Sony will have to be more realistic in its short term strategy in the wake of new challenges
Sony’s tag line – Like.No.Other; very much seems to live up to its meaning, for Sony Corporation – one of world’s largest manufacturers of consumer durables; and considered to be the benchmark when it comes to product quality and innovation.
Unfortunately, the tagline also seems to fit its appalling losses for the quarter ending September. Seems like the reasons and circumstances, which lead to the appointment of Sir Howard Stringer as the Chairman & CEO of Sony in 2005 are coming back to haunt this consumer electronics giant (Stringer was elevated because his predecessor Nobuyuki Idei was not able to sustain the bottomlines in the midst of commoditisation). In fact, Stringer, at the time of his appointment, was quoted thus, “I got this job in crisis.”
As it appears, the crisis is nowhere near to becoming cris'was'! Net income for the latest quarter declined by 71.8% and stood at 20.82 billion yen ($210.36 million) as opposed to 73.71 billion yen ($745.12 million). But the real shocker was the operating income, which plummeted massively by 89.68% and stood at 10.55 billion yen ($106.57 million). According to Richard Ptak, Managing Partner, Ptak, Noel & Associates, the company’s senior executives did not focus on business fundamentals and misplaced priorities. “Strong Yen versus weak Euro and dollar made their products expensive and the meltdown in US and European markets further augmented the condition,” he avers. A major chunk of Sony’s sales is from overseas markets and a strong yen completely depleted profits especially from the sales of its flat-panel LCDs – Sony Bravia and Sony PlaySation 3. Also, Sony Corp. for the first time included the results of its subsidiaries Sony Ericsson and Sony BMG in its consolidated quarterly results.
Sony’s tag line – Like.No.Other; very much seems to live up to its meaning, for Sony Corporation – one of world’s largest manufacturers of consumer durables; and considered to be the benchmark when it comes to product quality and innovation.
Unfortunately, the tagline also seems to fit its appalling losses for the quarter ending September. Seems like the reasons and circumstances, which lead to the appointment of Sir Howard Stringer as the Chairman & CEO of Sony in 2005 are coming back to haunt this consumer electronics giant (Stringer was elevated because his predecessor Nobuyuki Idei was not able to sustain the bottomlines in the midst of commoditisation). In fact, Stringer, at the time of his appointment, was quoted thus, “I got this job in crisis.”
As it appears, the crisis is nowhere near to becoming cris'was'! Net income for the latest quarter declined by 71.8% and stood at 20.82 billion yen ($210.36 million) as opposed to 73.71 billion yen ($745.12 million). But the real shocker was the operating income, which plummeted massively by 89.68% and stood at 10.55 billion yen ($106.57 million). According to Richard Ptak, Managing Partner, Ptak, Noel & Associates, the company’s senior executives did not focus on business fundamentals and misplaced priorities. “Strong Yen versus weak Euro and dollar made their products expensive and the meltdown in US and European markets further augmented the condition,” he avers. A major chunk of Sony’s sales is from overseas markets and a strong yen completely depleted profits especially from the sales of its flat-panel LCDs – Sony Bravia and Sony PlaySation 3. Also, Sony Corp. for the first time included the results of its subsidiaries Sony Ericsson and Sony BMG in its consolidated quarterly results.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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