Restructuring / Turnaround Strategies Case Study

Sony Corporation: Turning Around the Television Business

Abstract:
Since 1968, Sony Corporation (Sony) had dominated the television industry with its Trinitron Technology. Television, which is part of the electronics segment, contributed 18%-20% to the group’s revenue. However, the company faltered during the transition from the analog to digital technology. While competitors such as Sharp, Samsung, Philips and LG invested heavily in the commercialisation of Flat Panel Display (FPD) televisions, Sony continued investing in the Cathode Ray Tube (CRT) technology. With the demand for FPD TV displacing CRT TV and average selling price of tube TV declining rapidly, the company’s operating margins declined from around 10% in 1991 to a meagre 1.5% in 2004. In a bid to consolidate its position, the company, in December 2004, announced its exit from the Plasma Display Panel TV market paying more attention to the LCD and rear projection TV business.

Pedagogical Objectives:

• To discuss about the missteps taken by the management at Sony over the years which led to the company losing its market leadership position in the television segment
• To highlight the corrective measures taken by the company to improve its product mix in a bid to increase revenues and profitability.

Keywords : Sony; Trinitron; WEGA; Sony TV; Digital Transmission; LCD TV; Restructuring / Turnaround Strategies Case Study; Television market; CRT TV; Sharp; Samsung; Television business; HD TV; Sony Style Stores