Sony Case Study Essays

Sony Case Study Essays Sony Case Study Essay Sony Case Study Essay International Business Strategy Case Study: Sony: managing the international Ramp;D network 1. How did Sony internationalize its Ramp;D activities? Sony started to internationalize its activities in the 1950’s. For this, it used an incremental and cautious way. They followed the Morita’s strategy which is: first to learn about the market, to learn how to sell to it and to build up its corporate confidence before to commit itself. He also says that when you have confidence, you should commit yourself wholeheartedly. So Sony started by exporting products through foreign agencies or its own sales offices when entering foreign markets. The manufacturing plants close to markets where sales took off were also set up. Sony also internationalized its Ramp;D activities, starting with marketing activities in the US and other centres across Europe. Sony established incrementally overseas technology centres when the overseas sales and manufacturing subsidiaries were successful. Until the early 1980’s, these Ramp;D centres were set up by Japanese business labs or by foreign subsidiaries without the direct involvement of corporate headquarters. Sony established its first overseas Ramp;D centre in San Jose in California in 1977. The second was built in Basingstoke in UK in 1978. What were the initial motivations for Sony to establish technology centres abroad? The main reason why Sony’s foreign subsidiaries established Ramp;D activities was to solve problems faced by local sales and manufacturing activities, especially requirements. Indeed they had problems to modify products for local markets and to provide technological support to overseas plants. With technology centres established directly in the countries concerned, it was easier to analyze the local needs and to act directly. Sony also believed that foreign subsidiaries should ultimately conduct their own manufacturing, marketing, service financing and Ramp;D activities. How would Kuemmerle categorize the Ramp;D centres at Sony? Ramp;D centers at Sony can be categorized as home-base-augmenting because advanced knowledge from local Ramp;D centers is used to improve other Ramp;D bases. Indeed, the goal is to benefit from host country input markets as new suppliers of valuable resources or so called new FSAs. In the mean time, Sony has understood the need for more adaptation in order to meet host market demand requirements. . How have the motivations for internationalizing Ramp;D changed over time? At first Sony was very cautious in internationalizing its activities. It was very gradual. Foreign Ramp;D activities were set up only where Sony was successful. Sony believed that its foreign subsidiaries should run their Ramp;D activities themselves. The early motivations to proceed that way were to solve problem s faced by local sales and manufacturing activities, especially requirements to modify products for local markets and to provide technological support to overseas plants. So the first motivation was actually product adaptation. Managers on the field were more likely to choose the right Ramp;D projects to engage in. the underlying motivation was also to develop products locally in order to meet the needs and requirements of the local markets. Sony also aimed to realize global synergy in Ramp;D by transferring local specialties to other regions. But later Sony felt the need to use advanced knowledge embedded in various foreign locations. Indeed, some technologies were far more advanced in some countries than in others. There was then a clear need to establish Ramp;D bases in advanced technology locations so as to access the relevant knowledge. The second motivation could be called access to advanced knowledge. Then internal coordination between Ramp;D labs had to be increased to improve efficiency and to create synergies (efficiency and synergies). Coordination had become an important motivation for internationalizing Ramp;D while autonomy was kept by local Ramp;D centers in order to adapt to local requirements. 3. Why did Sony feel the need to internationalize its Ramp;D activities in the late 1980s and early 1990s? First Sony overseas production accounted for 30% of Sony’s total production and foreign sales represented 70% of Sony’s sales. So there was clearly a need to increase the fraction of Sony’s international Ramp;D which represented a too small fraction of Sony’s total Ramp;D. There was also the need to keep on developing products locally in order to meet local needs and requirements. Sony also felt that some parts of the countries could use more advanced technologies than others. There was then a need to allow Ramp;D centers from countries that were less technologically advanced to enjoy the advanced knowledge gained in other countries in order to remain at the cutting edge of technology. 4. How did Sony manage its overseas Ramp;D activities? How did the managerial approach evolve over time? As we’ve already said before, Ramp;D centers were set up by Japanese divisions or by foreign subsidiaries and managers of these centers were given substantial autonomy. Actually the overseas labs had the freedom to decide which Ramp;D projects to do. Then, as they gradually internationalized, Sony thought they had to increase internal coordination between the different Ramp;D labs in order to improve efficiency and create synergies. That’s why they introduced in the early 90’s a regional management system, hoping to improve internal coordination. In fact, they gave specific role to the US, Japan and European based offices. The CTO based in Japan became responsible for worldwide Ramp;D strategy, while CTOs in the US and in Europe were responsible for regional Ramp;D strategies and the coordination of activities. In addition, they organized coordination meetings twice a year for the 3 CTOs to discuss internal collaboration and resource allocation. However, overseas labs retained the power to plan and execute their own projects. 5. What have been the problems with Sony’s way of managing Ramp;D activities? There are 2 mains problems with Sony’s way of managing Ramp;D activities. First, the lack of coordination among divisional managers due to a silo structure. This insufficiency of coordination led to bad allocation of resources in Ramp;D for improving existing products. Moreover, different divisions and products groups under the decentralized structure have been allowed to pursue independent agendas. So, different labs worked on the same project. It is fair to say that Sony wasted resources and duplicated efforts for nothing. Secondly, even if we don’t care about the first problem, Sony’s Ramp;D efforts have simply been less effective than those of rivals because of a major problem in the realm of strategic guidance and incentives. 6. Besides in-house restructuring to strengthen its technological capabilities, what did Sony do to rejuvenate its business? Sony started to form strategic alliance to increase its technological strengths. For instance, Sony, IBM and Toshiba developed together Cell, a semiconductor described as a supercomputer-on-a-chip. Joint ventures were also formed by Sony such as Sony BMG in the music business and Sony Ericsson in mobile phones business. Sony has also worked on the structure of Ramp;D’s activities. They tried to create a sense of urgency and to stop with complacency. In 2005, they launched a plan to reduce management layers, improve coordination of Ramp;D and refocus Ramp;D on growth areas. This plan was called â€Å"Project Nippon†. Sony is also trying to create an â€Å"over-arching structure† for research and development and software spending for all products. 7. Can you provide an update on the internationalization of Sony’s Ramp;D activities, using materials available on the Web?