Change is the only constant
1. Organizational structure
Sony is a huge multinational corporation with a headquarters in Japan, Minato-ku, Tokyo. It is on the largest media conglomerate in the world. It was founded in 1946 by Masaru Ibuka and Akio Morita. It specializes upon the production of video, electronics, communications, information technologies and video games consoles for consumers as well as professional markets, and its products of highest quality developed the company into of the richest companies in the world.
Speaking about the beginning of its operations, it is necessary to mention that primarily it was the radio repair shop, which was founded by Masaru Ibuka after the World War II. Along with Akio Morita, in one year, they have founded the company that it English means Telecommunications Engineering Corporation. Since then the present day corporation have launched a lot of products and even though they probably had not invented some of them, their developments were the most successful ones.
The overall production of the corporation is mainly concentrated in Japan, even though the company has its affiliated companies all over the world.
The name Sony was not from the very beginning, the name was given only is 1955, that was the mix of the Latin word sonus and also meant a little boy sonny. The choice of such a name was very unusual for Japan and aroused a lot of contradictions.
Sony Corporation consists of 5 structural components: Sony Financial Holdings Group, Entertainment Business Group, Game Business Group, Sony Ericsson mobile communications and Electronics Business (includes Semiconductor and Component Group and Consumer Products Group).
Sony has many affiliated companies as in Japan, as well as business units all over the world.
1.1 Corporate governance
Sony is committed to strong corporate governance. As a part of this effort, Sony adopted a “Company with Committees” corporate governance system under the Japanese Company Law. In addition to complying with the requirements of laws and regulations, Sony also has introduced its own mechanisms to help make its governance system even more sound and transparent, including strengthening the separation of the Directors’ function from that of management and advancing the proper functioning of the statutory committees. Under this system, the Board of Directors defines the respective areas for which each Corporate Executive Officer is responsible and delegates to them decision-making authority to manage the business, thereby promoting the prompt and efficient management of the Sony Group.
Sony Corporation’s statutory entities are comprised of the Board of Directors, which is appointed by resolutions at the shareholders’ meeting; three committees (the Nominating Committee, Audit Committee and Compensation Committee), consisting of directors named by the Board of Directors; and the Corporate Executive Officers, who are appointed by resolution of the Board of Directors. In addition to these statutory entities, Sony has Corporate Executives who carry out business operations within designated areas (www.sony.net).
1.2 Products and technologies
It was historically stipulated that Sony Corporation had always been creating new standards for recording and information storage technologies.
From the very beginning the company was producing reel-to-reel tape recorders and transistor radios. In 1980s great and outstanding videotape format war was taking place, and during which Sony produced the Betamax system for video cassette recorders, while JVC had already marketed the VHS format. In this battle JVC won as VHS became the worldwide standard for the VCR and the only thing that was left to Sony- is to accept the proposed format.
In late 60s Sony marketed Trinitron brand name, a kind of display that is no more modern and popular, but still produced for the markets of China and India. The production of such computer monitors was stopped in 2005.
In 1979 Sony launched production and introduced Walkman brand, which was the first portable music player in the world.
In 1982 it introduced professional Betacam videotape format, which is used even nowadays in the television and film industry. One year after that the 90mm micro diskette (3,5 -inch floppy disc) was introduced by Sony. In the same year it marketed MSX, a home computer system, and launched the production of CDs. Later Walkman brand was extended to Discman. In 1990s Sony marketed SD and MMCD, which later became supported by other electronics production companies. DVD was introduced by Sony in 1997.
Such inventions like Dolby Digital 5.1, MiniDisk, introduction of Memory Stick format (as well as Memory Stick duo and Memory Stick Micro), PlayStation and PlayStation Portable, Blu-ray Disc also belong to Sony Corporation.
3. Change management
Sony Corporation had experienced a lot of changes from the time of its establishment. It had formed many mergers, acquisitions and joint ventures. On 1988 Sony acquired CBS record group from CBS and renamed it for “Sony Music Entertainment”. In 1989 it purchased Columbia Pictures entertainment for about 3,4 billion dollars from Coca-Cola and renamed it for “Sony Pictures Entertainment” (1991). In 1993 Corporation bought a computer games company Psygnosis Limited, Liverpool, United Kingdom. In 1995 Sony along with Toyota Industries Corporation formed ST Liquid Crystal Display Corporation, 50:50. In 2001, October, Sony Ericsson was founded, a joint venture of the Corporation and Ericsson AB. In 2002 Aiwa Corporation was founded. In 2004, April, Sony Corporation and Samsung Electronics Co. Ltd founded the joint venture Ltd S-LCD Corporation, Samsung obtained 50% plus on share in the venture. In the same year, in July, merger with BMG was approved by European Union. This new company was called Sony BMG Music Entertainment, and at present moment it holds about 20 percent of the global music market. The key competitor is Universal Music Group with about 25 percents of the world market. In 2005 Sony-led consortium (shares distribution is the following- Providence Equity Partners – 29%, Texas Pacific Group- 21%, Sony -20%, Comcast- 20%, DLJ Merchant Banking Partners- 7% and Quadrangle group- 3%) acquired The MGM company for almost 5 billions dollars including paying for the company’s debts in the amount of 2 billions dollars. In 2006 Sony NEC Optiarc Inc. was formed, a joint venture with NEC Corporation -55:45. In 2006 Sony Corporation had great shopping by acquiring digital Single LEX Reflex (Digital SLR), Konica Minolta camera section, as well as camera servicing and support, and Grouper Networks, which was a successfully operating company, specialized in creation of user generated video sharing platform and P2P technology. Last year Sony Corporation established a joint venture with Qimonda AG and named it Qreatic Design Inc. and also with NXP Semiconductors, Moversa GmbH.
Sony Corporation provides a wide platform for investigating the cases and analyzing changes. Speaking about significant change in management, it is important to mention that in 2005 Nobuyuki Idei- Sony Corporation Chairman and Group CEO was replaced by Howard Stringer, who previously took the same position in Sony Corporation of America. Howard stringer was British and it was the first time in the history of Japanese electronics company was run by the foreigner.
It is obvious that the corporation through the years of its existence was experiencing many changes regarding not only mergers with other companies, but changes in management as well. As activity of the corporation is totally connected with technological advances which presume constant moving forward and updating existing technologies, as well as analyzing global market trends and looking forward taking significant market shares in different segments of business.
In answering question, I would like to pay attention to the joint venture of Sony Corporation with Ericsson AB.
In this joint venture Sony acquired a more significant share at the market of mobile phones for using Ericsson mobile technologies and Ericsson AB obtained investments to the development of them. This change effort was very successful, as without Ericsson name and technologies, Sony had the small share at the market and mobile phones production direction was not that successful.
Speaking about external forces that influenced the board of directors to take such a decision was rapidly growing market of cell phones with such big players like Nokia and Samsung and many smaller producers. All together they were dominating at the market and Sony cell phones business was loss making.
Internal forces for change were mainly connected with the decision to obtain more profit from this market segment.
The potential resistance to change could have been the idea that changes are always losses at the beginning and it is always giving something up, and changes implementation always presumes setting long-term strategic goals. And the result from changes will not always be immediate. There are six basic strategies that can help overcome resistances to change, they all have their advantages and drawbacks and this is only the decision of management what strategy to choose. First one is a combination of education and communication, and then goes participation and involvement, facilitation and support, negotiation and agreement, manipulation and co-optation, and finally explicit and implicit coercion.
In the case with Sony, there were no resistances to this change, as goals were clearly set and needed financial investments, which would pay-back in few years, discussed.
4. Change assessment and strategies for improvement
There are several change management principles, implementation of which would ensure a successful change in the organization. The first says that in any case the involvement and support agreement from people within a particular system (environment, processes, culture, relationships, and behaviors) should be present. The second implies understanding of at what position or place is the organization at the present moment (at moment when the change is thought and decided to be implemented). The third one understanding where the organization wants to be, when, why, and what means does it planning to use to get there. Then the plan should be developed in which all achievable stages should be indicated as well as expected time periods.
Sony Corporation met all criteria for successful change implementation, as the market surveys were done to understand the share of the Corporation at the global market, goals were set and the strategic planning was done.
In order to understand to what type of change model joint venture Sony Ericsson belongs to, it is necessary to understand the sense of all of them.
Kurt Lewin in the beginning of the 20th century introduced the change model with three phases called Lewin’s freeze phases. The first stage is called “unfreeze”. The idea is that people are seeking for safety and need to feel the sense of control, and therefore it is necessary to use push and and pull methods, first to make them go, the second- to keep them going. The second stage is called a transition. Lewin says that change is not the step but the process or a long journey and thus it requires time. And the last stage is “refreeze”. It is the end of the change journey, and the goal of this change is putting down roots again.
John P. Kotter presented his own eight steps for successful change:
A. Create Urgency (For change, it can be helpful that the company definitely wants it. A sense of urgency should be developed around the need for change.
This is what can be done:
- Identification of the potential threats and planning for future
- Opportunities examination and exploitation
- To get people thinking, strong discussions should be fulfilled by providing people with strong and convincing reasons for change
- In order to strengthen the argument one wants to explore, it can be useful to involve customers, people who are in the same industry or outside stakeholders
B. Form a Powerful Coalition. In the organization should be convinced that the change is necessary. This implies strong leadership and firm support from the board of directors within an organization. Change should not be just managed, it should be lead.
Change leaders can be assigned in the organization. To lead the change it is necessary to bring together a team. When formed, “change team” should act like a team and continue to formulate change urgency.
This is what is proposed to be done:
True leaders in an organization should be identified, even though they can be people not from key management positions
Those key people should be asked for emotional commitment
It is necessary to work and improve the team you are with to form strong and powerful change caolition
Weak sides of the formed coalition should be checked and the team formed with people from difference department so that the change strategy was well-thought and covered the more questions the possible.
C. Create a Vision for Change. A clear vision should be well thought of so that everyone knew what is going on in the organizations and what deeds are expected from people that will be involved in the process.
- Core values for the expected change should be developed
- Then there should be vision formed to ensure that everyone clearly understands what is expected future of the organization and where the organization wants to be
- For the execution of vision formulated the strategy should be formed
- Each member of the change coalition should be knowledgeable enough about future changed and steps that will be taken
- The vision speech should be practiced the more often the possible
D. Communicate the Vision. Kotter proposes the following: “What you do with your vision after you create it will determine your success. Your message will probably have strong competition from other day-to-day communications within the company, so you need to communicate it frequently and powerfully, and embed it within everything that you do”.
It is not effective every time to call the meetings to speak about change management. It is probably more effective to use every chance for that, but just when it is appropriate. The vision should be used upon the daily basis to set short-term goals and to solve problems. As the fresher the information in minds of change coalition the less time they need to recall it and to respond quickly for emerging questions and problems.
Still just talking is not effective enough. All word, all what is said should be supported with actions, as actions speak louder then words the expected behavior from oher should be primarily demonstrated by the leader.
This is what can be done:
- Frequent talks and speeches regarding change management
- People in the organization should be openly addressed not only good news, but also bad ones
- Vision should be addressed to all aspects of the organization, trainings and performance reviews are very helpful. Everything should be tied to the vision.
- Provide good example for actions
E. Remove Obstacles. It can be useful to ensure whether there are some problems with this kind of change and whether someone is resisting it.
Barriers to change should be checked upon regular basis.
What is proposed to be done:
- Leaders whose main roles are to deliver the change should be identified, hired and changed
- Organizational structure, performance and compensation systems, and job descriptions should be analyzed to endure that they correspond to the change vision of an organization
- People should be awarded and recognized when they achieve some inter stage successes
- People that are resisting changes should also be identified and shown what is needed
- Actions should be taken quickly to decrease or destroy all existing barriers.
F. Create Short-term Wins. Success is the best motivation to work. An organization should be aware of all successes and know that everything is going in the right direction. People in an organization would like to see some small but immediate results for inspiration.
Short-term objectives should be set.
What can be helpful while implementing this step:
- Early targets that are very expensive should not be chosen, as investments should be primarily justified
- All advantages and disadvantages of the chosen targets should be identified and thoroughly analyzed. As if the early goals are not successfully achieved, the whole change process can be hurt then
- People who participated and assisted in reaching particular goals should be awarded
G. Build on the Change. The change should have deep roots. Organizations should keep looking for improvements, even though they reached particular set goals.
- When any goal is achieved, an analysis should be made regarding what was good and what still needs improvements
- To continue building on the place that was reached, other goals should be continued to be set.
- Kaizen, the concept of constant improvement, can be very useful for organization
- New people (agents and leaders) should be attracted to the change project so that the ideas were fresh
H. Anchor the Changes in Corporate Culture. At the end, the implemented change should become the undivided part of the organization. Additional efforts should be made to be sure that it touches each aspect of the organization.
What is useful to be done:
- People in an organizations should be inspired by the future changes, so stories about success told upon the regular basis are very helpful in this case
- When people are hired and trained, change ideals and values should be included
- Key members of the change coalition should be publicly recognized, and other staff should remember the contributions
These two described models are similar by their sense and the Kotter to my opinion just extended the idea of Lewis and added some useful advices. So, I consider these two models to be equally applicable to the change with Sony Corporation.
As to the strategies for improvement, I would propose employee motivation, even though this item is well thought in the company, there cannot be too much.
In the conclusion I would like to summarize results of my research regarding change management in Sony Corporation. I have found out that Sony Corporation is practicing changes on constant basis, using all ideas of change management so that changes were successful. Corporation set strategic goals about increasing company’s revenues and obtaining of the set market share and finds the best way to implement them. So, I investigated reasons for making changes in Sony Corporation and analyzed them from the standpoint of change management. I realized that changes should be undividable part of the organization that seeks for profit and success.
Information about Sony Corporation, retrieved March, 1 2008 from www.sony.net
Change management, retrieved March, 1 2008 from http://www.businessballs.com/changemanagement.htm
Kotter’s 8-Step Change Model retrieved March, 1 2008 from http://www.mindtools.com/pages/article/newPPM_82.htm
Kotter, J.P. (2005), Leading Change. Harvard Business School Press.
Brewer, P.C., Juras, P.E. (2003) Global Electronics, Inc.: ABC Implementation and the Change Management Process . Issues in Accounting Education, Vol. 18
Jones, J., Aguirre D., and Calderone M. (2004, April, 15) 10 Principles of Change Management, retrieved March, 1 2008 from http://www.strategy-business.com/resilience/rr00006
Information about Sony Corporation, retrieved March, 1 2008 from www.sony.com
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