Classic, Columns / Analysis, Decision making process, Sony / April 9, 2015

Sony’s decision making process

Sony had reported a loss for three years from 2009 until 2012 when company announced the restructuring of its management to try to set an alternative approach for the future.

Sony Corporation is a leading Japanese company, known as one the most influential leading manufacturer of consumer electronics, entertainment and game products. Sony had reported a loss for three years from 2009 until 2012 when company announced the restructuring of its management to try to set an alternative approach for the future. In this study, I review the decision making process of Sony and conduct porter’s five forces of analysis and time series forecast using three models: moving averages, weighted moving average and exponential smoothing averages.

Elements of Sony’s decision making process

 

The problem finding

Sony has suffered a loss in the past three years both on the profit and corporation value. In addition, as many organisations suffer from being usually reactive in term of finding predetermine future problems and prepare for them, in addition to that Sony had, done the same. The management did not take actions proactively and because of that, Sony was suffering loss since 2009 until finally Sony decided to bring a new management with a new leadership to try to develop a new business strategy in respect to the global changes in consumer electronics industry. With the new leadership of Mr Hirai, who was the head of Sony computer entertainment in japan and later in as the head of Sony’s international business affairs in New York.

 

Swot Analysis

Sony_Swot_Analysis-300x208 Sony’s decision making process

 

Problem solving and outcome

As Mr. Hirai, working at the centre of management team that will connect and work with all the heads of each business by restructuring the management of each business and making some organisational changes. By reading some of Sony’s news releases in 2012, by the time Mr. Hirai arrived he already decided to work and set new performance objective for each business group, the new business management can focus on its structure can focus on its goals, define their mission, knowing what the priorities of their department are and focus on S.M.A.R.T goals.

In addition to that, Mr. Hirai already made some changes and gave each manager a clear goal. For instance:

Corporate Executive officer Masaru Kato and Tadashi Saito (chief strategy officer) will oversee the Sony’s group overall financial management, corporate business strategies and technology strategy.

Mr. Suzuki (corporate executive officer and EVP) will oversee product strategy.

 

From Sony’s annual report, we can see that the new management had decided to stop loss and change that into profit. On the other hand, decreasing Sony’s liabilities by selling assets, decreasing operating costs, layoffs reached 10,000 jobs and cut its TV production for about 50%, and that’s all to try to get its consumer electronics division down to smaller, more manageable and profitable operation, but even after these changes they still suffer a loss in electronics department. In fact, Sony only made money through selling life insurance, selling its corporate headquarters in Tokyo and sold its corporate headquarter in New York City, which is sold for a billion us dollars, without that, it would not be reporting profit in 2013. On the other hand, Sony seems optimistic about next year sales strategy, especially after the announcement of play station 4, but is, that when it comes to head to head competition with Apple and Samsung, Sony is still not making much of a head.

For example, Apple had long formed long-term relationships with Micron, Intel and Samsung. Since Mid-2007, apple has commanded about 25% of global flash production, because apple is buying these components in large quantities that it can exercise a significance advantage over suppliers. This enables Apple to negotiate better terms of quality and prices. Second, by commanding such a large quantity of the global market, apple had created new barriers to entry or even difficulties for its competitors such as Sony, because they can buy the components in limited quantities and with a higher price.

On the other hand, Mr. Hirai answered on an interview when he was asked by a BBC reporter about if Sony is better than Apple and Samsung. And he answered “We are in so many different product categories… for example, we have a leadership position in video game space with PS4 coming up this year….that’s an area that Samsung is not in… we are very strong in our entertainment properties, and financial services…. Entertainment Samsung is not in…”         

 

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Sony’s decision making process
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Sony had reported a loss for three years from 2009 until 2012 when company announced the restructuring of its management to try to set an alternative approach for the future.
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