Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code :LDS0024C

Year :2007

Industry :Engineering, Electrical and Electronics

Region : Japan

Teaching Note:Available

Structured Assignment :Not Available

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Introduction: On 7th.March, 2005 the Board of Directors of the giant multinational Sony Corporation appointed Howard Stringer (Annexure I) as Chairman and CEO. The appointment created history because it was the first time an ‘outsider’ non-Japanese was selected to head a Japanese electronics conglomerate. Stringer formally took over in June the same year replacing former Chief Nobuyuki Idei who had been Chairman from 2000 and also Group CEO from 2003.2 Consequent to the appointment some Board members resigned taking responsibility for the poor performance, over the years, of Sony Electronics, a business that made up 70% of Sony’s $64 billion annual revenue.3 Moreover, when Stringer became Chairman, Sony Pictures was passing through one of its worst slumps in years after acquiring MGM, in partnership with three private-equity firms, and Comcast, a cable television company.4 Tensions were on the rise between Sony Music and German partner BMG in the merger of Sony BMG Music Entertainment. Stringer commented that it was a little unfortunate that it was not a more tranquil time for the two entertainment companies. He felt that jobs like his come during difficult times and that the early years were going to be demanding.

Other sectors were also beset with problems. Sony (Exhibit I) was losing the television wars to Sharp, its Walkman line was being crushed by the Apple iPod, and the company’s bloated management made it hard to launch a counter-attack.

In September, 2005 Stringer began implementing the first part of his strategy to turnaround Sony. He cut 10,000 jobs, 7% of Sony’s global workforce, closed down 11 out of 65 production facilities worldwide and put in place plans to reduce costs by $1.8 billion by March, 2008. The idea was to focus on developing their core business and trim product lines. However, it was observed that Stringer was very clear that reducing costs was just one of the many parameters that could affect bottom lines. He explained the need for new projects and strategies to be covered by timely decision making. So the important question was: Would Howard Stringer’s tenure see Sony regain its top position as an innovative item producer of electronic and digital entertainment?