What Made Sony one of the Leading Companies in Global Electronics Industry?

Strategic Management – MT-560

Soumyadipto Halder

Student no - 16117743

Case : Sony Corporation – Future Tense?

What made Sony one of the leading companies in global electronics industry?

Sony started in the year 1946 with a capital of ¥ 190,000 and 20 employees, initially it started with producing telecommunications and measuring equipment and later began making transistor radios and tape recorders. One of the key focuses from its start was on product innovation and offering high quality product, which added as one of the factors of its success. Over decades Sony brought very innovative products into the markets. The Introduction of Trinitron Color TV in 1968 was very successful and remained as a market leader till mid-1900s; Sony was even successful in launching the world’s first compact disc player. Walkman was a groundbreaking product keeping itself in the top position in portable music player since launch of iPod in 2003, having more than 200 million of unit’s sales. There was other product like PlayStation, Digital Handycam that gave an edge to Sony.  Its also shows market dominance with its global expansion plans to USA with subsidiaries and manufacture units being set up abroad.

What are the main reasons behind the Downfall?

In 2009 Sony  has posed its first full year operating loss since 1995, with an annual loss of 98.94 billion Yen with sales going down by 12.9%. Sony at this time had lost some of the major Leadership positions in key products like televisions and media player. There are a few factors, which are responsible for the downfall. Primary being ‘Silo Culture’ creating a major barrier in the various departments of the organization thus this resulted in Sony failing to bring out innovative products on time to suit the changing needs and preferences of consumers, though it had all the required competencies. The divisions were not united among themselves creating boundaries, which had to be brought down for survival if it has to survive in the complex technology world. The financial crisis in 2008 was also one of the factors debated for its downfall. Sony’s negligence in importance market research came at a cost; the company was mostly taken by the huge demand of its innovative product keeping a blind eye to the consumer preferences and future challenges. Sony also failed to launch its online music store due its ‘silo culture’ before the launch of the iPod in spite of having its resources, even though it launched the music store ‘ Connect’ there was a big format and compatibility problem with one group focusing on mp3 format and the other ATRAC there was even problems with the software after its launch which was outsourced to a startup for fixing but Sony’s employees were not cooperative thus Connect stopped selling music in March 2008. Sony was a major player when it came to televisions which was gradually overtaken by Samsung and LG  when the market was slowly turning towards flat screen televisions and LCDs Sony was busy perfecting its Trinitron CRT. Samsung was now the most popular consumer electronics brand overtaking Sony in 2005. Tough later Sony launched WEGA and BRAVIA however it was priced too high. Even looking into the gaming console segment Sony play station 3 brought up its product on plates nearly after one year from launch of Xbox 360 and Nintendo’s Wii. The slack was due to again ‘Silo Culture’ and incorporation of high performance in the gaming consoles, later it came to realize that customers are more keen on the fun factor than a superior product.  Sony even came up with an E-Reader  which was quite innovative  with better dimensions and could store content upto 80 books also boasted the e-ink feature giving the user similar experience reading a book however the titles released were very limited and there were difficulties in download and navigation as competitors like Amazon came up with better product thus winning the segment.

SWOT Analysis

Strength (internal)

Strong Band image – Sony and a very strong market reach.

International presence – Having various global expansion plans setting up subsidiaries and manufacturing units.

Resources  - Various resources among the corporation with various departments.

Innovative – Focusing on innovative products can be seen as a game changer

Weakness (internal)

Management Structure – A difficult to manage management structure with ‘Silo Culture’ among departments.

Market research negligence – Sony was neglecting the product trends and was more focused in developing and modifying its own product.

Opportunity (external)

Emerging markets - New market in Developing countries like India and China.

Wide range of departments – There are various departments which may compliment each other, e.g. presence both Entertainment and electronic thus creating better opportunity for users who are looking entrainment in the digital field.

Threats (external)

Restructuring   – Restructuring the organization may pose as a threat questing the company motto, even may create staffing problem.

Competition – There is a number of new companies taking a market edge and posing as a threat.