Launched in 1946 in Japan, Sony gained a reputation for producing innovative products that were sold throughout the world. In fact, the firm’s success was instrumental to Japan’s development as a powerful exporter during the 1960s, 1970s, and 1980s. Sony was sometimes “first to market” with an innovative product, while sometimes being able to rapidly enhance a product’s capabilities by innovating. Introduced in 1979, the Sony Walkman, which was a personal stereo tape deck, is an example of a “first to market” product from Sony. On the other hand, Sony innovated the transistor radio—initially developed by Regency Electronics and Texas Instruments—in a way that made the product commercially viable. Regardless of the type, innovation has been critical to how Sony competes in multiple product areas. Realizing the value that could be gained by sharing resources, capabilities, and core competencies across types of businesses, Sony’s success for many decades was a product of its commitment to “convergence,” which the firm operationalized by linking its activities across businesses such as film, music, and digital electronics. In essence, Sony was successful for many years as a result of being able to effectively implement the related constrained strategy. But as we noted in the chapter when discussing the related constrained strategy and the structure needed to implement it, an inability to efficiently process information and coordinate an array of integrated activities between units are problems that may surface when using the cooperative form of the multidivisional structure. This appears to be the case for Sony. In response to performance problems that have plagued the firm for over a decade, Sony put into place significant structural changes in October 2015, intended to be the foundation for improvements to Sony’s ability to create value for customers and enhance wealth for shareholders. At the core of the structural changes are efforts to group the firm’s businesses in ways that allow Sony’s upper-level leaders to more effectively allocate financial capital. A key objective is to allocate capital to the businesses with the strongest potential not just to grow, but to grow profitably. In essence, the new structure is an example of the SBU form of the multidivisional structure.

Question

1. To implement a corporate strategy, a firm needs to have a  strong set of capabilities to “parent” the set of business  units that the firm has established or acquired. Given  Sony’s history and organization structure, what would  you argue are Sony’s strongest parenting or corporate capabilities? How will the new strategy utilize these  capabilities?
2. Do you think that Sony has the right organization structure to foster the necessary integration among its electronic and entertainment content businesses that its revamped strategy seems to entail?
3. What additional organizational structure and/or process adjustments will Sony need to make to realize its revised strategic objectives?