Restructuring Sony

The music business had a CAGR of 10.5% while the pictures business had a CAGR of 17%. Significant gains were, however, recorded by the games and insurance business. The games business registered a CAGR of 215%, while the insurance business registered a CAGR of 31%. In the late 1990s, Sony's financial performance deteriorated. For the financial year 1998-99, its net income dropped by 19.4%. During that period, Sony was banking heavily on its PlayStation computer game machines. It was estimated that the PlayStation (Games business) accounted for nearly 42% of Sony's operating profits and 15% of total sales for the quarter-ended October-December 1998. In the late 1990s, many companies across the world were attempting to cash in on the Internet boom...

Sony's key business divisions - Consumer Electronics division, Components division, Music division and the Games division - were re-organized into network businesses. This involved the reduction of ten divisional companies into three network companies, Sony Computer Entertainment (SCE) Company and the Broadcasting & Professional Systems (B&PS) Company (Refer Exhibit I). SCE Company was responsible for the PlayStation business while the B&PS Company supplied video and audio equipments for business, broadcast, education, industrial, medical and production related markets. The restructuring aimed at achieving three objectives - strengthening the electronics business, privatizing three Sony subsidiaries, and strengthen the management capabilities...