Sony-Columbia Pictures: Lessons from a Cross Border Acquisition
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Case Code: BSTR119 Case Length: 17 Pages Period: 1989-2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.500 Organization: Sony Pictures Entertainment Industry: Media and Entertainment Countries: US/Japan Themes: Media and Entertainment |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background Note
On May 7, 1946, Masaru Ibuka (Ibuka) and Akio Morita (Morita) co-founded a company called Tokyo Tsushin Kogyo Kabushiki Kaisha (Tokyo Telecommunications Engineering Corporation) with an initial capital of ¥190,000. The two founders decided that they would offer innovative, high-quality products to their consumers.
They introduced many new products like magnetic tape recorder, 'pocketable radio,' and many more. By 1958, the company had established its business in Japan and changed its name to Sony Corporation. Sony's decision to enter global markets took roots during Morita's visit to Royal Philips Electronics plant in Holland in 1953. Philips' plant and headquarters resembled Sony in many ways. Morita thought that if Philips could succeed in international markets, there was no reason why Sony could not. Soon, Sony began to focus on exporting its products in the international markets. In February 1960, Sony Corporation of America (SCA) was established to oversee Sony's marketing activities in the US by doing business with Americans like an American company. This was something that no other Japanese electronics company had ever attempted before.
Many experts doubted that a company specializing in transistor radios and other electronics products, as opposed to a general trading company, could do business successfully without an agent's assistance. Despite these doubts, SCA performed well under the leadership of Morita. During the mid-1960s, Sony entered the European markets. In the 1970s, Sony also set up manufacturing units in the US and Europe. During this period, Sony developed and introduced the Walkman, which was a huge success. The Walkman boosted Sony's sales significantly during the 1980s. By the mid-1980s, Sony's consumer products were marketed in Europe through its subsidiaries in the UK, Germany and France. Morita's strong desire to own a movie production studio to support Sony's electronics business, led to the acquisition of Columbia in 1989. Though Sony had also been in negotiations with the management of other top Hollywood studios such as Paramount, MCA/Universal and MGM, it finally decided to acquire Columbia pictures, which unlike other studios, had retained rights to its entire film library and 2,700 movie titles...
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