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The first strategic issue faced by Sony was the inefficient manufacturing
structures which decrease Sony’s quality that badly affects their reputation and caused
a decline in product competitiveness. DeWit & Meyer (2004: p192) argue that “the
essence of most uniquely Japanese management practice will be they productivity
improvement, TQC (Total Quality Control) activities, QC (Quality Control) circles, or
labour relation – can be reduced to one word: Kaizen”. They also argue that “the
implication of TQC or CWQC (Company Wide Quality Control) in Japan have been
that these concepts have helped Japanese Companies generate a process-oriented way
of thinking and develop strategies that assure continuous improvement” (p192).
However, in the case of Sony, they did not make any improvement or perform well in
Kaizen or implement an efficient manufacturing structure that ensure high product
quality which affect their product quality and caused a massive damage to the
company. For example, there is the recall of 9.6 million Sony Laptop batteries which
were liable to overheat and potentially burst into flames where Sony even failed to
fully study the problem (Forbes.com, 2nd October 2006) and there are complaints
from Japan’s consumer about PS3’s new system (Wonova.com, 15th Nov 2006) which
will affect the compatibility and status of Sony badly.
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their customer had completely decreases the confident of the market and swipes away
its reputation. Finlay (2000: p295) also argue that “a good reputation is something
that all business would like to have but in some cases a good reputation is much more
valuable than in others”. Reputation is one of the significant intangible resources
(Collis & Montgomery, 1999) for Sony that differentiates themselves from the
competitors for them to charge a premium price for their excellent product and
quality, as Kotler & Keller (2006) argue, good reputation can create a positive
prejudice in the mind of the customer which make customer prefer the brand.
Therefore, the diminishing of Sony’s reputation will create a negative prejudice and
weaken their core competences which will directly affect their competitive advantages
and become a major threat for Sony.
Besides than quality and reputation issues, Sony are insufficient in responding
to the shift of market demand and losing of its competitive advantages. The delays for
the European launch of PS3 due to manufacturing problems (BBC.co.uk, 6th
September 2006) caused Sony to become incapable of fulfilling the increasing market
demands which increase the stake for Sony as there are other strong competitors such
as Microsoft and Nintendo to have a head start in gaining market share and enjoy first
mover advantages. Besides, Sony also responds slower than others in the increasing
demand of Plasma TVs and lost ground for key growing area. As Mintzberg et al
(1999: p96) suggest, “first mover may gain advantages in building distribution
channels, in typing up specialized suppliers or in gaining the attention of customer”
and “the first product of a class to engage in mass advertising tends to impress itself
more deeply in people’s minds than the second, third or fourth”. Therefore, Sony lost
its competitive advantages and large proportion of the market shares in the game and
electronic industry; they are also unable to benefit from the first mover advantages
which left them behind of their competitors.
Currently, Sony are implementing emergent strategies from both “inside out”
– Resources Based View (Hamel & Prahalad, 1990; Barney, 1991) and “outside in” –
Positioning view (Porter, 1980 and Mintzberg et al, 1998), or so called Market Based
View (Finlay, 2000) to secure its current position. Johnson et al (2005), Finlay
(2000), Lynch (2006) and Thompson & Strickland (2003) all suggested that an
integrated approach of the resources-based and positioning view can maximize the
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As for “inside out”, also called the competence-based view (Hodgson, 1998),
Sony has been green-lighting asset sales to free up cash so they can rebuild the
company around a tighter core of businesses. In December, Sony sold part of its 49%
stake in retailer StyleLife Holdings to a group of investors (Hall, 30th January 2007).
This managing for value strategy which “concerned with maximising long-term cash-
generating of an organization” (Johnson et al, 2005: p468) by disposal of assets to get
more funds and reinvest back into different business units such as R&D, production
and others can help Sony to strengthen its core competencies. As DeWit & Meyer
(2004: p326) suggest, “the real sources of advantage are to be found in managements
ability to consolidate corporate-wide technologies and production skills into
competencies that empower individual businesses to adapt quickly to changing
opportunities”.
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However, Priem and Butler (2001) have shown that the Resources Based
View, as currently constituted, contains a theory of sustainability but not a theory of
competitive advantage (i.e., value creation).They argue that “simply advising
practitioners to obtain rare and valuable resources in order to achieve competitive
advantages and, further that those resources should be hard to imitate and non-
substitutable is not very helpful in providing practical help” (Johnson et al, 2005:
p155).
On the other hand, as for “outside in” which is the Positioning view,
Mintzberg et al (1998) argue that positioning is important and had develop the
Positioning School. Sony also believes that the external business environment will
shift the strategy of the organization. Finlay (2000; p11) suggest that “organization
alter itself and the products and services it offers in order to match the needs of
customers in its chosen marketplace which is a market-based approach, so called
because the organization looks to the marketplace to see how it should act and how it
should evolve”. Besides, based on the environmental factors, Mintzberg et al (1998)
developed the environmental school which argue people in strategic management
must consider the range of decisional powers available, given the forces and demands
of the external context. Sony insufficient in responding to the external market had
caused them to lost ground in key growing areas and their strategy must be able to
cope with the external environment.
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Moreover, Porter (1991) strongly believe that making choices about how
organization position their company in its competitive environment is what strategy is
all about and emphasize on the importance of positioning view. He argues that
organization can sustain competitive advantages by implementing the generic
strategies by position themselves either being cost-leadership, differentiation or focus
(Porter, 1985). Sony had positioned themselves with a differentiation strategy which
seeks to provide products or services that offer benefit different from those
competitors and that are widely valued by buyers (Johnson et al, 2005). Sony are
rewarded with a premium price with its uniqueness (DeWit & Meyer, 2004) that help
them to gain greater competitive advantages.
However, Bowman & Asch (1996: p36) critics that “a final criticism of
Porter’s approach stems from our experience of trying to use these concepts with top
management teams wrestling with the strategies of their organization. In addition to
the lack of clarity surrounding the generic strategies, the generic strategies present an
essentially static approach to competition”. Hamel & Prahalad (1994) also argue that
“the traditional competitive strategy paradigm (e.g. Porter, 1980) with its focus on
product-market positioning, focuses only on the last few hundred yards of what may
be a skill-building marathon.”
(Removed)
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Finally, Sony is still in a critical position where they need to be extra caution
about all the potential crisis that they will be facing in the future. Finlay (2000: p451)
argue that “crisis control relies on both pro-active and reactive control. It is pro-active
in that, although the precise form of the crisis will be unknown, broad elements of
many crisis situations will be, and these can be planned for through risk management
and particularly contingency planning. Crisis control is also reactive in that the
specifics of the situations must be dealt with as they unfold”. Thus, risk management
and crisis control are also essential for Sony to implement in order to stay alert and
increase their awareness to potential threats.
In conclusion, Sony must learn from their mistake and implement more
effective and efficient strategies if they want to get out from this current unfavarable
situation. Besides than their current strategies, alternatives strategies suggested above
should become another major concern for Sony to ensure that they can effectively
rebuilt their poor reputation and regain more market share in the future.
(2177 words)
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References
Textbooks
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• Markides, C. (2004), “What is strategy and how do you know if you have
one?”, Business Strategy Review, Vol. 15, No. 2, p5-12.
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• Priem, R. L., & Butler, J. E. (2001), “Is the resource-based "view" a useful
perspective for strategic management research?”, Academy of Management
Review, Vol. 26, No. 1, p22-40.
• “Sony: death or glory?: Can blue chip giant regain its luster?” (2006),
Strategic Direction, Vol. 22, Issue. 4, p14-16.
Internet Resources
• Benson, M. (8th November 2006), “Has the sun set on Sony? - [Available at
http://www.wonova.com/11/2006/has-the-sun-set-on-sony/ ]
• Rowley, I. (2nd October 2006), “Sony's Battery Exchange: A Huge Price Tag”
- [Available at
http://www.businessweek.com/globalbiz/content/oct2006/gb20061002_17655
9.htm?chan=search ]
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Veiga, A. (21st December 2006), “Sony to pay millions for damaging software” -
[Available at http://www.msnbc.msn.com/id/16314555/wid/11915829 ]
• “Sony Hits More Problems In Japan With The Launch Of The PS3” (15th
November 2006) - [Available at http://www.wonova.com/11/2006/sony-hits-
more-problems-in-japan-with-the-launch-of-the-ps3/ ]
• “Sony suffers 94% loss on battery recall in 2Q” (26th October 2006) -
[Available at http://news.xinhuanet.com/english/2006-
10/26/content_5253924.htm ]
• “Sony boss 'to put consumer first” (24th March 2005) - [Available at
http://news.bbc.co.uk/1/hi/business/4378665.stm ]
• “Sony failed to fully study battery problem” (2nd October 2006) - [Available
at http://www.forbes.com/business/feeds/afx/2006/10/02/afx3061270.html ]
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