Executives Leadership Styles and the Preferred Decision-Making Models - Case Study Example

Strategic Analysis of Sony Corporation Name Institution Course Date Strategic Analysis of Sony Corporation Question 1 Sony Corporation has position itself as a producer and marketer of high quality and innovative consumer electronic products (Robin, 2013). It has differentiated itself from the competitors by offering high quality products at affordable prices. The company’s products are extensive and are appreciated by a large number of consumers across the globe. For instance, some successful products that made Sony acquire a huge market share include PlayStation and Walkman (Robin, 2013). Sony game and music business has been successful despite economic recession. The company also differentiated itself by using superior technology and effective marketing strategies (Graham, 2008). Despite the huge success of the company, Sony has been faced with intense competition across the globe (Robin, 2013). At the local level, the company faces several Japanese competitors in the industry. Large competitors of Sony include Matsushita, Toshiba, Hitachi, and Samsung in Korea. Most of the competitors launched cheaper products that were imitative in nature. In order to position itself strategically in the market, Sony offered unique and high technology products but at 30 per cent high prices compared to the rivals (Robin, 2013). In order to solve the challenge of pricing, the company decided to argument its products with unbranded products and sell unbranded components to other manufacturers. This strategy was very successful in cost reduction and automation although it was different from Sony previous strategic plan (Robin, 2013). The strong strategic position of Sony was also due to Japan economic success. Japanese economic miracle led to the growth of several companies like Toyota, Mitsubishi and Sony Corporation (Robin, 2013). The strength of yen led to exporting difficulties. However, Sony was protected from this due to international production. In addition, although the strength of the yen was problematic to companies, it favoured Sony’s acquisition in the United States. Sony is not only the leading brand in Japan, but has overtaken other brands in other countries to become the leading brand. In the recent years, Sony has undergone several changes aimed at improving its strategic position. The company has empowered its employees and management to participate in the change process. Managers are given the opportunity to look for creative ideas and solutions for present problems (Gershon and Kanayama, 2002). In order to solve the challenges facing the company and position itself on top of the competitors, the company underwent management changes. When Idei took charge as the company’s CEO, he announced a major restructuring of the company’s divisions into three major groups including home network company, personal IT network Company and Core Technology and Network Company (Robin, 2013). Research and other operations were transferred to these network companies in order to improve decision making autonomy. Investors and stakeholders responded positively to the restructuring (Robin, 2013). However, these changes showed limited result and led to financial crisis. This led to management change when Howard Stringer was appointed the chairman. However, the financial damage was too much and led to Hirai taking office as the new CEO. Hirai established five point strategic revival plan to save Sony from destruction. He intended to turn around the television business, expand the company’s operations in emerging markets, strengthen core areas such as video cameras and game business, create new business and increase its innovation and realign the company’s portfolio and optimize resources (Robin, 2013). Question 2 Sony Corporation is among the most successful companies specialized in electronics, music, film and games services (Robin, 2013). Effective management of resources, capabilities and core competencies enabled the company create a strong competitive advantage. Miniaturisation and portability was the main part of Sony’s capability even before the development of Walkman. These elements showcased the company’s innovative ability and inventiveness. The core capability of the company lay in the creativity manifested in its new technology and innovative products. Through the production of differentiated products, Sony has been able to boost its competitive advantage (Graham, 2008). It has produced and marketed originally differentiated products that make it hard for competitors to substitute. In addition, Sony had a number of patents that it acquired from technological development. However, there was a challenge of poor patent protection of some consumer electronic products (Robin, 2013). Sony has numerous tangible and intangible resources that boost its success (Newbert, 2008). The company has a strong financial capability. Between 2000 and 2010, Sony enjoyed an increase in revenue. The company received operating revenue of 6.68 trillion Yen in 2000 which increased to 8.8 in 2008. By business segment, the electronic business covered the largest percentage of total revenue received. For instance, in 2009, the electronic business received about 5.1 trillionYen which made up about 65 per cent of the company’s total revenue. Non-electronic business covered about 34 per cent of the total revenue with games attracting the larger percentage. In the 1900s, Sony had dominated Japan with most of its revenue coming from that location. However, over the years, the company has increased its revenue in other locations such as United States and Europe. In 2009, Sony Europe received revenue amounting to 1.98 trillion yen which made up a larger percentage compared to revenues received in other countries. Although the company has suffered financial losses in the past years, it has been able to bounce back from it (Robin, 2013). Financial success of Sony is attributed to its effective management and leadership. Under Idei leadership, the company saw financial prosperity. Idea launched Transformation 60 as a way to drive success of the company. The purpose of the Transformation 60 was to reduce cost by 300 billion yen, decrease workforce by 20,000 and achieved 10% profit margin. These plans were unsuccessfully (Robin, 2013). However, Howard Stringer drove the company into cost-cutting which led to a huge increase in sales and revenues. With regard to capabilities and core competencies, Sony’s failure can be attributed to the ignorance of continuous development of core business. It has failed to capture the digital music market which has led to it losing the market to substitutes such as iPod (Lawler, 2012). This is due to analogue mentality and lack of continuous improvement and core advantages. Moreover, excessive diversification has made the company spend a lot of its resources in unsuccessful products (Robin, 2013). Sony has transferred its focus from its core business by having several businesses such as music label, games, movie store, electronic etc. It is correct to say that the company has failed in product positioning as a result of lack of brand focus as well as core competencies (Lawler, 2012). However, generally, Sony has enjoyed success over the years which has been attributed to successful internationalization, effective corporate culture and effective leadership. Sony’s ability to expand and grow through internationalization has been a major enabler of success compared to other compatitors (Robin, 2013). Early internationalization process was driven by Akio Morita who took time to understand the nature of American consumers and businesses. According to Cullen and Parboteeah (2010), it is difficult for multinational companies to succeed in foreign markets due to lack of consumer knowledge. Sony Corporation was the first Japanese company to be in the New York stock exchange. The first plan was established in Taiwan followed by United States and Europe. By early 1990’s, Sony has about 600 subsidiaries in major European and Asian countries (Robin, 2013). The company carried out product specialization in order to appeal to specific markets. To achieve successful internationalization process, the company used joint venture and strategic alliance. Through these strategies, the company was able to share risks and financial strength with the local counterparts and minimized cultural challenges (Kunii et al., 2008). In addition, Sony’s success in creating a strong competitive advantage can also be attributed to its corporate culture (Robin, 2013). Despite the success of the company in expanding into foreign markets, it is considered that internationalization is a huge challenge to Japanese companies. Many Japanese have had a little contact with foreigners and few have knowledge of English language. As a result of this, many Japanese companies delayed their internationalization process and some international processes ended in an ethnocentric way (Robin, 2013). Nevertheless, Sony was non-typical Japanese corporation as it as culturally and organisationally different from the rest. Its corporate culture values diversity in the workplace. The company integrated non-Japanese people in the top management positions. This was seen in the decision to place Michael Schulhof in charge of the US component business (Robin, 2013). Leadership in Sony has been exceptional which has contributed to its success over the years. Sony was founded in 1946 by Masaru Ibuka and Akio Morita and since then it has grown to become one of the most valued brand in terms of creativity and innovation (Robin, 2013). Morita and Ibuka formed a lasting partnership and brought complementary skills. According to style theory of leadership, leaders are determined by what they can do and not what they are. The core concept of the style theory relies on two forms of behaviour: task and relationship behaviour (Webb, 2007). The way leaders combine these two behaviours influences leadership effectiveness. Leadership under Ibuka and Morita encouraged creativity and innovation. The two led to the growth of leadership and innovative culture. The succeeding leaders also had the ability to solve challenges and establish a successful corporate culture (Webb, 2007). The trait theory of leadership states that people can either be born or not born with the important qualities that influence them to be effective leaders. All the chosen leaders of Sony had the capabilities and qualities that made a huge change in the organisation (Kao and Kao, 2007). For instance, leadership under Idei led to a number of positive changes that led to innovation and financial success of Sony. Recommendations and Conclusion Sony engages in many businesses which has intensified competition in these fields. Excessive diversification has made the company spend a lot of its resources in unsuccessful products and competencies. Sony should go back to their core competences and invest time and resources in them. In order to return the focus to the core business activities, Sony should aim at positioning its game and mobile businesses at the main core activities of the consumer electronic business (Rubio, 2012). 70% of the total research and development financial budget should be devoted to these areas. In addition, the proposed time for accomplishment of this should be 5 years. Also, for this strategy to be possible there is a need for organisational structure changes. Other activities of the company should be secondary and priority should be given to the core competencies (Rubio, 2012). This will nurture its core competence and will enable Sony regain the market leadership. As seen earlier, Sony’s has declining innovative ability due to its focus on analogue machines in today’s digital world (Robin, 2013). In today’s consumer electronic business, it is important to develop products that satisfy the needs and wants of consumers. This means that Sony should try to innovate the entire design process of its products in order for them to be attractive and easy to use. Some of its products are high tech with many features that people do not use. Sony’s managers should start thinking of how to make its products innovative and easy to use. In addition, enhancing the research and development will be able to support new, innovative product development (Menguc and Auh, 2006). One major issue mentioned in the case study is financial difficulty facing Sony due to profligate spending (Robin, 2013). One way to deal with financial challenges is cost cutting. Idei was unable to cut its cot by 10%. Therefore, in order for Sony to cut its costs, it should use other lower cost areas such as Malaysia, Thailand and Philippines to set its factories. This will ensure it takes advantage of cheap labour and serve budding consumer markets. Another way of cutting cost is through refining products instead of reinvesting them in order to minimize set cost and enhance automation. Cost cutting plan can take about 5 years to achieve and requires coordination of both the employees and the management. References Cullen, J. B & Parboteeah, K 2010, International Business, Strategy and the Multinational Company, New York, Routledge. Graham, H 2008, Marketing Strategy and Competitive Positioning, 4th ed., Pearson Education, India. Kao, P-H and Kao, H 2007, Taiwanese Executive’s Leadership Styles and Their Preferred Decision-Making Models used in Mainland China. Journal of American Academy of Business, 10(2), pp. 71-79. Kunii I., Brull S., Burrows P., and C Baig 2008. "The Games Sony Plays", Business Week, June 15, p. 128. Lawler, R 2012, Barriers to Innovation. Sony vs. IPod Case Analysis. Retrieved 18th Nov. 2016 from http://parttimembadegree.com/business-schoolcases/barriers-to-innovation-sony-vs-ipod-caseanalysis/ Menguc, B & Auh, S 2006, Creating a firm-level dynamic capability through capitalizing on market orientation and innovativeness. Journal of the Academy of Marketing Science, vol. 34, no. 1, pp. 63-73 Newbert, S. L 2008, Value, rareness, competitive advantage, and performance: A conceptual-level empirical investigation of the resource-based view of the firm. Strategic Management Journal, vol. 29, pp. 745-768. Richard, G and Tsutomu, K 2002, The SONY Corporation: A Case Study in Transnational Media Management. The International Journal on Media Management, vol. 4, no. 2, pp. 106-118. Robin, J 2013, Sony in the New Millennium, London, South Bank University. Rubio, J 2012, How Can Sony Unleash Innovation and Large-Scale Change? Retrieved 18th Nov. 2016 from http://www.forbes.com/sites/johnkotter/2012/09/10/how-can-sony-unleash-innovation-and-large-scalechange/ Webb, K 2007, Motivating Peak Performance: Leadership Behaviors That Stimulate Employee Motivation and Performance. Christian Higher Education, 6(1), pp. 53-71. Read More