason was that Sony’s corporate-level strategies no longer worked in its favor; the leaders of its different product divisions had developed business-level strategies to pursue their own divisions’ goals and not those of the whole company. Also, Sony’s top managers had been slow to recognize the speed at which technology was changing and as each division’s performance fell, competition between corporate and divisional managers increased. The result was slower decision making and increased operating costs as each division competed to obtain the funding necessary to develop successful new products.
By 2005, Sony was in big trouble, and at this crucial point in their company’s history, Sony’s top managers turned to a gaijin, or non-Japanese, executive to lead their company. Their choice was Welshman Sir Howard Stringer, who, as the head of Sony’s US operations, had been instrumental in cutting costs and increasing profits. Stringer was closely involved in all US top management decisions, but nevertheless, he still gave his top executives the authority to develop successful strategies to implement these decisions.
When he became Sony’s CEO in 2005, Stringer faced the immediate problem of reducing operating costs that were double those of its competitors because divisional managers had seized control of Sony’s top level decision making authority. Stringer recognized how the extensive power struggles among Sony’s different product division managers were hurting the company. So, he made it clear they needed to work quickly to reduce costs and cooperate, sharing resources and competencies to speed product development across divisions.
By 2008, it was clear that many of Sony’s most important divisional leaders were still pursuing their own goals, so Stringer replaced all the divisional leaders who resisted his orders. Then, he downsized Sony’s bloated corporate headquarters staff and replaced the top functional
One reason was that Sony’s corporate-level strategies no longer worked in its favor; the leaders of its different product divisions had developed business-level strategies to pursue their own divisions’ goals and not those of the whole company. Also, Sony’s top managers had been slow to recognize the speed at which technology was changing and as each division’s performance fell, competition between corporate and divisional managers increased. The result was slower decision making and increased operating costs as each division competed to obtain the funding necessary to develop successful new products.
By 2005, Sony was in big trouble, and at this crucial point in their company’s history, Sony’s top managers turned to a gaijin, or non-Japanese, executive to lead their company. Their choice was Welshman Sir Howard Stringer, who, as the head of Sony’s US operations, had been instrumental in cutting costs and increasing profits. Stringer was closely involved in all US top management decisions, but nevertheless, he still gave his top executives the authority to develop successful strategies to implement these decisions.
When he became Sony’s CEO in 2005, Stringer faced the immediate problem of reducing operating costs that were double those of its competitors because divisional managers had seized control of Sony’s top level decision making authority. Stringer recognized how the extensive power struggles among Sony’s different product division managers were hurting the company. So, he made it clear they needed to work quickly to reduce costs and cooperate, sharing resources and competencies to speed product development across divisions.
By 2008, it was clear that many of Sony’s most important divisional leaders were still pursuing their own goals, so Stringer replaced all the divisional leaders who resisted his orders. Then, he downsized Sony’s bloated corporate headquarters staff and replaced the top functional