Sony Corporation - Restructuring Continues, Problems Remain
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Case Code: BSTR361 Case Length: 22 Pages Period: 1995-2009 Pub Date: 2010 Teaching Note: Not Available |
Price: Rs.400 Organization: Sony Corporation Industry: Consumer Electronics Countries: Japan Themes: Organizational Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Seven out of eight years, Sony has failed to meet its own initial operating profit forecast. This is probably the worst track record amongst most major exporters. That means that either management is not able to anticipate challenges... or they fail on execution almost every time. Either way, it does not reflect well on Sony's management."
- Atul Goyal, Analyst, CLSA, in January 2009.
Sony in Crisis, Again
In May 2009, Japan-based multinational conglomerate, Sony Corporation (Sony) announced that it posted its first full year operating loss since 1995, and only its second since 1958, for the fiscal year ending March 2009. Sony announced annual loss of ¥ 98.9 billion, with annual sales going down by 12.9% to ¥ 7.73 trillion. Sony also warned that with consumers worldwide cutting back on spending in light of the recession, the losses could be to the extent of ¥ 120 billion for the year ending March 2010.
Sony's announcement came after the company had announced a major reorganization plan in February 2009. Sony had gone through a series of reorganization programs starting from the year 1994, the aim being to improve the financial performance and competitiveness of the company. However, most of them failed to achieve the desired results. Analysts blamed the silo culture, which prevented different divisions in Sony from communicating and cooperating with each other, for the company's problems.
Howard Stringer (Stringer) became the first non-Japanese CEO of Sony in March 2005 and he announced a major reorganization in September 2005.
The reorganization focused on revitalizing the electronics business of the company and on improving profits by reducing business categories and product models. It also aimed at removing redundancies and overlaps in business processes by focusing resources only on the company's high growth business like HD products, mobile products, semiconductor/key component devices, and network-enabled products and appliances...
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