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Sony Corporation is a global company headquartered in Tokyo, Japan (Sony.net, 2018). In 1946, Masaru Ibuka and Akio Morita started the company with only $1500 and started operating internationally later in the ‘50s (Gupta & Dhillon, 2015). One of the first products this company made was the transistor radio which had not been developed in Japan. Later, it introduced other products such as the Compact Disc Discman and the Mini Disc system. Currently, it produces a variety of electronic equipment like cameras, televisions, mobile phones, and computers. Based on the company’s sales and revenue, Sony is one of the most successful companies despite operating in a highly competitive environment.
Major Milestones
Since the inception of the company, Sony executives expressed a desire to add entertainment content to the firm’s operations. However, the organization was facing a lot of difficulties in the early 1990s since the Japanese economy was experiencing a recession. Additionally, Ibuka suffered stroke in 1992 while Morita got affected by the same in 1993 (Tett, 2016, p. 58). In 1994, Morita officially retired from the company which put the company in a challenging situation. The loss of the firm’s founders led the company to lose approximately $200 million in 1993 (Gupta & Dhillon, 2015).
Despite the challenges, Sony Corporation carried on its intent to succeed in the entertainment industry. In 1993, the company established a new division called Sony Computer Entertainment after identifying the potential in this market. The introduction of the PlayStation video game console in the entertainment division in 1994 proves to be one of the most successful projects (Schilling, 2003). Within eight years, this game unit was contributing an average of 10 percent of the firm’s revenues. Similarly, the introduction of the robot dog, AIBO, in 1999 significantly captured people’s imagination (Fong, Nourbakhsh, & Duetehann, 2003). Sony introduced the VAIO line of computers in 1997. VIAO was a system which the organization used to market to the clients who expressed interest in development and interaction with multimedia programs.
In spite of success in the entertainment industry, Sony Corporation encountered disappointing financial reports. In 2005, Howard Stringer got promoted from being the CEO of Sony Corporation in the U.S. to Sony Corporation (Velez-Castrillon & Cory, 2015). The elevation of an American to head a Japan-based company was surprising to many although a significant percentage of Sony’s employees were not Japanese. Notably, the revelation that the company was installing rootkits, a form of malware, in 2005 had an impact on the firm’s sales (Mulligan & Perzanowski, 2007). There were claims that the company was installing rootkits as the music CDs were loaded into computers. The main purpose of the malware was to collect information of the users and send it back to Sony. In 2009, Howard became the head of Sony’s electronic division.
Stringer’s objective was to make the company successful again and immediately started by streamlining operations and cutting down the costs. By this time, Sony was undergoing economic struggles as the electronics sector continued to decline. Stringer’s strategies were not really successful forcing him to step down. In 2012, Hirai Kazuo succeeded him who had been serving as the head of the video game division (Velez-Castrillon & Cory, 2015). Kazuo’s main focus was on consumer electronics even though he maintained Stringer’s cost-cutting measures. Kazuo began selling real-estate holdings of the company and the most notable was the sale of Sony’s U.S. headquarters in 2013 for over $1 billion (Velez-Castrillon & Cory, 2015).
Leadership and Management Challenges
Hirai Kazuo’s primary goals in the company have been to minimize losses and increase the profits. Consequently, he has been implementing key changes in the organization including its operations, structure, and the workforce. While Hirai is a charismatic leader who promoted a positive working environment for the employees, he failed to consider that the Japanese remain loyal to a company until retirement. Since Sony Corporation was undergoing loss, Kazuo did lay off workers which resulted in making employees feeling insecure. Also, the fact that any number of employees would be easily laid off damaged the morale of the current workers. In this way, Sony Corporation was no longer able to retain good employees or attract new talents. Laying off the workforce made the employees to undergo psychological distress which had a negative impact on their work performance.
Japanese firms usually exhibit a hierarchical structure which makes the decision-making process slow. Therefore, Hirai started making key changes that would result in converging the unique assets of the company. With a rapid and optimized process for making decisions, the CEO intended to improve the overall management of Sony. However, the top executives entailed a number of employees who were responsible for the past success of Sony Corporation. Most of these business leaders opposed Hirai’s changes even though he maintained his cool attitude.
Within a few years after being appointed, Hirai sold away the firm’s profitable businesses like VAIO computers (Velez-Castrillon & Cory, 2015). Again, this had an effect on the motivation and emotions of the workforce. The fear of losing their jobs made the employees to lack interest in work. Particularly, the employees who had been in the company for a long time felt that most of these changes were overwhelming and uncalled for.
References
Fong, T., Nourbakhsh, I., & Duetehann, K. (2003). A survey of socially interactive robots. Robotics and Autonomous Systems, 42(3-4), 143-146. Retrieved from https://doi.org/10.1016/S0921-8890(02)00372-X
Gupta, S., & Dhillon, I. (2015). Organizational Restructuring and Collaborative Creativity: The Case of Microsoft and Sony. Journal of Business Strategy, 12(1), 53-65.
Mulligan, D. K., & Perzanowski, A. K. (2007). The magnificence of the disaster: Reconstructing the Sony BMG rootkit incident. Berkeley Tech, 12(2), 1157-1168.
Schilling, M. A. (2003). The introduction of the PlayStation video game console in the entertainment division in 1994. California Management Review, 45(3). Retrieved from https://doi.org/10.2307/41166174
Sony.net. (2018). About Sony. Retrieved August 12, 2018, from https://www.sony.net/SonyInfo/
Tett, G. (2016). Ibuka suffered stroke in 1992 while Morita got affected by the same in 1993. New York: Simon and Schuster.
Velez-Castrillon, S., & Cory, A. (2015). How Sony Got its Groove Back: A Case Study in Turnaround Management. Business Education Innovation Journal, 7(2), 144-154
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