Sony Corporation is a Japanese multinational company based in Tokyo, Japan. Its vastly spread out business is mainly focused on the gaming, electronics, financial and entertainment services sectors. The company is one of the top manufacturers of electronic products for the consumer and professional markets. Sony is ranked 87th on the 2012 list of Fortune Global 500
To understand the company better we will now analyze the way changes have taken place, what were they’re reasons and how the company responded to it. Changes are not always the best thing but many businesses need to adapt to them to make changes.
Types of changes that have occurred in Sony
Nobuyuki Idei , former Chairman and Group Chief Executive Officer of Sony Corporation (until the 7th March 2005) Idei was appointed and initiated a major shift from analogue to digital technology, as there was a belief that Sony was lacking behind in the market in this respect. Idei also targeted the top position in the audio and visual industry, a universal standard in home computer devices and a new distribution infrastructure. He believed his job was the ‘regeneration of the entrepreneurial spirit’ believing it had been lost. Sony’s problems continued and were ‘most obvious in its core electronic business, which makes up for two-thirds of its income’ as the consumer devices such as DVD players, Televisions and music players came under immense price pressure and Sony did not come up with any more exciting new gadgets to increase profits . Idei resigned after many hurdles he faced and handed the authority to Welsh-born American Howard Stringer, a former television executive. Prior to joining Sony, Mr. Stringer had a distinguished 30-year career as a journalist, producer and executive at CBS Inc. Stringer aimed to unite cutting-edge technology with entertainment content while reviving Sony’s electronic business. To combat the price drops of rivals Stringer streamlined Sony, unveiling a sweeping restructuring plan that cut 10,000 jobs, shed a number of unprofitable divisions and products and attempted to centralize decision-making. Woods (2006) identified that ‘Sony has started to respond faster to changes in the operating environment by focusing more on software and services as well as by streamlining its chain of command’ (p. 17), while this new team was commended for accelerating the pace of change within Sony (Woods, 2006). Stringer initiated more top-down leadership to achieve Sony’s goals for the upcoming years, something that Kotter says is key as he identifies the need to ‘create visions’, ‘motivate’, ‘establish direction’ and ‘align people’. Ireland and Hitt (1999) developed six components for successful strategic leadership including determining a firm’s vision, maintaining core competencies and developing human capital, all aspects that Stringer has developed upon with his insistence to develop new technology and benefit from a centralized decision making system.
Sony being a multinational corporation in the electronics business, the company faces significant macroeconomic challenges. The decreasing trend in profits could be seen since 1998, possibly the main reason that prompted the need for an organisational restructuring. Whether the organisation’s strategy influences its structure or vice versa, the structure of Sony has to be evaluated first. In 1999, after the restructuring, the company became a tall hierarchical structure with three main business areas – electronic, entertainment and insurance and finance. Alongside with the “unified dispersed” model to face the constant market demands, the company became a divisionalized form with decentralization of dispersion of power to ease decision-making. The divisional structure of the electronics business is divisionalised due to its low interdependency level, adhocracy in...
Books used to accumulate general information on the topic:
Organisational Behavior by Mcshane, S. L/ Glinow, M. A. V.
Change Management: The People Side of Change Second Edition by Jeffery M Hiatt
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