Sony Restructures Itself Sony was founded in 1946 as an engineering company call

Question

Sony Restructures Itself

            Sony was founded in 1946 as an engineering company called “Tokyo Tsuchin Kyogo” by Masaru Ibuka and Akio Morta. It had 20 employees and a capital of $2,500. From the beginning, the company focused on production innovation and high quality.

            Sony started off manufacturing telecommunications and measuring equipment and then transistor radios and tape recorders. When the company went international, it changed its name to Sony. Sony set up its first subsidiary in the USA in 1960 and was listed on the New York stock exchange in 1970, the first Japanese company to do so.

            Sony always had a strong culture of innovation and deeply held common values of quality and excellence. It introduced the Trinitorn Color TV in 1968; the Walkman (1979); the first compact disk play (1982); the Camcorder( 1982); the Discman portable CD player(1984); Play Station (1994); and the Digital Handycam (1993). However, Sony’s success was not to last forever. From 2000 to 2004, Sony’s shares dropped from a high of $150 to $25 due to increased global competition from relatively new products such as Samsung’s LCD and plasma televisions and Apple’s iPod. Sony was forced to make some major changes.

In 2005, Howard Stringer because the first non-Japanese CEO of Sony. Stringer was born in Wales but moved to the USA and joined Sony America in 1997, where he gained a reputation for improving the financial performance of Sony America by integrating its electronics, game and entertainment groups. When Stringer relocated to Tokyo to assume his position of CEO, he knew exactly what he had to do!! He knew that Sony was experiencing financial loss from increased competition and he was determined to make this restructuring a success. Sony was originally structured according to products, but each business product unit operated independently with its own accounting, human resources, and sales departments. There was little communications across units and frequently the technology for products was incompatible so customers complained.

            Stringer flew his executive team from Sony America to Tokyo and together they designed a restructuring process for Sony. When they were finished, Stringer announced his plan. He began by telling the employees that “In the old days, at the beginning, when Sony was new, everyone took risks and dared to be innovative. Serving the customer was important. Now, everyone finds excuses for not changing. Everyone has an excuse why things can’t be done. The customer is not important any more. People only care about themselves and protecting their own territory.”
            Stringer announced his new plan, “Sony United” and it focused on improving financial performance by changing the culture of Sony Japan so that each unit who have to collaborative with other Sony units. Stringer kept the original design of five product groups, but centralized human resources, finance, sales, and research and development under the Sony Electronics division. He believed that this would save money and allow software development across all products so that all of Sony’s products could operate seamlessly with one another. He also laid off 12,000 employees and closed 11 plants. However, the restructuring was met with resistance and change was slow—as was profitability.

            In May, 2009 Sony announced its first full year operating loss, with losses of $6.5 trillion dollars.   A month later it announced that the new Sony CEO would be Kazuo Hirai. The first thing that Hirai did was to form cross-functional teams from across all five divisions to diagnosis the current problem and to come up with solutions. After three month, the teams presented their finding to Hirari and based upon their recommendations, he announced his “One Sony” plan which was a restructuring of Sony into two business groups: 1) the Networked Products and Service Group (NPSG), which included entertainment, personal computers, mobile products, and Sony Media Software and service, and the 2) New Consumer Products Group (NCPG) which aimed to achieve profitability through product innovation and improving efficiency and speed of operations through sharing of technology and cross-functional collaboration.

Following this new restructuring plan, Sony’s gained market share and appeared to be on the road to financial profitability. It experienced three good years of market growth and a slow but steady gain in profitability.

On March 12, 2012, Sony announced that it would cut about 10,000 jobs in the fiscal year ending in March 2013. It also announced a new restructuring plan to turn the company around after posting a record $6.4 billion in losses for the 2012 fiscal year. With the job cuts and the corporate reorganization, Hirai said that he anticipates an operating profit of $2.2 billion for the current fiscal year ending March 2013.

.

Discussion Questions:

.

1. Why was Hirai more successful in leading change? What did he do that helped him to be more successful?

2.How would you describe the culture of Sony? What was Sony’s original culture? What had it become? And what role did it/does it play in the failure of Sony’s change efforts?

Explanation / Answer

Answer: 1

Hirai was more successful in leading change because the process he adapted for change was more suitable for the business and it helped them to bring the real business issues with the help of cross functional team and accordingly they developed the suitable solution for the same. The solution they developed based on the recommendations from the CFT teams.

Hirai did following things to be more successful are as below

Cross functional Approach: Hirai followed the approach of cross functional team for diagnosis the problems and developing the solution. This approach helped Hirai to understand the real cause for the business based on the experience of the cross functional team across the globe. This comes out with useful information and this information helped in developing the real solution for the Sony business.

Use of team experience: Hirai adapted the approach to use the experience of cross functional team, as they are closer with the business and they are the best people to define the problem for the Sony business in their respective regions.

Sony One is based on CFT recommendations: Hirai ‘s plan for Sony improvement is based on the recommendations of the cross functional team’s finding based on their experience and regional issues. This helped the Sony to recover from real issues.

Answer 2.

Culture of Sony: Culture of Sony is defined as the culture of different business verticals and each business verticals are working in isolation and lack of inter communications among the sub-businesses of Sony. Sony culture lacks in collaboration and synergy as a one business.

Sony’s Original Culture: The original culture of Sony was exploring innovations and delivering higher quality products for the consumers.

Sony’s Culture become: Sony culture was not in a good shape and employees are protecting themselves and they do not focus for customer satisfaction. They are finding excuses and reasons for themselves but they do not explore innovations and focus towards higher product quality and customer support.

Role played in the failure of Sony’s change efforts: The role played by the culture of Sony was significant as the Sony culture helped the organization to adapt the changes and the change was introduced and implemented successfully that helped Sony to recover from the losses and started generating the profit for the Sony business.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.