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breakneck speed and dynamic business environment it operates in (electronic compliance and entertainment industry). They have adopted different types of organizational structure to strengthen their financial performance as well as to achieve supremacy (competitive advantage) over rivals. In the year 1994 they applied the divisional structure for Sony with each division responsible for all its operation. As a result the subsequent time consuming decision making process has been reduced significantly. In 1995 they changed their group management strategy and consolidated their business functions across divisions such as marketing and R&D to achieve better result. They have also introduced a high powered executive board to look over all the strategic decision made by the divisional presidents. In between 1998 to 1999 they again started recon-structuring; this time the emphasis was on integrating internet with electronics and entertainment interests. They also reduced the no. of division into three different network companies e.g. Home, Personal IT and Core Technology network. They also introduced two fresh regulatory board and committee, the network committee board (NCB) accountable for daily operations and network company management committee (NCMC) in charge of management policies and strategies. Sony revamped their corporate strategy again in 2001 when they pioneered an ingenious strategy which intertwined the electronics hardware side of Sony with games and communication service business so they can offer ground-breaking products. Sony entertainment industries restructured the company frequently since their establishment in 1946. Initially Sony Group was categorized in three sectors during 1990s. Electronics, entertainment and financial services were the major sectors that Sony industry primarily emphasized on. Sony group was highly responsive towards the changing market conditions as well as focused on high potential products. Therefore, to keep the profits flowing, Sony first restructured their organization during 1994.
Initiative Restructure in 1994 Sony restructured the organization based on product divisions. The eight divisional companies were based on eight significant products with and aim to grab a stronghold in the global market. The divisional companies were based on: (a) Consumer audio products (b) Consumer video products (c) Recording media and energy (d) Broadcast products and industrial systems (e) Infocom products (f) Mobile electronics (g) Mobile components (h) Semi-Conductors In this organizational structure, each divisional company was authorized to take responsibility regarding production, investment and sales of each product line in different countries. Objective: 1) To create a more market-driven, market-responsive company 2) To clarify lines of responsibility and increase autonomy.
The basic features of the new structure are as follows: 1) A new company structure to promote quicker, more effective operations that better reflect market changes; 2) The establishment of an Executive Board to reinforce headquarters and corporate strategy and management functions;
3) The appointment of new companies and groups for entering into the IT (information technology) and telecommunications businesses that represent a merging of AV and computer technologies; 4) The consolidation of marketing functions; 5) The establishment of the Corporate Laboratories for new business development; and 6) The training and support of promising young talent to foster future top management. Sony’s Organizational Structure in 1994:
Recording media and energy
Sony’s Restructure in 1995 and 1996 The business group structure was implemented by Sony Corporation during 1995. Due to Sony’s poor financial performance the top management decided to integrate the business group’s domestic and international business functions. The three main functions included marketing, R&D and HR. Moreover, the divisional companies were directly supervised by the headquarters. During 1995, R&D and IT department progressed remarkably. The initialization of International Division continued to 1996 where Sony made further group changes and created three new marketing groups: Japan Marketing Group (JMG), The International Marketing and Operations Group (IM&O) and the Electronic Components and Devices Marketing Group (ECDMG). The JMG was responsible for marketing in Japan for the
audio, video and IT related products. The IM&O performed marketing functions overseas and ECDMG was responsible marketing operations for semiconductors. So, ultimately the structure included to new groups for the purpose performing of international operations. International Division Structure in 1996:
Japan Marketing Group (JMG)
International Marketing and Operations Group (IM&O)
Electronic Components and Devices Marketing Group (ECDMG)
The Restructure in 1998 In the early 1998, Sony established Sony Entertainment Online in the US to make profit from internet related projects. This new structure separated policy maker individuals from those who were responsible for operations. The chief financial officer was assigned to decide company’s financial strategies and network businesses. In order to link between Sony’s electronic business with content-related businesses (based on internet), Sony performed another reorganization. The new restructuring began in 1999 where ten divisions were reduced to five. The three network companies were there and Sony Computer Entertainment (SCE), and Broadcasting and Professional Systems (B&PS) were the other two different entities. This new structure was aimed to decentralize the worldwide operations. This was the initiative stage for area division structure which was implemented in the later years and gave regional headquarters responsibility and ensured autonomy of the network companies created in different region.
Final Restructure in 2000-2001 At the beginning of 2000, Sony started to face increased competition from Domestic and foreign players in its electronics and entertainment businesses. Therefore there was an urge to restructure the existing organizational structure in order to achieve success both in domestic and global market. Perhaps, Sony entertainment implemented sustained the Area divisional structure adapted during 1999.
The Competitors included both domestic and global: Domestic – Matsushita and NEC by internet ready cellphone Foreign – Samsung and LG Sony also faced threat to Sony’s home entertainment business from – Microsoft, Sun Microsystems and Cisco systems.
Objective: The objective was to become the leading media and technology company in the broadband era by transforming itself into a personal broadband network solutions company and launching wide range of broadband products and services to the customer across the world.
Restructured Organizational Structure: A new headquarters formed to function as a Hub. Hub will plan the overall management strategy for the company. Under Global hub there are 5 different businesses -
Four Network Strategies: Convergence of A/V products with IT was one of the major restructuring. Results: games and internet service business were combined with electronics hardware business so that innovative products could be developed and offered for the broadband market.
Management Platform The platform provided supportive services - Accounting, finance, legal, intellectual copy rights, HR, IS, PR, External affair and design. Later on Management platform was split into 4 different platforms – Management Platform
Sony reformed their product centric network companies into solution oriented companies by regrouping 7 companies. Resources were allocated among the network companies on the basis of growth potential.
From the beginning of its lifetime Sony went through different sort of organizational structure in order to create suitability with the future, because of the company’s performance, emerging competition and diversified product categories. At 1994 they started with product divisional structure for their electronics sector because of their diversified electronics products and each division acted like a large autonomous entity. After that International division structure were followed by Sony in order to manage overseas sales. International division structure eventually led towards the Area division structure and Sony also evolved as a broadband network solutions company worldwide at 2001. Sony basically went through too much restructuring since 1994 but it is reasonable to some extent because of the changing atmosphere and competition. The effect of this massive restructure on a regular basis was positive or negative can be determined by looking at the net profits. And at 30 June, 2003 Sony had a decline in their net profits of massive 98%, though Sony also spent billions of money in order to restructure the overall company.
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