Subject category:
Strategy and General Management
Published by:
IBS Case Development Center
Length: 9 pages
Data source: Published sources
Topics:
Sony BMG; Sony Music; Bertelsmann Music Group; Global music industry; On-line music piracy; Internet and file swapping technology; Joint venture; Synergies of a merger; Pay for play scandal; Andrew Lack; Restructuring strategies; Executive tension; Personality clashes; Sony BMG labels; Costs cutting strategies
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Abstract
Sony & BMG music entertainment, the second-largest music record company in the world, was formed as a 50:50 joint venture between Sony Music and Bertelsmann Music Group (BMG) in August 2004, with both the companies having equal representation on its board. Soon, the company''s sales declined and Michael Smellie, Sony & BMG''s Chief Operating Officer from Bertelsmannn, tendered his resignation. Following this, the Bertelsmann group opposed the renewal of contract for Andrew Lack, who was from Sony and was the Chief Executive Officer of the joint venture, on the grounds that he was responsible for the lacklustre performance of the company. The case, while highlighting the reasons behind forming the Sony-BMG joint venture, offers scope to discuss the various challenges that might stem from cultural and personality clashes between the two collaborating companies.
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Abstract
Sony & BMG music entertainment, the second-largest music record company in the world, was formed as a 50:50 joint venture between Sony Music and Bertelsmann Music Group (BMG) in August 2004, with both the companies having equal representation on its board. Soon, the company''s sales declined and Michael Smellie, Sony & BMG''s Chief Operating Officer from Bertelsmannn, tendered his resignation. Following this, the Bertelsmann group opposed the renewal of contract for Andrew Lack, who was from Sony and was the Chief Executive Officer of the joint venture, on the grounds that he was responsible for the lacklustre performance of the company. The case, while highlighting the reasons behind forming the Sony-BMG joint venture, offers scope to discuss the various challenges that might stem from cultural and personality clashes between the two collaborating companies.