Reflecting on the evolution of strategy at Sony and Panasonic
Assessing Sony corporate strategy based on publicly released documents and their website, with commentary comparing them to Panasonic’s stated strategy.
Public statement on Sony’s corporate strategy: http://www.sony.net/SonyInfo/News/Press/200806/08-080E/
Sony’s website announcing corporate strategy transformation: http://www.sony.net/SonyInfo/IR/info/strategy/message.html
- context: undergoing transformation in response to a disastrous 2009, with the goals of returning to profitability, improving customer experience and seizing growth opportunities simultaneously.
- They characterize the global environment as the most challenging in a generation and they made fundamental changes in structure and processes. They reorganized electronics and game businesses to respond to increased competition and a customer base which has more choices and more access to information than ever before.
- They reorganized around a consumer products and devices group to bring together hardware, sensors and batteries and were looking to gain efficiencies and cross sector synergy.
- The network products and services group is more of a business-to-business solution provider
- lines of operations are to be supported by horizontal platforms of sales, marketing, manufacturing, logistics, procurement and customer service and they plan to do centralized R&D and software development. Their goal is to be more agile, competitive and successful and more responsive to shifting customer network demands.
- They recognize a need to cut costs and be better stewards of their financial assets and their strategy includes consolidated purchasing, reducing headcount, consolidating manufacturing worldwide. They are reducing their suppliers by 50% and have already achieved a 20% savings in annual procurements. There aggressively managing inventory and accounts receivable to improve cash flow and financial position
- they recognize the need to be more aggressive in marketing using multi-modes of connecting directly to consumers
comparing Sony to Panasonic:
- much narrower focus in product lines and business sectors in Sony and so they are likely to be experiencing much more volatility since they have fewer business sectors affecting their bottom line. Much less language concerning corporate citizenship and sustainability, which demonstrates the urgency that they feel to get their financial house in order. The report reads as if they have drifted away from efficiency in operations and are scrambling to get back in line. They are even using their corporate strategy page as a way to introduce new product lines, presumably as part of their multi mode outreach to consumers and investors.
- The Sony website has an extensive treatment of corporate culture and the opportunities for young people to find unique and innovative careers with the company, although this is conspicuously absent from their top level strategic plan which is focused on bottom-line performance exclusively. They do appealed to the founders guiding principles and speak about Sony’s DNA which still thrives after 60 years http://www.sony.net/SonyInfo/CorporateInfo/History/prospectus.html
- the initial prospectus had at its center considerations of the workforce and providing an environment for engineers to satisfy their vision as individuals and productive members of their society. This was important at the time since they were just coming out of World War II
- a. “The first and primary motive for setting up this company was to create a stable work environment where engineers who had a deep and profound appreciation for technology could realize their societal mission and work to their heart’s content.”
“…We shall eliminate any unfair profit-seeking practices, constantly emphasize activities of real substance and seek expansion not only for the sake of size”. Interestingly this was management policy number one in the original prospectus.
- They’ve set targets of 5% profit margin and 10% ROE for 2013 which is consistent with a mature, capital-intensive industry that features rapid trend dynamics. Getting the market assessment right is important for them in order to produce appropriately sized lots
My sense is that the current global business environment is much more important than differences in the culture between the two companies as both are undergoing dramatic transformations which will affect their bottom line immediately. If and as they are successful, I expect their culture to adapt slowly, as it always seems to.
It’s interesting to me to note the extreme shift in perspective between the founding document in the current strategic plan at Sony. The original company’s vision was to create an internally consistent company that would lead the way in reconstruction of Japan while the current outward focus on returning to profitability by any means necessary is completely bottom-line driven. The pages on corporate culture lag those of the strategic plan which is an indication of where the company focuses these days. The original prospectus for Sony talked about rightsizing the company and not chasing every possible profit, although the current document has adopted the Western orientation completely it seems
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