Corporate Strategy

1297 Words Jun 23rd, 2015 6 Pages
Q1. How did Sony become a diversified company? What was the rational for entering the entertainment sector? Was it a good choice?
Sony first ventured into diversification in 1961 when it created Sony Enterprise Co. in order to manage the Sony building in Ginza. Gradually, Sony moved into the space of retailing, took interest in a French restaurant named Maxim’s, ventured into Sony Travel Service and also became an importer to sports equipment and luxury goods.
Over a period 50 years, the company either acquired or started new subsidiaries, most of which are shown below: Year | Company (created or allied with) | Industry | 1963 | Joint Venture (JV) with CBS bought out by Sony | Entertainment | 1965 | JV with Tektronix | Measuring
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These ventures would later be renamed as Sony Music Entertainment and Sony Pictures Entertainment.
Additionally, Sony/ATV Music Publishing created in 1995, has effectively ensured a strong treasury of intangible assets in the form of copyrights of various artists. While on the face of it this may to not seem much, the long term benefits, are grossly undervalued.
Overall, venturing into the entertainment sector has proved to be a very good move on the part of Sony. Despite the initially losses suffered through Columbia pictures, the faith shown in this wing of the corporation has paid off.
Q2. Evaluate the corporate strategy based on recent financial performance.
When Kazuo Hirai replaced Howard Stringer as CEO in 2012, an announcement of its “new corporate strategy” was also made. This comprised of five initiatives which Sony would undertake, primarily revolving around the strengthening of its core businesses of digital imaging, game, and mobile.
Based on the performance reported in 2013, in table below, we can clearly see the changes for each segment Segment | Sales | Operating Income | | 2012 | 2013 | Y-o-Y % | 2012 | 2013 | Y-o-Y % | Imaging Products & Solutions | 761.3 | 730.4 | -4.1% | 18.6 | 1.4 | -92.5% | Game | 805 | 707.1 | -12.2% | 29.3 | 1.7 | -94.2% | Mobile Products & Communications | 622.7 | 1257.6 | 102.0% | 7.2 | -97.2 | -1450.0% | Home entertainment & Sound

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