Saving Sony Company - Essay Example

SAVING SONY Lecturer: Saving Sony Question Change Is the Only Constant Since its inception in 1958, Sony has seen a variety of changes in its structure and functioning. However, the most notable changes were seen at the beginning of the 2000’s when the company began restructuring its business and operation components. From the perspective of organizational dynamics, change is the only constant that organizations such as Sony have to adapt in order to survive in the marketplace. This is because most of the businesses in this age are operating using the most efficient human resource combined with the newest technology in the market. In this segment, the major focus will be on Sony’s journey of inevitable change that has made it reach where it is today. Perhaps the first change that the company experienced in the millennium was the appointment of Howard Stringer in 2005 as the chief executive. Apart from Stringer being the first non-Japanese to head the firm in over a half a century, he had a history with some of the fiercest competitor of the Sony Corporations. Despite this, he was the best choice to turn around company’s dwindling profits. Organizational analysts were sceptical of his approach of streamlining the operations of the business and the massive job cuts. The new chief executive included several other ambitious techniques that previously never existed in the company. For instance, he scraped off entire lines of production such as production of cathode ray tube (CRT) television sets. Change was also inevitable in the composition of human resources for Sony over the years. This is partially a step of business strategy and partially for skills that the company required for its future plans. The laying off of about 10,000 employees as a cost cutting measure had a direct impact on the company’s short term in terms of public perception. However, this was necessary to turn around numbers for the company. Human resource in major companies is a key element for their success or failure as Marshak (2005, p97) illustrates. This is because all decisions are made and implemented by directors and employees respectively. Therefore, chief executives and company directors aim at hiring the best and retaining the most productive employees at all times. In light of these, the employee restructuring of Sony was implemented by eliminating human resource that was either too obsolete or redundant in their work. This is a change that most of other multinationals are experiencing today. Thirdly, cultural change is another dynamic that Sony has experienced over the years. The CEO himself noted once that the corporate culture of Sony of producing technologically superior products was working against the company (Pilling, 2007, p5). This is because the newer and younger clientele look for technology that has a combination of ease and convenience in their gadgets. Evidently, some electronic devices of the company’s competitors are better because of their simplicity in usage. For instance LG’s television sets have fewer buttons and less complicated features than the Sony’s television sets. The culture of dynamic change in production and marketing of products is meant to streamline the company’s future. The organizational decision making process determines the speed by which implementation of objective takes place (Bryan and David 1989, pp6). Some of multinationals have a culture of bureaucracy whereby decisions take lengthy processes to be made. This is a dangerous move since time and money is lost to competitors. Therefore, Stringer advocated for a more streamlined structure of decision making where each unit of operations would make decisions on key areas without necessarily approval from another. Such moves have worked fairly well in many small and medium enterprises (SME’s) in corporate decisions. This is a change that Stringer successfully introduced to the market. Finally, the change of business operations is the most important that the company has seen over the last decade. Sony being a technology oriented company operates in a very dynamic and delicate environment. This is due to the obvious knowledge that technological advances are made every day in the world. Its single most known product is the walkman which was received very well in the market. However, that did not last long because other easy to use devices were introduced to the market and eliminated the products from the market. Products such as DVD and mini-disc that were constructed while stringer was at the helm have seen both positive and lackluster reception from the market. Therefore, change is the only constant that Sony has experienced over the last decade. Despite this, its corporate image has remained the same and its ardent customers are still intact. Question 2: Internal and External Forces in Sony That Have Created Need for Change The environment where a company operates has a direct impact on the strategic decisions for that company. Both the internal and external environments provide the company with opportunities and threats which facilitate its operations. In Sony, both internal and external factors have played a key role to determine the path of change which the company makes. This section highlights some of the major forces that have made Sony make the changes it has done so far. With no doubt, the internal environment for Sony has made a big contribution towards the company’s change. Some of the factors here are the human resource, capital allocation and cash flows. Others include the products on offer as compared to the market’s threshold. Externally, factors such as technological, competition, social aspects of the markets and legal position of the company have created the need for change. The most influential internal factor that made the company take such drastic measures as job cuts is the money flow. By the end of the 90’s and early 2000’s, the company had begun experiencing tumbling of its share prices and revenue losses. Its sales had declined considerably compared to its competitors such as Samsung and Apple which produced similar products. The main reason for the poor recordings was the irrelevance of some of its products which were not appealing to the masses. Secondly, some of the financial decisions that previous managements made were not clever in the long run. Therefore, for the sake of the company’s income statement and balance sheet, major changes were to be made in the company’s finances. Mr. Stringers’ economic stimulus plan cost Sony about $1.8 billion which to some was a bit overdue. Therefore, financial situations of the company made the CEO and the entire corporate body such changes. Secondly, the product on offer by any company is a major internal factor that fosters changes. Being an electronic production company, Sony designs products not only appeal to the customer but are cost effective according to Pilling (2007, p5). This ensures that the customer and the company are satisfied. Due to this, the traditional CRT television is replaced by the HD LCD technology that is more customer-friendly. This factor is directly linked to the employees that are present to carry out these functions. Some of Sony’s competitors have introduced tri-annual employee crash courses to make the employees better in productivity. In other cases, the only way to streamline the quantity of employees is through job cuts and retrenchment of staff. This is one of the most drastic and ultimate ways of keeping profits intact and changing the direction of the company’s future. Externally, there are forces that have made Sony have a need to change its operations. Competition is the first factor that necessitates these changes. In many cases competitor analysis become the basis which companies make their decisions. Samsung and Apple which are the major competitors for Sony have realised better profits in the past few years. This is because of their ability to read the market and the mood that prevails. In addition to this, strategic decisions for such companies have been out rightly on point. In this regard, competition serves to make the company have a self analysis and audit in terms of markets decisions. The other external factor which made Sony experience the changes it has today is the technological factor of its operation. It is obvious that the mode of production and design for electronics is technologically oriented. However, product marketing and selling is technologically oriented by service companies according to Bryan and David (1989, p7). For Sony, its product positioning has been excellent over the years because of the strategic marketing segmentation. However, in its line of production, Sony is one of the most technologically oriented Japanese firms. Therefore, this is a change that is not only necessary but inevitable in the long run. Other minor external factors that have the direct impact on Sony include the social impact and legal perspective of the company. The market place is a social aspect of any company. Perceptions, attitudes and approaches of customers to any company greatly affect the company’s sales. When Mr. Stringer joined the firm, the dwindling of Sony’s shares was not a good thing for the company because it was affecting its image. The customer and the investor always want to be associated with a company that makes profits and records good returns at all times. Therefore, changes both internally and externally are necessary. Question 3: Implementation of Sony’s change by using Various theories There are various theories that organizational experts have put in place to create and implement change in an organization. These models and theories are very many but a few are notable and inclusive in their application by a company such as Sony. For a manager to successfully make a change in their approach, they must fully understand the dynamics of the organization they lead (Phillips,1983, p7). This is because of the impact which even the slightest mistake may create to such a multinational’s stakeholders. For Sony, the most important aspect of change management is to be clear about their goals and objectives. There are four models and theories which can be used by Sony to implement the changes of their environment namely the Lewin’s model, the neoclassical theory, and systems theory. A combination of the three will be the basis of discussion in this segment. According to Lewin, change must be pre-planned and executed by doing away with some of the organizations components. One component is the organizational culture that existed at the time. He advocated for a complete reshuffle of the present organization and corporate culture. This means that the organization and corporate culture must be completely changed and replaced during the process. As a consultant it will be vital to monitor the effects that the step takes since it will pose a cultural shock for people in the short run. All stakeholders of Sony will encounter a bit of cultural shock when they experience the changes. For instance, the CEO, Mr Stringer came overboard and pioneered a restructuring of the company’s operations and decision making. Previously, each unit of the firm had autonomy in decision making. He introduced a centralized decision making authority that saw some of these units forced to accommodate new ways of doing things. One must appreciate the fact that it is inevitable for the organizational human resource to experience the gap which the change brings forth. The essence of monitoring this is to ensure that productivity does not go down during the time of transition according to Phillips (1983, p16). Secondly, the neoclassical theory should be applied at the levels of human resource management. In this theory, there is an advocacy of eliminating the rigid structure in all sections. Being manufacturers of electronic products, new ideas and ways of doing things should be brought about from the workers themselves. Workers ought to be treated well and their opinions taken into consideration. When change of both the structural and HR components of the firm takes place, there is a cost factor that also must be taken into consideration. For Sony, the cost might have been 1.8 billion dollars but for any other SME, such costs could shut the business in the long run. Therefore, the decision makers of the firm in the change should be brought into sharp focus to ensure that the costs of the organizational change are within the range of operation. By proper analysis of the projected change, the organization can cut the expenses without hurting the balance sheet of the organization (Taylor, & Hansen, 2005, p56) The systems theory on the other hand has components which Sony can rightfully employ in its quest to implement its change. Here, the change agent is the interconnectivity of all systems of the organization. This ensures that every part of the organization feels a positive impact of the changes that may be realised at another section of the firm. For instance if Sony’s advertising strategy works as planned a positive response is echoed at the end of operations and vice versa. Analysts agree that for change to happen, all stakeholders must be involved at all levels. This is because exclusion of any part of the body or organization may not only slow down the change, but may jeopardize the whole process (Robbins, 2004, p8). Mr. Stringer advocated for a process which was to eliminate technological redundancies by reshuffling the entire production line. This is perspective was a positive thing to do for the company especially when it was struggling. Such a move ensures that Lewin’s model of change has put in place. A combination of these factors makes the company be in a position to turn around and make its numbers. Ultimately, change has never been easy in life. This is even worse in the corporate world where drastic measures of change can be very rewarding or terribly detrimental. Therefore a paradigm shift of thought must be incorporated to ensure that change is not only possible but made to be according to the plan. Resistances of change in an Organization At any particular time of change, there are various forces that come between the stages of formulating the desired change and its implementation. These may be internal or external forces that are deliberate or unavoidable. For a corporation like Sony, there are various dynamics that a change agent should take into consideration for change resistors when initiating the process. Some of these resistors include poor communication, administration processes, redundancy of skills and financial factors as Miranda (2013) teaches . These four factors may be only a sample of many more but rightfully reflect the perspective which major companies pass through in their quest for change. Poor communication can cause people in an organization to misunderstand the vision that a change agent has in mind (Stancioiu, & Militaru, 1999, p64). The administrative process of communication makes it possible for an organization to share and implement the desired changes. The internal arraignment of the information should be factual and relevant while capturing the details of a particular change path. Communication up or down the hierarchy of organization should fast and particular because any distortion of information may change the whole idea. Due to poor communication, people may be placed in a position of uncertainty hence resists the changes. For instance, when job cuts are the only way to streamline the organization’s structure, the CEO must ensure that all stakeholders are made to understand the rationale behind the process. Therefore, poor communication may make it hard for the people to appreciate its essence and resist. In the same line of thought, administrative processes may be a stumbling block towards change. Some organizations are rigid in their way of doing business especially when making decisions. There is lack of autonomy in decision making the processes slow as Marshak (2005, p99) puts it. This means that any short term change may not take place because of the lengthy processes. For instance, Sony had a problem when its software development in the making of its television sets in the early 2000’s because of slow implementations of ideas. This almost cost the company several million dollar losses because of the rigid administrative processes. Obsolete skills or brain drain is another major change resistor. Human resource development is a process that takes time effort and money to fully develop. In the course of change, many organizations may plan to cut jobs for the purposes of streamlining their margins of cost. Despite this being an option of creating sensible profits, there is a risk of loss of experience and human capital (Stancioiu, & Militaru, 1999 p56) . Companies may wish to retain the best skill, if not the cheapest but they may lose the long term benefit of change contributed by these people. Therefore, it may be important to create a situation where the best is preserved. Secondly, obsolete skills can affect organization growth. For instance, if there is retention of staff members who don’t understand current trends and market demands may work negatively to the organizational change. Sony has a reputation of constantly updating its members through trainings and educational drives. These activities are necessary because they ensure that the organization gets the best manpower. However, there are those extreme cases whereby employees can’t be trained further. This calls for transfer or layoff in order to facilitate proper functions of these companies. Lastly, financial factors may make or break a change objective in an organization. This is both external and internal in nature. Economical downturn may cause companies to revenue or money in some areas. Therefore, company administrators need to have a clear perspective on the strategy they employ to achieve the change they desire. Budgets and projections are made in financial years but may not capture effects that some changes bring forth. Sony closed down almost eleven of its plant laying 10,000 workers in the quest for its desired change. These are the implications that any change agent should expect if necessary steps are to be made. As manager, the above factors should be put into consideration when creating an environment for change. It is vital to prepare the organization psychologically for drastic measures that are to be taken. This ensures that the vision of shifting the levels of change is carried well by the people under their managerial watch. In conclusion, this exercise has concentrated on the case study of Sony and focused o its journey of change for the past decade. This is through highlighting of the internal and external forces that foster that change. In addition to this, the study has looked at change agents as well as the resistance that comes against them. References Pilling, D 2007, Camera Sales Raise Sony’s Game’, Financial Times, May p5 Marshak, R J 2005, ‘Contemporary challenges to the philosophy and practice of organizational development’, Reinventing organizational development Vol. 3, No. 6, pp. 97-110 Phillips, J R 1983. ‘Enhancing the Effectiveness of Organizational Change Management’, Human Resource Management, Vol 22 No.1, pp183-199 Carmen, G 2009, ‘The Internal And External Environment Analysis Of Romanian Naval Industry’, Management & Marketing, Vol. 4, No. 3, pp. 97-110. Stancioiu, I & Militaru, G 1999, Management. Substantiate Elements, Teora Publishing House, Bucharest Bryan B and David B. 1989 ‘HybridArrangements as Strategic Alliances:Theoretical Issues in Organizational Combinations’, Academy of management Review Vol 14 No. 8 pp 234–49. Miranda Brookins,2013, What Causes Resistance to Change in an Organization? Demand Media (online) Available at http://smallbusiness.chron.com/causes-resistance-change-organization-347.html (accessed 25 march 2013) Robbins, S P 2004, Organizational Behavior - Concepts, Controversies, Applications. 4th Ed. Prentice Hall Washington Taylor, S & Hansen, H 2005, ‘Finding form: looking at the field of organizational aesthetics’ Journal of Management Studies Vol 42 No. 6 pp 1211–1231 Edward , S P 2004, Organizational Behavior Applications.. Prentice Hall, Washington Read More

 

Read More