4.0 Conclusion 8
5.0 Recommendations 9
6.0 Reference list 11
1.0 Introduction
This report will analyze and discuss the particular case, Sony’s Sudden Samurai by Brian Bremmer. Problems/issues related to this case will be addressed to Sony Corporation. The report first presents Sony’s background, then the company’s problems and relevant theory.
- Background of Sony
Sony is a global international company, founded in May 1947. The name, “Sony”, was an original brand name that was originally applied on Totsuko products. Chairman and CEO of the company is Howard Stringer. The major products of this company are audio, video, televisions, information and communications, semiconductors and electronic components. Company’s mission statement is to experience the joy of advancing and applying technology for the benefit of the public. (Sony Corporation 2008) The Sony Corporation engages 5 operating segments - electronics, games, entertainment, financial services and other. These make Sony one of the most comprehensive entertainment companies in the world. But for the last few years Company faced a downturn in their sales and profits. However Sony believes that through clever strategic management and diplomacy Corporation can overcome these difficulties and remain at the helm of the industry.
1.2 Problems
The main problem for Sony is slowing down of sales and profits in the last few years, because the current market in present time is much more competitive with less profit margins and lead-time for product innovation. Consequently change is needed in Sony. However, even with strategirial and structure change, the Sony spirit of innovation should remain intact because that is what made Sony grow and will make it stay strong.
The appointment of the new non Japanese CEO, who has entrepreneurial skills and prefers to take radical actions rather then just participate in ‘passive resistance, is one of the biggest issues, which lead to major changes in culture and structure of the company. As a result the company can face to the resistance to innovations which new leader can bring.
The main challenge for Stringer is to over go the resistance inside of the company. Next strategic steps should be done in order bring the company to the power. They are:
- Cost cutting, by eliminating jobs, standardizing parts, and cutting the number of suppliers.
- Moving factories in Asia, in order to get cheaper work force without allowing quality to suffer.
- Banish of the proprietary technologies, by emergent partnership with other companies, in terms of product development.
- Integration and cooperation between the divisions, which should be done by bringing executives of different company’s branches together and discussing plans and goals which can help company to rise its value.
-
And finally efficient management, which means that all these changes, should be done in a short period of time and in most effective way. Products should be refined instead of reinvented so that there would be less set up cost and greater computerization could be achieved.
2.0 School of strategic thought
The current Sony Corporation has a unique culture which is firmly rooted in its history, in its essence it is still a traditional Japanese company in many ways. There is life-time employment, with strong norms and values which in turn create strategies through their actions. Status is given instead of bonuses for superior achievement. There is also the strong seniority system such as the mentor and apprentice relationship that is typical of a Japanese firm. All this can be classified as the cultural school which sees strategy formation as a collective process. (‘Description of 10 schools of thoughts’ 2008) Collective vision and stress on human resource, which is typical of many Japanese, can be clearly seen in the mission statement, ‘to experience the joy of advancing and applying technology for the benefit of the public’ (Sony Corporation 2008). The approach of the cultural school tries to involve the various groups and departments within the company. Strategy formation is viewed as a fundamentally collective and cooperative process. (‘Description of 10 schools of thoughts’ 2008) There are limitations of this concept, such as it is vague and can feed resistance to change both of which apply to the case (Minzberg 1998).
With appointment of a new CEO the company may shift toward the Entrepreneurial school, which sees strategy formation as a visionary process. The visionary process takes place within the mind of the charismatic leader of organization such as Howard Stringer. (Mintzberg 1998) A sound vision and a visionary CEO can help an organization to sail cohesively through muddy waters, especially in these difficult years for the organization. (‘Description of 10 schools of thoughts’ 2008)
3.0 Solutions for problems/issues
3.1 New CEO/Changes in Culture
Sony brand is famous for its innovation that makes Sony the greatest company that started in post-war Japan. Their products changed everyday household lives forever. However, this consumer targeted quest for excellence and constant innovation instead of targeting mainly profit also has a lot to do with current crisis Sony is facing. There are several problems/issues faced by the company in this case study.
The major concern is the changes in management of the company. ‘With the appointment of Howard Stringer as chairman and chief executive, Sony has not only turned to a foreigner but to a strong proponent of the “content” side of the company, a move that could mark a profound shift in its strategy.’ (Associated Press 2008)
Thus it is a big issue for the company to change the culture. On the negative side Stringer lacks technical depths in electronics and he cannot possibly have hands –on in a thorny restructing in Japan, staying in New York. But Stringer has a fresh look at the company and may impose Western management practices that could radically reshape and revive Sony. (Case study)
3.2 Communication/Education
By implementing certain changes in company’s culture new CEO can face to some resistance to changes, because people are afraid of the unknown. The best approach to address resistance is through increased and sustained communications and education. For example, Stinger should meet with all managers and staff to explain reasons for the change, how it generally will be carried out and where others can go for additional information. A plan should be developed and communicated. Forums should be held for organization members to express their ideas for the plan. They should be able to express their concerns and frustrations as well. (McNamara 2007)
3.3 Leadership and Organization-wide change
Company must undertake organization-wide change to evolve to a different level in their life cycle. (McNamara 2007) The company’s change should be managed at the highest level of change, which is leading change. This means creating the change to which others must react. (Brown 1998) Sony should set the strategy to force other firms to follow them, by creating new technologies and products, raising industry standards and redefining customers’ expectations. (Brown 1998)
The Company should regenerate their strategy. According to Brown and Eisenhardt, the constant struggle with the tension between old and new in organization is an edge of time process. (1998). A more planned strategy should be adopted, which should outline the general direction of the company. Sony should make a quick shift toward the new opportunities and become a leader in this industry.
3.4 Cooperation between divisions
Stringer has long term plans for Sony. His main aim is to save the company rather then just passively look at how company is going down. His main idea is to make all company’s divisions integrate and cooperate with each other. Internally, the different Research and Development groups should cooperate more. The product line areas should also be made more compatible with one another. Crucially this can be achieved through the communication between groups and managers. Products can then be made with higher added value and longer life rather than making frequent model changes. This is also a shift from a manufacturer-orientated mentality to a consumer-orientated mentality, which is a way to save Sony’s natural resources. The brand-line compatibility also builds brand loyalty for consumers.
3.5 Cost cutting: Moving to Asia
A major idea of the new CEO is cost cutting strategy by eliminating jobs in Japan, cutting the number of suppliers and moving factories in Asia. The major way to improve profit margins is to cut cost. Sony currently has factories in the United States and Japan. Although this is good for relationship of the firm in a foreign firm and offers a chance to pay suppliers with local currencies, Sony is not fully making use of other lower cost areas in the world, especially Asian countries such as Malaysia, Thailand and the Philippines etc. By setting up factories in these countries, Sony can take advantage of their cheap labor and also get a head start in their growing consumer markets. The Company should cooperate in setting up standards in high technology areas in order to reap maximum profits and extend the technological lead-time over their fellow Asian countries. Sony would thus be regaining its leadership position and creating world-class products. Cutting costs is a result of reinventing a company, not a goal. (Taylor 2007)
3.6 Proprietary interfaces
Also Stringer wants to banish some old-fashioned thinking, like trying to control the market with proprietary technology. Every time Sony has released a product in the last few years it has had either a proprietary implementation of an open design or a completely proprietary core technology. For example, for years, Sony has been selling digital cameras, that use its proprietary, expensive, and hard-to-find "Memory Stick" rather than the more common digital memory formats. And it did not work well for the company. (Taylor 2007) So now Sony needs fully support industry standards and depend on the excellence of its products, rather than lock in, to win customers. (Case study) New products, which involve both hardware and software, should try to achieve industry wide standards. The standard may not be the best or the one created by Sony, but Sony would already have a significant head start and the standards are just a way to ensure stability to allow Sony to concentrate on product development and improvement. Consumers prefer to have the ability to choose between competitive equipment.
In relationship with the other Japanese consumer electronic firms, a more cooperative attitude should also be taken. The Company should cooperate in setting up standards in high technology areas in order to reap maximum profits and extend the technological lead-time over their fellow Asian countries.
4.0 Conclusion
In conclusion, major problems company faced are falling profits and resistance to change. Sony's main task is to integrate its talent by placing common goals and priority for this increasing competitive market. Sony has the potential to innovate into a company with international operations as well as international culture. By implementing solutions to the current problems/issues, such as cutting costs, making all parts of company to cooperate with each other, changing proprietary interfaces and bringing some innovations in company’s culture, with strategy and luck, Sony will become a modern innovative company.
5.0 Recommendations
It is recommended Sony to review the strategy beginning with renewing the corporate goals. The management should be providing the organization with specific goals and strategies for the short and long term. The new CEO should concentrate on internal relationship in order to bring changes in the sake of future of the company. Effective management must wisely overcome resistance by implementing solutions such as increased communication and education between each group and the management acting as liaison and guidance, cooperation between all divisions, development and integration of the products and building on strategy. Finally all outcomes of the new strategy should be constantly reviewed and adjusted if needed.
6.0 Reference
Brown, S and Eisenhardt, M 1998, Competing on the Edge, The President and Fellows of Harvard College, USA
Mintzberg, H 1998, Strategy Safari, Publisher, City of publication
Associated Press 2008, ‘New Sony CEO may signal strategy change’, MSNB, viewed 10 January 2008,
‘Description of 10 schools of thoughts’ 2008, 12 Manage, viewed 10 January 2008
McNamara, C 2007, ‘Basic Context for Organizational Change’, Free Management Library, viewed 14 January 2008,
Sony Company 2008, ‘Sony Corporation’, Sony, viewed 6 January 2008
Taylor, D 2007, ‘Some tips for new Sony CEO Howard Stringer’, , viewed 15 January 2008,