Corporate Strategy Case Study

Sony's Failed Synergies : Bad Strategy or Bad Management?

OR

Abstract:
When Masaru Ibuka and Akio Morita established the Sony Corporation, their dream was to create a world-class company capable of spawning the ‘World's First’, the ‘World's Smallest’, the ‘World's Biggest’, or the ‘World's Best’ consumer electronic products. During the second half of the twentieth century, Sony introduced the world to revolutionary technology in the form of the Walkman (personal stereo), Trinitron TV (high resolution colour television), and the PlayStation (video game console), thereby setting global industry standards. However, although Sony was the first company to introduce a videocassette recorder (Betamax), it was the rival VHS technology that prevailed in the market after the major videotape format war of the 1980s. Sony's conclusion that ownership of content would enhance its ability to set industry standards led to the company's diversification into the fields of music, motion pictures, and financial services.

Pedagogical Objectives:

• To highlight the growth of Sony from a small, unknown Japanese company to one of the world's best-known companies
• To provide an insight into Sony's strategy of foraying into businesses unrelated to its core electronics business, and the apparent failure in successfully merging the company's diverse operations and extracting operational synergies
• To discuss whether bad strategy or bad management was the reason for Sony's failed synergies

Keywords : Sony Corporation (Sony);Mergers,Acquisitions,Alliances Case Study; Masaru Ibuka and Akio Morita; Tokyo Tsushin Kogyo Totsuko; Global consumer electronics industry; Audio and video electronic devices; Sony Computer Entertainment Inc; Business model legacy innovation; Failed synergies of content and devices; Video tape format war Betamax vs VHS; Sony Ericsson, Aiwa, MGM, Cineplex, CBS; Innovative alternative technological threat; Walkman, Trinitron TV, Cybershot, Playstation; World’s smallest, largest, first, best; Sony Pictures, Music Television; Restructuring and turnaround strategies