Sony 2004 Annual Report Download - page 6

44
Continuing to be one
of the world’s leading
consumer brands
– Nobuyuki Idei, Chairman
By successfully executing “Transformation
60,” Sony is enacting bold reforms that will
create new value and generate growth
What is your assessment of the current
operating environment, and what are
Sony’s primary goals in this environment?
The markets Sony is involved in are undergo-
ing dramatic changes. In the consumer elec-
tronics industry, we are witnessing rapid
advances in cutting-edge technologies in such
areas as networks and semiconductors. The
industry has been further thrust into an age
of mega-competition by the entry of new
participants from other industries and strong
economic growth in countries such as China,
India and Russia. The needs of customers are
becoming more diverse than ever, and ad-
vances in network technologies are creating
new ways to enjoy music, movies and other
content. The pace of change will only con-
tinue to accelerate.
Sony has been a fountain of groundbreaking
ideas since its inception in 1946. The transistor
radio, the Trinitron color television and
Walkman are just a few of our many innova-
tions that have altered people’s lifestyles. Sony’s
hallmark has always been its ability to identify
trends sparked by changes in the times and in
customer needs, and to use that insight to
create innovative products and services. Some
people believe that today’s remarkable pace
of change makes this a time of chaos. At
Sony, however, we believe this is a time of
unlimited possibilities and opportunities.
In this environment, it is vital that we initiate
reforms in order to remain a youthful, energetic
company for the 21st century. This is why we
formulated a group-wide mid-term corporate
strategy called “Transformation 60” (TR60),
scheduled for completion in 2006, Sony’s 60th
anniversary. Our objective is to position Sony as
a truly global company with an operating frame-
work capable of withstanding dramatic shifts in
business conditions. This will allow us to remain
one of the world’s leading consumer brands.
Sony’s aim is to continue to be a leading
consumer brand and evolve as a 21st-
century global company
To this end, Sony is implementing dramatic
structural reforms and a growth strategy
based on the convergence of management
resources
Can you explain TR60 in more detail?
TR60 can be thought of as having two central
pillars. One is a structural reform to enhance
our operational profitability. The other is a
growth strategy.
The first pillar is designed to enhance the
profit structure of our businesses. We are
doing this by cutting fixed costs through the
downsizing of our workforce and the consoli-
dation of our manufacturing, distribution and
customer service facilities. We are also endeav-
oring to reduce variable costs by reassessing
our strategy for the procurement of produc-
tion materials.
The second pillar, our growth strategy, posi-
tions home electronics, mobile electronics and
entertainment content as core businesses and
focuses on the convergence and centralization of
management resources within the Sony Group.
In the home electronics category, we believe
that the role of the television as the center-
piece of the living room will be enhanced by its
increasing ability to be linked up with other
electronics devices and access a wide range of
content. In the mobile electronics category, we
plan to accelerate the convergence of mobile
handset communication functions and audio-
visual functions, such as those found in video
cameras and digital still cameras, in a manner
similar to that in which functions have already
been added to cellular phones.
Concurrently, Sony is making substantial
investments in key components such as semi-
conductors that we believe are strategically
important. By increasing the proportion of
key components produced internally, we plan
to increase the proportion of added value
captured by our finished products. We believe
that this will further enhance the differentia-
tion of our products from those of our com-
petitors. An additional goal is to maximize
operating efficiency by leveraging information
systems to strengthen both our demand and
supply chain management operations.
Our convergence strategy for the entertain-
ment business is equally important. We plan to
capitalize on our entertainment assets in
music, pictures and games to increase the
value of our content. At the same time, we will
accelerate the convergence of entertainment
content and electronics products, building a
new business model that is suited to the net-
work era. Through these activities, we intend
to generate further growth in our entertain-
ment business, positioning us even more firmly
as a global media and content company.