Japan, Sony Headquarters.
"What's going on? Our Walkman sales had dropped in the second quarter. What did the sales department do?" Norio Ohga was furious. He was scolded by the President during the meeting today.
Compared to the Walkman sales, Aiwa's products were selling well. Aiwa was still Sony's holding company in the past. But because Aiwa had been making losses for many years, Sony also suffered losses. Also, Sony needed to get rid of some bad assets because of the financial crisis. That's why they sold Aiwa's shares to Feng Yu at a low price.
But they did not expect Aiwa had already developed a new product at that time, and Heitaro Nakajima did not inform him about it. If Norio Ohga had known that Aiwa had successfully developed this new product, he would never sell Aiwa's shares. With this new product, Aiwa would be able to turn losses into profits this year. Within 3 years, Aiwa would be out of the negative equity situation.
Sony still had a strategic cooperation agreement with Aiwa. It was stated in the agreement that both parties must maintain a healthy competition and fight against the rise of other brands.
Now, it seems that this agreement was successful. No other brands could compete with them in the Walkman market. But Sony had never thought that Aiwa would overtake them. From the second quarter's sales, Aiwa will be able to compete with Sony this year. What about next year?
What made Norio Ohga furious was when he sold off Aiwa's shares, everyone was praising him for selling a loss-making company at a high price. But today, Aiwa had just started to rise, and all of them started to blame him for his mistakes!
Was this his mistake? Everyone had agreed to this decision at that time. I am only the Vice-President. If the President and you all do not agree, how can we succeed? All of you should get a share of the credit. Why am I the only one to be the scapegoat?
The Sales Department Head stood in front of Norio Ohga and bowed down. He allowed Norio Ohga to spit on him. Norio Ohga calmed down after scolding for a while. He asked the Sales Department Head to explain why Aiwa's market share had increased suddenly. What did they do better than Sony?
Aiwa still had some old production lines, and they were using a single magnetic head. These magnetic heads only had the function of playback and no recording function. This lowered Aiwa's cost, and this was suitable for Hua Xia's current market. Feng Yu was very clear about this point. Although the Hua Xia market had gradually opened up the recording function, it was not open to all regions. Without the recording function, Aiwa's Walkman can adapt to any region in Hua Xia.
Moreover, it was just a Walkman. Most people used it to listen to music, and very few would record it. Moreover, the recording effect of a Walkman was far inferior to a large tape recorder.
Also, Aiwa's BEE technology makes the sound clearer and more authentic. That's why music lovers are more willing to choose Aiwa. Also, Aiwa's headphones technology had started to overtake Sony, and this caused Sony's market share to drop.
The most representative markets were Japan and Hua Xia market. In the Japanese market, Aiwa had a higher market share, and with good products, they could accept it. But in the Hua Xia market, Aiwa had suddenly become so popular that almost no one was interested in Sony's products!
Aiwa had tried to enter the Hua Xia market in the past. But at that time, they were using Aiwa's brand, and the market did not recognize them. In the end, Aiwa gave up. But last year, Aiwa set up a Hong Kong company in Hong Kong and re-entered the Hua Xia market under the Aiwa brand. Within one month, Aiwa had overtaken Sony.
After analyzing, there were a few reasons. First, Aiwa's brand was more attractive to the people in Hua Xia. They would think that it was a Hua Xia product. The advertising slogan, "Aiwa Home Appliances, I love Hua Xia." Secondly, Aiwa's product positioning was not only for cassette players. It was also for learning products. This was why many parents bought Walkman for their children to learn a foreign language. Thirdly, Aiwa had shamelessly used Walkman's sound quality to compare with Sony's products. This comparison showed that Aiwa's sound quality was better. This made those music lovers give up on Sony and choose Aiwa brand!
There were also some other reasons that were not important. For example, Aiwa had a good distribution channel. Within a week, their products were sold to all the major cities in China. They also used TV and newspaper advertisements to promote their products. Aiwa had invested a lot in advertising. Also, Aiwa had higher profits for the distributors, and the distributors were more willing to sell Aiwa Walkman.
After listening to his subordinate's report, Norio Ohga asked: "How are you going to explain the Western countries?"
In the Western countries, Sony had always been the leader in the Walkman industry. Now, Aiwa had caught up with them. Are the reasons that you analyzed also applicable in the Western countries?
AIWA had also advertised their products in the US and Europe. They had highlighted their products' sound quality. Also, Aiwa's Walkman had abandoned the traditional black and silver color scheme. They had produced a batch of colorful Walkman. The exterior design was very attractive, and many girls chose Aiwa as their first choice.
Sony had not expected this to happen, and this caused their Walkman to lag behind Aiwa in appearance and quality. Even the new products introduced by Aiwa this year were not well received by the market.
What worried Norio Ohga the most was that Heitaro Nakajima could keep such important information a secret. After Hua Xia's man invested in Aiwa, Aiwa would be able to introduce a new product immediately. That means Aiwa would have more than one new product. If they continued to introduce better quality Walkman next year, Aiwa would be the leader in the Walkman market.
If that was the case, then Norio Ohga would be in trouble. Norio Ohga was the Vice President of Aiwa, and after the President had bought Columbia Pictures, the company's funds were tight and started to suffer losses. Norio Ohga was also one of Sony's shareholders and had a high chance of becoming the President.
But if Sony's Walkman market leader position was taken away by Norio Ohga because he insisted on selling Aiwa's shares, then he might not even be able to keep his position as the Vice President!
No. Feng Yu cannot let AIWA grow so smoothly. AIWA has the intention to rise, and Feng Yu must stop it. Feng Yu must force AIWA to follow behind Sony and help Sony to fend off the other competitors.
Norio Ohga could only blame himself for being too focused on the video game console project with Nintendo. If not, Aiwa would not have the chance to grow so fast!
Norio Ohga suddenly remembered why he had sold Aiwa's shares in the past, and all the directors had agreed to it. It was because Aiwa had a huge debt. The debt was more than 10 times its assets!
At that time, it was because of Sony, and those banks also owned Aiwa's shares, that's why they did not chase Aiwa for their debts. But now, can they chase Aiwa for their debts?
Without liquid funds and the money to purchase raw materials, how is Aiwa going to develop?
Competing with Sony is asking for death!
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