The Economist point out that Sony is a company that long dominated the field of consumer electronics. However, every product has turned unprofitable. Sony expects to lose nearly $3 billion when it reports its 2008 results, its first loss in 14 years. Currently, Sony has many competitors and has loss on every set it has sold. The crisis is enabling Sir Howard Stringer, Sony’s chief executive, to reorganize the company into 2 groups, one based around networked media products and other encompassing televisions, cameras and components. Moreover, the company cut costs by laying off people around 16,000 employees and closing factories that affect their workers who had counted on lifetime employment. Sir Howard is in a position to make thorough changes and have to make it quickly enough to save Sony and himself. The next year, if he cannot overhaul the company, the next head to roll will be his.
Sir Howard uses this crisis to reorganize the company which hard to do in the past. Does this change can help the company to gain more profit? I think in the economic crisis, it hard to increase sales that have high competition. The issue of cutting costs; he reduces the company’s costs by layoff employees. I think many companies which have to reduce their expense will do as him because this method can reduce their costs immediately but it will affect the workers who work there for their lifetime employment and never think to find a new job. Is this method will useful in long term? Moreover, many of them who have a low position and low salary will unemploy before high position staffs. Is it fair for lower position staff? In my opinion, it seems unfair for employees who work for the same company. Furthermore, to reduce the same costs, amount of laying off people with low salary are more than high salary staff.
What do you think about Sir Howard ideas? Does Sir Howard can help Sony to overcome the crisis within one year by reorganization and reducing costs?
References
Game on. (2009, March 5). The Economist. Retrieved March 9, 2009 from http://www.economist.com/people/displaystory.cfm?story_id=13234173
Wednesday 11 March 2009
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I have heard that Sony would lay off employees and abolish some major departments. But, I don't know much about business. (Actually, I have been interested in business field since I was young.)
ReplyDeleteWhen some departments were abolished, no mater to employ that employees even high position employees.
I think, in economic crisis, almost all companies are impact, it's difficult to solve in short time, only 1 year.
Therefore, Sir Howard may take more than 1 year to solve, although he has much experiences to recovery companys from many business crisis. However, I sure Sony will not out of business, because Sony's products are high qualityand good design, and Sony also has own high technology such as blue ray dise(newest type of CD), cell micro processor used on playstation3(next generation console game) as well as notebooks, audio chip in Sony Ericsson mobile phone and so on. However, they are more expensive than other brand products. to decrease price of them might be help Sony stay in business.
Well.. I'm not supposed to say that, but I would say.. I think laying of employees is actually the most effective way to keep the company running business. Of course, if it were me or my husband, I'd be angry, but... There might be another way to solve the issue, and it must be the last decision, but yet laying off is also neccessary, I think.
ReplyDeleteI agree with Shinobu. It sounds awful, and I hope that it was only done as a last resort, but laying off 16,000 people is probably still better than pretending there is no serious problem until the whole business is lost and everyone is without a job.
ReplyDeleteI think a lot of people are learning some hard lessons right now as most countries economies go down hill.
I hadn't read that article before. 16,000 is a lot of lost jobs!
But like Mark, I like Sony products: I have a Sony TV, DVD player, camera, mobile, and so on. I hope they survive and come back to full strength.
Nice post. Thanks Pond.
I’m not sure about the Sir Howard Stringer’s policy on reorganizing the company into two groups. I mean, I don’t know how it can solve the economic problem at this time. I also agree with Shinobu that laying of people help the company to survive. However, I wonder whether 16,000 people are a big amount of employee for Sony Company. On the other hand, if Sony has 3 million employees worldwide, 16,000 is not a big amount. However, losing job around this time is a very bad situation because it’s also very hard to find a new job.
ReplyDeleteIn addition, I watched the news about an interesting Japanese government’s policy which is the sharing-job policy. In this policy, employees share their jobs with others that mean they will work and gain money less, but they won’t lose their job and other people also get a job. I think it is an interesting strategy.
I read the Wall Street Journal few days ago at the section Management. There was an interesting interview with an CEO from NIDEC corporation of Japan. He mentioned that his company never lays off employees since 1973 when the firm established. This economic crisis is the third time that the company has encountered. His company cut the salaries of CEO and other high rank positions by 50 percent or more and cut those of other lower managerial team less than half but trim the salaries of front-line workers,who are the largest group of employees, only 1 percent. The main reason to keep these employees because he believe they will help the company to be the first who are prompt to leap ahead other competitors when the economic recovers again. This human resourec policy is considered as one of the company's key success factors. He also added that the cutting costs by laying off employees is inappropriate to Japanese culture which believe in long life employment. Also, he argue that laying off employees as a way to cut costs is a solution from USA which seems to be a misguide solution to other Japanese companies.
ReplyDeleteThat was what I came up when I read Pond's post.
However, Sony company may be much different from NIDEC in terms of products and management.
Like Mark, I think Sony has its own strengths. However, I am not sure whether one year would be enough for Sir Howard to overcome this crisis.
Thanks Waew. Actually, after I read Pond's post, I thought small talk with Waew. I remembered Waew's saying that one of the company in Japan never have laid off their employees after they started to manage thier firm. If they confront economic crisis, they cut salaries of CEO and any other workes as Waew said. I think it is very good case to overcome economic crisis. However,the company is different from Sony such as the number of employees, right? Even though as Shinobu and Peter's argued laying off employees is good way for the company to overcome the global economic crisis, I would like to revalute the thoughtful management style of NIDEC.
ReplyDeleteSony must lay off employees, because many major departments were abolished. Sony don't have position for all of them.
ReplyDeleteSorry I forget give my source. I have read this news around early of this year, so my source is rather old.
ReplyDeleteTimes Online said that "The expected restructuring - considered by many analysts to be occurring far too late - is likely to be announced early next month, with the lion's share of the changes imposed on Sony's domestic Japanese operations in the form of factory closures and the abolition of several major divisions. " (2009, para3)
References
Sony on brink of upheaval as analysts back British chief. (2009, Jan 5). Times Online. Retrieved March 9, 2009 from http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article5446963.ece
Thanks for your source, Mark!
ReplyDeleteI didn't know that Sony is confronted with the problem, abolition of several major divisions. I feel again that globla economic crisis is very serious.