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Source: www.asiaecon.org |

SONY'S REORGANIZATION IN RESPONSE TO DECREASED EXPORT DEMANDS


  One of Japan's largest electronic conglomerate is looking to restructure its company. Sony recently announced a major overhaul in both leadership structure and company operations. The news comes after Japan's exports dropped 45.7%, considering that Japan's economy is primarily dependent on exports. Sony is expected to report a net loss this month, the first time in fourteen years.


One of Japan’s largest electronic conglomerate is looking to restructure its company. Sony recently announced a major overhaul in both leadership structure and company operations. The news comes after Japan’s exports dropped 45.7%, considering that Japan’s economy is primarily dependent on exports. Sony is expected to report a net loss this month, the first time in  fourteen years.

Sony is looking to revamp all areas including its leadership structure. Chief Executive Howard Stringer is now taking more control of the company. It has already been four years since he was nominated as the first non-Japanese chairman and CEO of Sony; his latest title acquisition is as President of Sony too. The latest move also comes after Mr. Stringer took control of company’s flagship electronics operations from two of his highest-ranking employees and gave the duties to younger executives. Mr. Stringer justified this move, stating that he believed that the senior executives were too focused on the Japanese market where consumers are said to be more willing to pay higher prices for the latest innovations. The restructuring comes after Sony has been struggling with lower demands and a lack of hit products.

Mr. Stringer believes that he has keen insight to market demands because he spends half a month at Sony’s headquarters in Japan, whilst the rest of the month in Britain. But, due to the major revamping, Stringer recently announced that he will now spend more time at Sony’s Tokyo headquarter. The executive restructuring has said to be Mr. Stringer’s most aggressive move since taking over as Chief Executive in June 2005. Some analysts have questioned the effectiveness of expanding Mr. Stringer’s role and if in fact the move will reverse Sony’s fortunes.

Under the executive reshuffling and reorganization, Sony President and head of the electronic business Ryoji Chubachi will step down and become vice chairman of the company. Katsumi Ihara will be removed as Sony’s Head of Consumer Products groups and become the executive director at Sony Financial Holdings. Mr. Stringer is also dividing the video game and electronics sector. The new division will  be headed by  Kazuo Hirai, who is currently in charge of  Sony’s video game division.

Sony is most famous for creating a portable music-player market with the Walkman, but in recent years Sony has struggled to maintain its stronghold in the portable music player market with the likes of Apple Inc.‘s iPod. Its other famous product is the PlayStation video game console, which has been losing out to stronger competition from Nintendo Co. and Microsoft Corp.. While Sony does provide other products, the television and personal-computer markets remain to be competitive markets.

The reorganization shall mainly force Mr. Stringer to be held responsible for Sony’s earnings. Despite Sony losing profit to competitors, under Stringer’s leadership, Sony has improved profits. The restructuring has said to allow Sony to take out $3 billion in annual fixed costs, compared to an earlier estimate of $2.5 billion. 

Recent products, such as the ultra-thin organic light emitting diode (OLED) television introduced in 2007 and failed to win over consumers due to its expensive tag of $2,042.Mr. Stringer and the new heads of operations are looking towards maintaining the high quality expected from Sony but at a more affordable price range. The new direction looks to try and appeal to consumers who have become more price conscious.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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