Sony Strategic Initiaties

“What strategic initiatives or actions would you recommend for Sony as it seeks to recover its strategic position and profitability? Why would you recommend these strategic actions?”

ACTIONS/STRATEGIC INITIATIVES

1. Review of Current Issues

2. Corporate initiatives to recover its strategic position and profitability

3. Growth Strategy/ Organisational & Structural Reform

REVIEW OF CURRENT ISSUES

• “Unlike its competitors, Sony has not produced products that I want” (Customer)

• “Sony products have many features but are difficult to use” (Customer)

• “Sony’s downturn has been caused by its inability to reduce costs effectively and by the weakening “power” of its products” (Analyst)

• “Sony is becoming less competitive in its individual businesses, as well as a total group. Is the main reason for this due to weak operations?” (Analyst)

• “The bottom line effect of reducing headcount has been limited. R&D, manufacturing and sales are activities that need to be reinforced.” (Media)

• “Different groups within Sony are developing similar products” (Analyst)

CONTRIBUTIONS TO SONY’S BUSINESS DOWNTURN

Products

“Lacking a Customer Viewpoint”

• Lack of hit products

• Development of similar products

• Over reliance on internally developed products

Technology

“Decline of Technological Strength”

• Delayed focus in semiconductors, key components, and software application areas

• Delayed development of differentiated technologies

• Decentralised and uncoordinated R&D development efforts

Organisation

Decline of Operational Power

• Focused too much on individual performance

• Gaps in communication from the Headquarters, to Coordinators, and frontline operations

• Lack of appropriate corporate governance oversight

THREE CORPORATE INITIATIVES TO RECOVER ITS STRATEGIC POSTION AND PROFITABIILTY

Customer Viewpoint

• Establish a corporate level committee to coordinate product strategies

• Eliminate cannibalisation and enable interoperability between products

• Focus resources on highly successful/winning products

• Re-examine product planning process

Make Technology No.1

• Pursue #1 market position in strategic product categories (TV, Video, Digital Imaging, Walkman)

• Increase integration of internally sourced key components with end products

Frontline Operations

• Strengthen the operational power of design, production and sales operations

STRUCTURAL REFORM PLAN

Streamlining Business Operations

• Implement restructuring plans for selected businesses; (targeted eg.15 product categories)

• Reduce number of product models; (eg. 20% reduction in product models)

• Consolidation of manufacturing sites; planned closure of manufacturing facilities to reduce costs

Headquarters and Administrative

• Staff reduction

• Sale of Assets

Recovery of Business

• Recovery of personal