Posted at 11.02.2018
Sony Firm was formed in May 1946 and was mixed up in research and development of telecommunication and manufacture equipment. It had been then known as Tokyo Telecommunications Executive Company. The name was modified to Sony in January 1958 and was shown on the Tokyo Stock Exchange in December 1958
Sony was a respected company of consumer electronic digital products for both consumer and professional market segments in the first 1990s. This was probably due to the fact that the environment was abundant, simple and steady. There have been relatively few rivals who could match the technical prowess of Sony and as such, the organization dominated both its market and the global market with ease.
However, major changes happened through the later parts of the 1990s and Sony was forced to improve its structure. This was because the environment changed to a intricate dynamic one because of this of increased competition and Sony's lack of ability to maintain significantly good income. This informed the decisive decision by mature management, to change the composition of Sony Firm in 1999 to be able to improve and maintain market ranking.
In order to totally understand the framework of Sony Corporation, it's important to take into consideration the contingency factors and design parameters that may have inspired the structural settings. Age Sony Corporation of over 60 years in conjunction with its large size (as it is a multinational company) suggests that behaviour is formalised in the company. In addition to this, japan culture suggests high electric power needs of the most notable managers which creates the existence of comparative amount of centralisation. The research of the surroundings as at 1999, point to the actual fact that the environment was not at all hard (as it was still a leading consumer electronics maker) and, not very dynamic though there were indications of challenging competition in the market. This instability however, resulted in less centralisation as well as perhaps, less formalisation in the company.
Sony Organization was involved in the manufacture of varied products which got different market segments. This emphasized the necessity to segregate the divisions into network companies matching to market diversity(i. e. electronics, entertainment and insurance and fund). Each section exerts substantial control over functioning functions had a need to serve these marketplaces. This form of framework led to the exercise of vertical decentralisation from the head office. Decentralisation is however, not complete as the assumption is that the head office still exercises significant power over some activities such as heavy capital investment, research and development, capital constructions etc. Furthermore, the company placed much focus on standardisation of outputs. This is exemplified in the fact that through the company's 50th wedding anniversary, the words, "unique', 'quality', 'velocity' and 'cost' were coined in to the managements school of thought. Thus, quality is important to the company which might explain its strong brand image. . These features and the useful department of organisational technology among the various divisions which is shown by the transfer of required support functions and research and development laboratories to each network company highly support the Mintzberg divisionalised bureaucracy framework.
It is important to note however that the company does not fully participate in divisionalised bureaucracy among the characteristics of divisionalised bureaucracy is that it works well in an environment that is not highly complex or very active but the access and lifetime of new market segments and more ground breaking products point to the fact that the surroundings is fast moving towards becoming complex and energetic.
A further research using the Burns and Stalker, mechanistic and organic systems claim that Sony Firm exhibited a hybrid of both systems although it had more features of mechanistic system. This is supported by the actual fact that the organisation was considered to be operating in a comparatively simple powerful environment as a result of its market dominance from past successes. Thus, change during this time period was relatively progressive (although higher when compared with previous years). Furthermore, staff loyalty was significantly high therefore of the provision of lifelong employment. Organic system is exemplified in the necessity for continuous innovative products.
The organisational culture in Sony Firm as at 1999, is consistent with Handy's electric power culture. Vitality was concentrated at the top which is in line with the paternalistic design of Japanese culture where much admiration is accorded to elders and daddy figures in the company. A lot of the executive board users were long providing employees of the organization who were well past retirement age but still exerted considerable impact over decision making process in the organisation. A dominant example is the Idei's forerunner, Ohga, who second guessed most of Idei's decisions and tried to impact them to match his own desired benefits. (Schlender 2005)
However, despite the restructuring in 1999, the earnings of Sony Corporation continued to fall season sharply and investors began to lose confidence in the company. Thus, in 2003, Sony still under the authority of Idei, launched a three 12 months, second period of restructuring, termed "Transformation 60". This course of action aimed to securing an operating profit margin of at least 10% by the end of 2006 and also corrected some of the anomalies in the past structure. The organization was therefore restructured to be able to secure earnings and achieve success in market dominance. Sony concentrated resources in main businesses and optimized production infrastructure and resourcing fixed costs. Sony wanted to achieve the success by focusing resources and consolidating fixed costs. Thus, Sony started out the convergence of businesses, including electric business, entertainment business and financial business.
However, by the finish of 2004, it became clear that theexpectation of "Transformation 60" had not been heading to be realized. Sony was burning off margins and facing much pressure from the shareholders. Due to the growing discontent within Sony and the entrepreneur community, Idei handed over the reins to Stringer (who possessed successfully supervised the Sony US Company) in March 2005, wanting he could bring back the company back again to its position of market dominance.
A few changes occurred after 2003 but Sony Organization was still organized based on the divisionalised bureaucracy settings. Evidence supporting this includes the fact that the network companies were still divided regarding to market variety and much more decentralization because of this of the organic and vibrant environment. However, in line with the Melts away and Stalker model, it became typically organic because of this of the necessity to make fast changes in invention. Furthermore, commitment shifted to task and group as employees were presented responsible for failures thus resulting in upsurge in job responsibility and reduction in job security as unproductive employees were let go.
Changes were designed to the structural settings in order to achieve better performance and success. A visible change was the termination of lifelong employment (a feature of Japanese culture) through workforce retention and old age offers in order to cut down operating bills. The compulsory retirement of 'old' employees such as Ohga, resulted in a power change from top professionals to the CEO (Stringer) in 2005. Thus centralisation became more frequent as power transformed hands.
Administrative changes include restructuring of job positions through the scrapping of japan recruitment system that was people oriented as individuals were employed predicated on what "meets best for the business". A classic example is the past CEO, Idei who was simply an engineer with relatively little management capacities when compared to other managers under western culture, at the helm of affairs. This was replaced by something of locating the best competent person for a specific job. This was achieved through the session of Stringer as CEO (a proven manager) and the reshuffling of the panel customers and job positions
Having reviewed the re-structuring which happened in 1999 and 2003, it appears advisable to analyse the issues encountered by Sony Firm in order to provide acceptable explanations because of their failures. A few of them are briefly discussed below
Increased competition: The entrance of new establishments and markets with more ground breaking and market friendly products like the Apple's ipod device and Nintendo's Wii.
The organization responded by making more impressive products but this, however did not meet most consumer needs. A good example is the make of LCD tvs as contrary to the more popular Bravia models by its competition.
Japanese Culture: The seniority based campaign and lifelong occupation scheme which can be top features of Japanese culture are believed to be essential problems. Most of the top positions derive from age group attainment i. e. employees have to reach a certain age group before improving to a specific position. In addition to this, operating costs go up because of the fact that during expansion, the company confirms undefined positions for these folks and still pay them for doing practically nothing as a result of lifelong employment structure. Furthermore, these folks exert considerable impact on decision making process e. g. the previous CEO, Ohga. All of this combined limit determination for the younger people and therefore the development of the organisation
The management responded by requesting non-executive directors to step down and the board was reshuffled to give more responsibility to the 'younger' people like Yoshioka, Hirai, Suzuki and Ishida (Siklos 2009)
Falling income: the earnings fell sharply as a result of inability to handle market requirements, high operating costs (as a result of heavy investment in research and development) and cost control issues in development.
Cost slicing exercises were embarked upon to cope with this problem through workforce lowering, the convergence of operating divisions and the decrease in costs of making parts.
Too much variety: Sony Firm was involved in the manufacture of varying products such as consumer electronics, movies, personal computers, mobile telecommunications, some of that have been not doing well.
The response to this problem was the segregation of activities into three main divisions (i. e. entertainment, gadgets and insurance and fund).
We have analyzed the refined but relevant transformations which happened in the structural construction and important contingent factors in Sony Corporation during the last decade. The organization culture and national culture were discovered to be the majority of the issues with the organization. Although the outcome of the restructuring has not reached desired goals, the organization, under the command of Sir Howard Stringer, is becoming somewhat more lucrative in comparison to his predecessors as creativity has increased at a faster pace(a good example is the predicted make of an "Google" Television set) which has led to relatively better earnings over the years. It could however be interesting to see if he is able to completely break away from the militating elements in its structural design and design them towards installing within the strong environment.
The importance of research and innovation can't be overemphasized in a swiftly changing digital world. An example is the development of the ipod touch by Apple. Therefore, it is vital to take part in the creation of fast and well-timed innovative products in order to prevent the re event of a similar situation of when Samsung's HD Disc dealt a blow on Sony's Blu-ray technology just five times after release into the market( Edwards, et al 2005)
Engage in detailed market research to know the real tastes of consumers. An example is the development of LCD tvs as against Bravia tv sets which was the favorite choice.
Develop less complicated software to fit into the international market and not simply the home market, japan.
Increased co-operation among divisions and employees in the company through the creation of lateral linkages. It is best for budgetary control and setting up operational focuses on.
Co-operation with other market sectors which can lead to reduced development cost. For example, the cooperation between Samsung and apple led to the creation of the iPod Nano. It will however be mentioned that to problems of issue of interest in proprietary privileges of products (Edwards, et al 2005)