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Case
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Reference no. 411-062-1
Published by: Asia Case Research Centre, The University of Hong Kong
Published in: 2011
Length: 30 pages
Data source: Published sources

Abstract

Sony’s traditional focus on its own technologies, instead of adopting the more commonly used standards that appeal to the larger consumers’ taste, has trapped itself in the state of 'Galapagos’-ization' (garapagosu-ka) that segregates the company from global competition. Since the mid 1990s, the company has been struggling from unstable profit and sales in its core electronics business while it aggressively expanded into the entertainment content sector. A number of restructuring strategies had been implemented but the effect hardly sustained due to various internal conflicts within the company. In mid 2005, a non-Japanese, Sir Howard Stringer was appointed as the first western CEO and chairman of Sony. Being perceived as an outsider, Stringer pushed forward a series of operational restructuring and placed a greater focus on software and content development than Sony’s tradition on hardware technology. Even though Stringer’s change efforts had brought a blink of hope for Sony’s comeback, the situation turned sour in early 2009 when the company announced its first operating loss in 14 years. While different voices about the problems of Sony arose and the leadership of Stringer was questioned, another round of restructuring attempts was pushed forward by Stringer. How could Stringer overcome the deep-rooted internal resistance that his predecessor had failed? What had gone wrong with the iconic electronics giant? Were all those restructuring and change efforts necessary and useful to Sony’s turnaround?
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Abstract

Sony’s traditional focus on its own technologies, instead of adopting the more commonly used standards that appeal to the larger consumers’ taste, has trapped itself in the state of 'Galapagos’-ization' (garapagosu-ka) that segregates the company from global competition. Since the mid 1990s, the company has been struggling from unstable profit and sales in its core electronics business while it aggressively expanded into the entertainment content sector. A number of restructuring strategies had been implemented but the effect hardly sustained due to various internal conflicts within the company. In mid 2005, a non-Japanese, Sir Howard Stringer was appointed as the first western CEO and chairman of Sony. Being perceived as an outsider, Stringer pushed forward a series of operational restructuring and placed a greater focus on software and content development than Sony’s tradition on hardware technology. Even though Stringer’s change efforts had brought a blink of hope for Sony’s comeback, the situation turned sour in early 2009 when the company announced its first operating loss in 14 years. While different voices about the problems of Sony arose and the leadership of Stringer was questioned, another round of restructuring attempts was pushed forward by Stringer. How could Stringer overcome the deep-rooted internal resistance that his predecessor had failed? What had gone wrong with the iconic electronics giant? Were all those restructuring and change efforts necessary and useful to Sony’s turnaround?

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