Tough Decisions

As we all know, Japan is well known for the innovations of new technology as well as production. Korea has been long time competitor in the market. Recently, Korea has introduced new ultrathin televisions that has arisen awareness of competition for Sony and Panasonic. Worldwide known electronic companies had to think of the way to gain stronger position in competing with Korea. Both companies agreed to cooperate on production of new technology for OLED televisions as well as organic diode display and panels for large screen TVs. Japan’s largest consumer electronics companies plan to launch mass-production method in 2013. In addition, to reduce the production costs companies are discussing the option to partner with Asian manufacturer AU Optronics Corp. Another reason for merging is the financial difficulties that electronic manufacturers are facing. Strengthened Yen has made Japan’s products more expensive for other countries and therefore the export of electronics overseas has dropped.

The choice that Japan’s electronics companies made reflect the 10 Strategic Operations Management Decisions: Design of goods and services, Supply Chain Management, Managing Quality, Process and Capacity design, Location Strategy, Layout Strategy, Human Resources and Job design, Inventory Management, Maintenance and Scheduling.

The companies are aware of Korea’s advantage in technology and must adjust its production to be an equal competitor in the market. Sony and Panasonic must reduce its production costs in order to meet consumer expectations in price as well as quality. As I mentioned before, the stronger currency has made production more costly to other countries and they were forced to look for alternatives to reduce cost. Partnering with another company is one of the ways to reduce production costs. OM has to weigh the gains and losses of such partnership and make a rational decision. None less important decision for OM is to estimate the demand for new products. They have to evaluate the market and make a decision on the inventory needed. The shortage of it causes the loss of customers and the excess inventory is costly. As I mentioned above, both companies are experiencing lower sales than usual and therefore the pressure to make a right decision is overwhelming.

Do you think the decision to merge both companies, Sony and Panasonic is rational? Should they partner with an Asian manufacturer?

Kachi, Hiroyuki (2012, 06, 26), Sony, “Panasonic Ally on TV Technology”, Wall Street Journal, p. B4.

Leave a Reply

Your email address will not be published. Required fields are marked *