For decades, the Japanese company Sony has been one of the recognized world leaders in the production of electronics. But with the beginning of the new century, the company's business did not go so well, for the last four years it has suffered heavy losses.
For the first quarter of 2012-2013, Sony's losses increased by more than 1.5 times and amounted to $ 314 million. The company has suffered losses for the fourth consecutive year. The result was a natural decline in the value of shares, compared to 2005, it fell by 60%.
The fall in the company's capitalization by 60% in seven years is a real disaster; it will be very difficult to restore its former positions in the world market. The main reason for Sony's losses is the strongest competition from Asian countries, primarily South Korea, Taiwan and China. If Sony can somehow compete with South Korea due to the fact that the cost of labor in these countries is commensurate, then the Japanese manufacturer is unable to compete with Taiwan, and even more so with China. The recent natural disasters in Japan have also become a serious problem for the company, resulting in heavy losses from business downtime.
The strengthening of the yen also negatively affects the competitiveness of Japanese goods in the world market; the reason is the flow of speculative capital from troubled Europe to a calmer Japan. The high exchange rate of the national currency increases the cost of goods produced in Japan, making it more difficult for them to compete for a buyer. As a result, Sony is in a paradoxical situation - the total revenue is growing from year to year, but the company is constantly at a loss.
In an effort to stabilize the situation, Sony is selling off non-profitable shares in joint ventures. There is also a reduction in staff, the company announced that by the end of the year it will reduce the number of employees by 6%, which will amount to 12 thousand people.
The negative results of the company led to a change in its leadership. New CEO Kazuo Hirai promises to fundamentally reform the firm's earnings system, hoping to make the company profitable again.
