Environmental Forces Promoted Stringer to Change Authority at Sony

Case study: SONY

Question 1: Environmental forces promoted Stringer to change authority at Sony.

Sony is one of the world’s largest suppliers of electronic products. Recently, rapid growth of technology has created a number of opportunities and challenges for the company. It faces high pressure from competition with a series of strong rivals in this industry, such as Apple and Samsung. Sony has started to lose its leading position and one of causes is probably obsolescence of the company's organizational methods. This paper will discuss how the CEO of Sony has restructured the company.

In the 90s, Sony created a culture called "Sony Way", in which the product engineering team received the most favorable conditions for communicating and cooperating together (Jones, 2013). Although Sony was capable of continuously launching new products, allowing different departments to pursue and implement their own ideas caused huge costs. Furthermore, in later years, big players in the market have constantly introduced products with superior technology, making Sony's famous products obsolete. Meanwhile, the leaders of Sony was unable to keep pace with technological changes, result in performance decreasing. By then, the competition between leaders and between departments were increasingly intensive as they were struggling to get funds for the research and development of new products (Jones, 2013).

Besides the huge costs and fierce competition within the company, Sony also faced denial of customers. Products such as Trinitron TV and Walkman music player were the pride of Sony, however, customers was no longer interested in them by the presence of more modern products like Apple IPod, IPhone, and Wii game machine of Nintendo. Meanwhile, Sony products are often considered the price too high compared to the value it brings to users (Jones, 2013). As inevitable result, there was increasingly less customers seeking Sony products.

The factors mentioned above have forced Howard Stringer to begin to restructure the organization. Stringer was a leader in the US, leading the process of cutting business costs and increasing profits. He became Sony's CEO in 2005 and was a non-Japanese.  

Question 2: Stringer's approach

According to Siklos and Fackler (2006), electronic products are Sony's flagship, which accounted for approximately 70 percent of total revenue. To restructure this business, Stringer determined to ignore the old culture "Sony Way". For the needs of cost reduction, he approved the plan to cut two billion dollars in October 2005 despite of questions of the Japanese executives (Siklos and Fackler, 2006). They though that Stringer too focused on cost reduction, rather than to follow traditional culture of company, which is to focus on development. In addition, the CEO also aimed to terminate the widespread investment in research and development of new products. He asked the leaders to choose the products which have the most potential to invest in, thereby, the company could save the research and development cost that was unlikely to produce value. From my point of view, Stringer's approach is completely appropriate since high price of Sony products is one of the most likely causes of customer denial. By cutting costs, Sony may reduce the price of products therefore, increase competitiveness for its products. Furthermore, it also encouraged different functional units within the company to collaborate with each other in new products development. Thus, they can avoid being hurt by negative competition.