sony restructuring

RESTRUCTURING

PRESENTED BY:

AAKASH SINGHABDUL GAFOOR KHANABHIJEET MEHROTRAABHIJEET SAHAABHIMANYU KUMAR

ABOUT SONYIt was incorporated in 1946 named as

Tokyo Tsushin Kogyo Kabushiki Kaisha (Tokyo Telecommunications Engineering Corporation).

It was changed to Sony in 1960.

Focus on globalisation.

Introduction of Walkman in 1970s which was a huge success.

FIRST RESTRUCTURING (1994)

Reason for Restructuring:◦Recession in Japan economy.◦Stagnation in Electronics Industry.◦Opportunities in Televisions and

Technologies.◦8-company structure was

announced.

Aim was to improve company’s focus on high potential products and to adapt to the changing market demands.

Cont….Eight Companies:

◦Consumers Audio & Video Products Company

◦Recording Media & Energy Company.◦Broadcast Products Company.◦Business & Industrial Systems

Company.◦Infocom Products Company.◦Mobile Electronics Company.◦Components Company.◦Semiconductor Company.

AFTER RESTRUCTURINGAfter implementation of company structure,

changes were made in Sony’s management structure.

But financial performance declined in 1995 because of poor performance of Pictures group and unable to produce innovative products.

Losses incurred ¥ 293.36 bn.

Reorganized and created 10 company structure.

SECOND RESTRUCTURING (1996)

In January 1996 a new ten company

restructuring was announced replacing

the eight company restructure.

Under the new structure previous

consumer Audio & Video Co were split

into three parts namely Display

Company, Home AV Company, Personal

AV Company.

Cont….A new company Information technology

company was also created to focus on

Sony’s business interest in the PC & IT.

Infocom products & Mobile electronics

merged to create Personal & Mobile

communication co.

Components & Computer peripherals co,

Recording media & Energy co, Broadcast

Product co, Image & Sound

Communication co and Semiconductor

Co.

SALES PERFORMANCE

Year Electronics

Game Music Pictures

Insurance

Others

1995 3027 35 481 282 113 52

1996 3283 201 506 317 207 78

1997 3930 408 570 439 228 88

1998 4377 700 660 643 291 84

1999 4355 760 719 540 339 81

CAGR 8.55% 215% 10.5% 17% 31% 11.7%

Unified Dispersed Model In April 1999, Sony announced changes in its

organizational structures.

Sony’s key business division – Consumer Electronics

Division, Components Division, Music Division and the

Game Division were reorganized into network businesses.

This involved the reduction of ten divisional companies

into following network companies – Sony Computer

Entertainment, Broadcasting & Professional Co.

RESTRUCTURING IN 2001Sony announced another

restructuring in 2001.

Aimed to transform itself into Personal Broadband Network Solutions.

Aim was to become leading media and technology company.

IMPICATIONS OF RESTRUCTURING

Failure of Internet Compatible phones due to softwares.

This led to reduce the number of manufacturing facilities and shift some production activities out of Japan.

Failure due to engaging itself in semiconductors to financial services.

Cont….Analysts felt it was due to huge

spending on restructuring which every time resulted unsuccessful.

In 2001, losses incurred100 bn.

Competition to Sony in its core business.