Environmental Pressures and Forces
Sony was a well-known company in the 1990s, but in the 2000s the competition from Korea, Taiwan and the US began to challenge it. The stress and the forces on the economy that forced Sir Howard Stringer to change the balance between centralization and decentralization came from its industry rivals. Companies such as Samsung, LG and Apple had begun the launch of their new technologies. Those new technologies included LCD flat screen TV’s, touch screen commands, flash memory, digital mobile music, 3D displays and GPS systems that were not available in Sony’s technology market.
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The current organizational approach of Sony was based on the individual operation of companies. However, this approach failed with the increase of competition on the market. This approach had weakened its market roots instead of offering the company a competitive edge. The leaders of Sony's various product departments worked to protect their own branches and their purposes, not for the benefit of the company. Sony's leaders also recognized the emerging technology shift slowly and the company departments began to fail, because every leader had worked only to safeguard their own unit on the market and not the whole organization.
As a result, decisions were slowly made and business costs were higher. All these factors led to enormous pressure for the company to improve their performance and which lead to Stringer’s decision to change the company's organizational structure. The company's performance fell considerably in the industry and began to suffer huge losses in revenue and the operating costs of businesses. These were the major factors that changed the balance between Sony's centralization and decentralization.
The biggest factor that cause economic stress that led Stringer to alter the balance between Sony's centralization and decentralization was that they have dropped in technical ranks. In the past, Sony's community had been highly respected throughout its history by collaboration, unity and interaction. The culture finally began to turn and the leadership of the various divisions of Sony became power hungry. The leaders were their own objects and ideas defensive and protective in nature. This caused competitors like Apple to become technologically leading. Stringer therefore had to modify the company.
Stringer’s Approach to Organization
Since Stringer joined Sony in 2005, he has been following his own approach to enhance the company’s organizational structure. The company worked to reduce the operating costs of almost twice the competition. Stringer worked to develop teamwork between the various department managers so that they would all work with their respective departments together for the company. Stringer even mandated that all the division leaders, who refused to follow his orders, to work together improve the company's conditions.
In order to improve the company’s performance, he promoted young leaders in the company. He directed his managers to prioritize the development of new goods and to invest in them alone. Sony even introduced computers, digital media players and gaming consoles for developing some competitive advantage on the market under Stringer’s leadership.
Stringer has worked to maintain the mechanical and organic structural equilibrium. The mechanism structure was followed by a well-defined hierarchy of authority, centralized decision-making and vertical maintenance in most of the conversations in the organization.
Standardization of company operations has also been applied. Stringer practiced the organic structure by introducing a shared specialization between workers and departments, which began with an integrated system, and encouraged employees to work in various capacities for a long time to increase the company's revenues. This was the only way, according to Stringer, to make the enterprise flourish during this difficult period.
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In the decision-making process for the line of products, Stringer switched from an organic approach to a mechanical approach so that operating costs would be minimized and that prices would not escalate again. In 2008, he also made the decision to replace all the divided leaders since it became clear that they all pursued their own self-interest. Initially, Stringer may have given a little slack in regards to the organic system approach to relax the reins a little when the PlayStation performed well, but then Sony suffered a violation of its consumer records and there was a record loss in 2011. Sony had a rough patch for many years, but if Stringer moves along this way, it will only be possible for him to turn around.
References
- Bremner, B. (2005). Is a Slimmer Sony Coming? BusinessWeek Online, N.PAG. Retrieved from https://login.proxy.tamuc.edu/login?url=http://search.enscohost.com/login.aspx?direct-true&db=bth&AN=18370472&site=ehost-live
- Bremner, B. (2005). Sony’s Dilemma. BusinessWeek, (3926), 50. Retrieved from https://login.proxy.tamuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=16473728&site=ehost-live
- Jones, G. R. (2010). Organizational theory, design, and change. Pearson.
- Levy, S. (2005). Can Stringer Fix Sony on the Run? Newsweek, 146(15), 12. Retrieved from https://login.proxy.tamuc.edu.login?url=http://search.ebscohost.com’login.aspx?direct-true&db=bth&AN=18442814&site-ehost-live
- Platt, G. (2005). Can Sir Howard Stringer Get Sony Back on Course? Global Finance, 19(4), 4. Retrieved from http://search.ebscohost.com.proxy.tamuc.edu.login.aspx?direct=true&db=bth&AN=16701428&site=ehost-live
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