STRATEGIC PLANNING

Strategic Planning

Strategic Planning - Sony Corporation

Sony's past strategy

Few other companies metamorphosed as often as Sony. The company frequently transformed itself through one of its new, instantly popular products. Examples included the transistor radio, the Walkman, the camcorder, and the PlayStation. Part of the reason for the changes at Sony was the markets it served. Consumer electronics advanced quickly. To stay a viable business, manufacturers had to keep pace with the technology or die. In the 1960s the company's main product was the transistor radio. The next profit driver for Sony became the small television. After that came tape recorders, then VCRs, and compact discs. Every five to seven years Sony had a new core product. By 1998 the PlayStation had taken centre stage at Sony. In one week of December 1998 Sony sold 4 million PlayStations in the United States (Flügge 2002, 8). From 1995 through 1998 Sony sold more than 50 million PlayStations. The product was so vital to company success that Sony announced a $100 million marketing campaign to tout PlayStation and its software in June 1997. It was the largest marketing campaign ever for both Sony and the video-game industry.

Along with its success Sony did hit some bumps in the road. Some innovations, like the Betamax VCR, never delivered on their promise. When Nobuyuki Idei took the reins as Sony president in 1995 times were difficult. Sony had recently made the strategically sensible but badly executed purchase of the Hollywood movie studios Columbia and Tristar Pictures. Sony's music division, by then the world's fourth largest record company, fell out of the music industry's good graces after a public battle with one of its leading artists, George Michael. Idei himself was an unusual choice for Sony's top spot. He had worked for Sony since 1960, but he ascended through the ranks on the marketing side, not the technological side, which had always been the pride of the company. Idei recognized the importance of the U.S. market and set about westernizing the company. He hired outsiders for several key spots. He also changed the company mindset and focus (Daft 2009, 177). Previously Sony described itself as a consumer electronics company or an entertainment company. In 1998 Idei said the company would be a digital entertainment company supplying both technology and software.

Sony was now one of the world's largest entertainment and electronics companies and the world's thirtieth largest corporation. Sony Electronics, the division "What's Next?" was created for, generated more than a fifth of the Sony Corporation's global sales. In fiscal year 1996 Sony Electronics had revenues of $9.6 billion, while total Sony revenues reached $43.0 billion. The company had divisions focused on music, movies, computer entertainment, electronics, and online entertainment. It also entered into the life insurance business.

Whether in electronics or services, Sony strives to create products that will make consumers around the world exclaim, "Ah, it's a Sony!" The tiny radio repair shop Tokyo Telecommunications Engineering Corporation, which later would become the Sony Corporation, emerged from the shadows ...