Sony, the Japan-based multinational conglomerate, is one of the leading manufacturers of consumer electronics devices and information technology products. Sony was responsible for introducing path breaking products like the Walkman, the Discman, and the PlayStation gaming console, among others. But in the late 1990s, it lost its leadership position in many product lines in which it was operating. Analysts attributed this to the silo culture prevailing in the organization. Each of the departments functioned like different fiefdoms, hardly cooperating with each other, even when it was necessary. Moreover, Sony’s growing complacency led to its failing to recognize the growing popularity of new technologies and digital products and the company choosing to stick to its proprietary formats.
Sony was caught off-guard and tried to revive itself under the guidance of its first non-Japanese head Howard Stringer, who took over as the CEO in 2005.
For a couple of years, Sony appeared to be on the path to revival. However, for the fiscal year ending March 2009, the company reported a loss. Sony’s failure to bring out innovative products in spite of having the required competencies was one of the main reasons for the company’s problems, and analysts attributed it to the existing culture in the company. In February 2009, with the aim of addressing the issue of its silo culture, Stringer announced a reorganization that involved changes in the organization structure. Through this reorganization, he sought to transform Sony into an innovative and agile company. However, it remains to be seen whether the reorganization can bring Sony out of its problems. Issues:
» Examine the challenges faced by Sony in a competitive global business environment.
» Understand the importance of organizational culture in effectively executing an organization’s strategy.
» Analyze how Sony can make its products competitive and foster innovation.
» Examine the efficacy of the reorganization program initiated by Stringer in turning around Sony and solving its problem relating to the silo culture.
» Analyze other measures that need to be taken by Stringer to restore profitability of Sony.