Organization Design And Technology Of Sony Corporation Essay

Due to the fast-paced growth of Sony Corporation in the international market, it gave way for the misalignment of its market and internal expansion leading to the deterioration of its rate of technological development or the quality of its product lines, and the decline of the efficiency of its workforce as the number of responsibilities and tasks suddenly increased triggered by the market expansion of the said company. With the aid of ICT Supplier Self-Assessment Questionnaire and balance scorecard, Sony Corporation has been able to improve the quality of its product and workforce efficiency. By expanding the workforce of Sony, it can solve the deterioration of its rate of technological advancement and inefficiency on workforce on a long term basis. Between adding new position to the organization structure of Sony and hiring more workers to expand the workforce of the said company, adding new position to Sony Corporation is the one that fits to solve the above mentioned problems of Sony considering the cost of its implementation and effectiveness. Introduction With the growing competition in the international market, it is a must for Sony Corporation to secure competitive advantage in terms of internal stability and technological development. Most consumers nowadays provides more premium on the most advanced products in the market, and this is the primary reason why Sony Corporation allot significant amount of resources to research and development to maintain the pace of their technological development. Furthermore, Sony has designed its organization structure in such a way that it could easily respond to various new market challenges. But the forces of market competition and globalization blocks the technological advantages of Sony as well as destabilized the internal stability through attacking their organization design as various departments and key person of the said company shoulders broader responsibilities as the company continues to expand in the international market. Sony’s competitors, Panasonic, Toshiba, Apple, Microsoft, and Dell are just few of the many electronics companies also operating in the international market with fast-paced technological development (Isuppli. om 2006: 1). Due to this scenario, Sony’s products appears to be less technologically advanced compared to its competitors leading to a sudden down turn on their sales and profit internationally as their customers shift to their competitors (Eetimes. com 2008: 1). Furthermore, during the peak of Sony’s international operation, various departments and top level managers was bombarded with more tasks and responsibilities in order to support their market expansion which presently lead to the deterioration of their performances. Distribution of task and responsibilities is weak and most of the organization design of Sony is already obsolete considering the present condition of competition and globalization in the international market. In this regard, this paper aims to discuss how the forces of competition and globalization weaken the organization design and technological advantage of Sony as well as the potential alternatives that Sony must undertake in order to solve the said weaknesses. At the end of this paper, expect for a recommendation that would best solve the problems of Sony concerning its organization design and technology. Classification of Organization Structure Sony Corporation has been using divisional type of organizational design as illustrated by their organizational chart, see appendix (. During the early years of Sony’s operation in the market, the divisional type of organization design enables them to easily implement strategies and decisions to problems that need immediate solution. Since Sony was only on its development stage, they were able to fully utilize the optimal gains that can be derived from using divisional organization structure. The fast relay of information, decision making and implementation of strategies through the use of divisional organization design provided Sony with tremendous amount of gains in the international market as they start successfully penetrating their target market and out-performed their competitors in the market, making them one of the successful multinational companies around the globe (Goliath. ecnext. com 2007: 1). Furthermore, the divisional organization design enables Sony to specialize its â€Å"groups† since thereby improving the quality of their products in the market (Market Wire 2005: 1). Like for instance, the Sony Ericson Mobile Communications Group concentrate only to develop and produce mobile communication products in the market. The head of Ericson Mobile Communications Group is directly below the CEO of Sony, and so with their other groups (Sony. net 2008: 1). The direct relationship between the head of Sony’s groups and its CEO provides ease on decision making and distribution of information as well as strategies on brand development. But this organizational structure starts to provide instabilities to Sony Corporation as it continues to grow as electronics industry superpower in the international market. As the company grew in the international market, responsibilities of each head of various groups also increased up to the point wherein they start performing inefficiently as their time being spent on every vital aspect of their operation become lesser and lesser. In this regard, the present status of divisional organization design to Sony becomes ineffective and only provides instabilities as the executives of the company starts to perform inefficiently on their respective fields. But divisional organization design fits Sony than any other organization structure available in the business management realm. Since Sony have a diversity of products in the market, and each group specializes into the production of their own product lines, then, divisional structure already fits Sony. The only problem lies on the fact that every executive of Sony starts gaining more responsibilities in his/her assigned group. In other words, the international expansion of Sony in the recent years was not accompanied by expansion of internal responsibilities of various executives of the said company, thereby leading to a down turn on their overall performance. In order for Sony to restore the stability of its internal affairs, it does not have to change its organization design; rather, Sony management can make improvements on their divisional structure by adding new positions or by appointing executive assistants to key positions on various groups of the said company. This strategy will provide enough room for the key personnel of Sony to manage their responsibilities well and delegate those less priority tasks to their assistance or new positions in the group. In other words, this strategy will give way for the internal expansion of Sony while maintaining their original organization design that was already proven to be effective and fit to the business structure of Sony Corporation. Choosing organization structure other than divisional design would provide great risk since Sony operates on various groups with different product lines to produce into the market. Furthermore, each group has less influence on one another and almost operates independently from other group while their headquarters and CEO serves as the link between them. In this regard, it is vital for Sony Corporation to implement the said internal expansion of their groups in order for them to re-establish their competitive advantage in the international market in terms of internal stability and workforce efficiency especially during these times wherein the forces of tight market competition and globalization calls for the acquisition of more potential sources of competitive advantages to keep the pace of Sony’s growth internationally. Key Determinant and Influences on Organizational Structure One of the main strategies of Sony in expanding its share on the international market would be the diversification of its product line from electronics to B2B business solutions, which later on enables the company to tap various resources. Since each product line of Sony needs different production processes compared to others, Sony decided to use divisional organizational structure in order to easily manage the entire company without compromising the quality of their product lines. For instance, Sony Financial Holdings Group provides business solution services to the market and needs different operational processes compared to Sony Entertainment Business Group that provides television, digital cameras, and video cameras in the market. Each of these groups requires different set of operational style, set of skills and equipments, and set of strategies, thereby providing enough room to these groups to operate independently from one another would enhance their productivity and efficiency as they specialize into their production process. This is the main reason why Sony chose to use divisional organization design in order to provide enough room for each product line to be developed separately by workers specialized on producing it from other product line. In this regard, the strategy of Sony to diversify its product line gave way for the use of divisional organization structure. Furthermore, another factor that serves to be the key determinant of Sony Corporation’s organization structure would be its growth rate. Sony Corporation has roughly 4 percent sales growth rate internationally as of this month which is relatively higher compared to its rival companies like Panasonic with -2. 78 percent sales growth rate (Reuters. com 2008: 1). During the initial stage of Sony’s growth in the international market, as their product become more diverse leading to a fast-paced growth, Sony chose to use divisional organization structure to allow the company to cope up with the said growth rate since divisional organization structure provides enough room for Sony to further develop their diverse product line through specialization. At present, the root of organization stability of Sony roots on the fact that they were not able to accompanied their market growth and expansion with internal expansion causing for the divisional organization structure to work inefficiently. Once the internal growth rate of Sony already aligned itself to its market growth, then, that is the only time wherein Sony can fully utilize the potential gains of using divisional organization structure. In this regard, it is therefore vital for Sony to keep track its market growth and internal growth if whether these two still align each other since these affects the performance of their organization structure. The strategy and growth of Sony is interrelated to one another and this is the main reason why these two factors greatly affect its organization structure. The strategy of Sony to diversify its product line provided them with enough opportunity to increase their market share in the international market. The said product line expansion and increase of market share enable Sony to easily penetrate its target market and outperformed its competitors. Furthermore, as Sony continues to successfully penetrate its target market and outperformed its competitors, it starts to gain impressive growth in the market due to higher sales and profit. But the said market growth of Sony was not accompanied by internal expansion which presently leads to tremendous losses as key personnel of its groups starts performing inefficiently and ineffectiveness of their organization structure. Furthermore, as these key personnel of Sony perform inefficiently, the research and development of their products starts to drop, giving enough room for its competitors to step up in the electronics and business solutions industry and provide financial losses to the company (Forbes. com 2008: 1). Therefore, at this point in time, it is vital for Sony to address these instabilities on its workforce in order to restore their competitiveness in the international market with respect to their market strategies and technological advancement. Organizational Effectiveness One way in which Sony Corporation evaluates performance would be through the use of Information and Communications Technology Supplier Self-Assessment Questionnaire which aims to determine if whether their suppliers uphold the Electronic Industry Code of Conduct. Since suppliers have a direct impact on the overall performance of Sony in terms of product quality, along with other electronics companies around the globe such as HP, IBM, and Microsoft, Sony Corporation created the Electronic Industry Code of Conduct which encompasses the ICT Supplier Self-Assessment Questionnaire. Through the ICT Supplier Self-Assessment Questionnaire, Sony can monitor the product quality of their suppliers. By securing the performance of their suppliers, Sony Corporation has been able to maintain its integrity of producing high quality products in the market. There were cases wherein Sony Corporation was sued for releasing substandard products in the market. Like what happened recently when a couple sued Sony when the battery of a Sony laptop exploded causing injuries to the complainants. Due to this, Sony had to pull out all of the batteries that were being suspected as substandard and replaced with a new one in order to prevent having more accidents. In this regard, through the ICT Supplier Self Assessment Questionnaire, Sony Corporation can stop the above mentioned accident caused to substandard products that they release in the market which mostly came from their suppliers. Dell, the maker of the said substandard battery of Sony laptop, is now making collaboration with Sony in pulling out those substandard laptop batteries in the market. Another way by which Sony evaluates their performance is through the use of balance scorecard. Balance score card help every organization in the market to determine if whether their smaller scale operational activities are still aligned with their larger scale activities. As for the case of Sony Corporation, it uses balance scorecard in determining the alignment operational processes of its groups, e. g. Sony Ericson Mobile Communications, Game Business Group, Entertainment Business Group, and Sony Financial Holdings Group, to the vision and strategy of the entire organization. For instance, the balance scorecard is being used by Sony Corporation in determining if whether the processes used in producing Sony Ericsson in the market are still aligned with the Corporate Social Responsibility of the entire company. Through this, Sony Corporation can keep their various groups intact to the vision and strategies of their â€Å"parent† company – Sony Corporation. Just recently, Sony Ericsson phone was awarded as the most â€Å"Eco-Friendly† phone in the market and the said award is being attributed to the continues success of Sony Corporation to uphold its Corporate Social Responsibility on minimizing the wastes being emitted in producing the said product (Sayer 2008: 1). Considering the said success of Sony Ericsson phone in the market, there is a great possibility that it can earn positive balance scorecard by upholding the CSR of Sony Corporation, which can eventually serve as the basis for further development of Sony Ericsson phone in the market (Ericsson. co. jp 2005: 9). Therefore, balance scorecard provides enough room for Sony Corporation to determine the alignment of their product lines to their vision and strategy especially when it concerns the integrity of their brand name. At this point, the performance evaluation tools of Sony Corporation, ICT Supplier Self Assessment Questionnaire and Balance Scorecard, has been able to solve its problem regarding maintaining the quality of their products in the market by securing the compliance of their suppliers and aligning the production processes of their product lines into their Corporate Social Responsibilities. Therefore, ICT Supplier Self Assessment Questionnaire and Balance Scorecard fit to the vision and strategies of Sony Corporation based from their successful solution regarding the low quality level of Sony’s products in the market. This issue on quality level and on how the above identified evaluation tools of Sony Corporation solved it will be thoroughly discussed in the next part of the paper. Critical Analysis of Current Problems Actually, the main problem of Sony Corporation would be the misalignment of its market and internal expansion that eventually lead to various â€Å"branch-problems† like low performance rate from the workforce of the company as well as the deterioration of the quality level of their product lines in the market. The fast-paced growth of Sony in the past years, while leaving their internal condition to remain untouched, provided inefficiencies on the part of their workforce as the responsibility of one another can no longer be performed as efficient as before, and low product quality as the said inefficiencies on their workforce started to reflect on the quality level of their product lines. This is the main reason why Sony Corporation suffers from return on investment and profit on its operation as their customers shift to the side of their competitors since the latter already have relatively technologically advanced product lines in the market compared to Sony Corporation. In order to provide a long term solution to this problem of Sony Corporation, it is a must for the management of the said company to expand their workforce either by adding new positions to reinforce the key positions in the company or hire more workers to delegate the tasks optimally among their workforce. But at present, Sony Corporation is applying short term solutions to these problems through the use of evaluation tools as discussed on the previous part of this paper. First, the ICT Supplier Self Assessment Questionnaire provided solution on securing the quality of their supplier’s products which later on be used on the production process of Sony. With the ICT Supplier Self Assessment Questionnaire, Sony can monitor if whether the supplies of their suppliers are substandard or complies with the Electronic Industry Code of Conduct which sets up the standards for electronic products in the market (Greenwald 2005: 2). Sony Corporation can now minimize the incidence of product malfunction or substandard components of their product lines just like what happened to the batteries of Sony’s laptop that exploded due to overheating. ICT Supplier Self Assessment Questionnaire will improve the quality of Sony’s product line even up to a small degree since it only solves their problem on the side of their supplier and not the root of the problem which still lies on the internal stability of their workforce. With the rise of ICT Supplier Self Assessment Questionnaire and Electronic Industry Code of Conduct, cases of substandard electronic products in the market will be minimized leading for Sony to improve the quality level of its products (United Nations Environment Program 2005: 1). In this regard, through the use of ICT Supplier Self Assessment Questionnaire, Sony Corporation manages to improve the quality of their product lines even up to a small degree. On the other hand, the balance scorecard of Sony Corporation provides enough room for the said company to improve the quality of their workforce’s performance since the company can determine if whether a group or department already performs outside the boundaries of their vision and corporate strategies. There are times wherein the misalignment of Sony Corporation’s products to their vision and corporate strategies roots on the inefficient performance of workforce of a given department or group, and balance scorecard can determine if whether a given group of Sony Corporation performs inefficiently based from the evaluation of the products being produced by that given group. Through this, Sony Corporation can easily determine which group among its companies needs to undergo workforce expansion to solve the said inefficiency of their workers. In this regard, the balance scorecard provides two services to Sony Corporation, evaluation of their product’s performance in the market and its alignment to the vision and corporate strategies of the company, and on which group of the company needs workforce expansion in order to improve the quality of their product lines just like what happened to Sony Ericsson phone in the market (Esato. com 2007: 1). Solutions In order for Sony Corporation to have long term solution to their problem regarding the misalignment of their market and internal expansion as the consequence of their fast-paced growth, it is advisable for them to expand their workforce either by adding new positions into their organization structure to optimally delegate the tasks among the workers of the company; or, the management could hire more workers that will handle the additional responsibilities provided by the market expansion of the company. Furthermore, through adding new position to the organization structure to various business groups of Sony Corporation, e. g. executive assistants will give their key executives to delegate some of the less important tasks and responsibilities to their assistants so they can concentrate to more responsibilities. The divisional organization structure of Sony Corporation will still be used in the organization design of Sony under the said strategy considering that it is the only organization design that fits to the business nature of Sony Corporation as discussed on the previous part of this paper. On the other hand, with regards to hiring more workers that will be responsible on shouldering the additional tasks provided by the market expansion of Sony Corporation, this will provide Sony with enough room to improve the efficiency of their workforce as every person on their workforce can now perform their responsibilities to their optimal level since tasks are now well distributed on their workforce. At the end of the day, these strategies will improve the quality of Sony’s workforce and so with the quality of their products. The only problem with hiring of additional workers would be the fact that it is costly to hire more workers for the company considering that Sony is presently suffering from low profitability in the market compared to adding new position to the organization structure of Sony Corporation. Recommendation Both of the above mentioned strategies provides same improvement on lifting the efficiency of Sony Corporation’s workforce and boosting its product quality level, but in terms of costs on the part of the company, adding new positions to the organization structure of Sony is relatively cheaper than hiring more workers. In this regard, alongside with the performance evaluation tools of Sony Corporation, it is a must for their management to add new positions into the divisional organization structure of the company to provide long term solution on their low quality product in terms of technology and improving the efficiency of their workforce considering the extent of their market expansion in the global market. Conclusion With the misalignment of market and internal expansion of Sony Corporation due to its fast-paced growth in the international market, it provided various problems into the said company. Technological advancement of Sony’s products drops while the efficiency of its workforce decline due to the significant increase on tasks and responsibilities on the workplace caused by the fast-paced growth of Sony in the recent years. Through adding new positions on the organization structure of Sony, it can already improve the efficiency of its workforce and so with the rate of its product line’s technological advancement in the market.