Free «Organizational Theory – Sony Case Study» Essay Sample

In the past, Sony was one of the most popular and successful electronics brands in the world. The company managed to master the art of designing and marketing products that met the needs of the market. According to the case study, Sony derives much of its competitiveness potential from its organizational design that provides product managers with the freedom to make key decisions related to their product lines. However, the company suffered a decline in sales and operations in the early 2000s, and it had to hire a new Chief Executive Officer (CEO), Sir Howard Stringer, who received the responsibility to reorganize the company (Jones, 2013). This essay will discuss Sir Howard’s attempts to reorganize Sony and the environmental constructs involved in the reorganization process. In addition, the paper will discuss the need for the reduction of uncertainties, compare mechanistic and organic structures, and investigate the use of the contingency theory in Sony’s case.

Sir Howard Stringer, the new CEO of Sony, had to reorganize the company in an attempt to strengthen its position in the market and facilitate success. The CEO’s reorganization of Sony’s structure was imperative since the internal competition between product and functional managers caused more troubles for the company. The environmental constructs involved in Sony’s case were intense competition from other consumer electronics manufacturers around the world, internal management wars, rapid technology changes, and challenges coming from international organizational management (Jones, 2013). Sir Howard Stringer was presented with the challenge of enhancing the company’s performance amidst the diverse internal and external environmental constructs. This compelled him to adapt, control, and reduce uncertainty at Sony.

From the case study, it is evident that the CEO was forced to devise certain directives in order to set the company’s vision and exercise effective leadership at the company. Prior to his ascent to the top executive position, each of the functional and product managers worked independently and did not fully take Sony’s goals and objectives into consideration. As such, individual leaders did not take the ultimate survival of the company into account, which led to the decline in the company’s operations. The CEO decided that it was important to control Sony’s operations in order to trigger progress in specific ways, namely controlling the operation costs, the research costs, and the development costs, as well as allocating Sony’s resources to projects that were considered to have the greatest potential of revolutionizing the company’s performance (Jones, 2013). The uncertainty that was inherent in the organization approach that Sony upheld resulted in the reduction of the ability of the company to align its processes with the market dynamics. Sir Howard Stringer applied the control and directed leadership approaches to reorganize the company.

In addition, Sony’s leadership made use of the mechanistic organizational structure. The vertical chain of command and a high degree of centralization and standardization were key characteristics of the mechanistic organizational structure at Sony. From the case study, it is evident that Sony previously derived its competitiveness from its organization, but the company lost it after certain aspects of market dynamics emerged, forcing the top management and Sir Howard Stringer to decide to integrate organic structures in the company’s management. However, the direct leadership approach used by Howard Stringer did not suit the organization, which is evident from the massive losses the company had suffered by the end of 2011. Sony began to utilize the contingency theory of leadership after the private details of its PlayStation customers had been accessed by hackers. In the course of a contingent plan’s implementation, Sony stopped the operation of its PlayStation website for weeks and was forced to compensate its customers in the process, suffering $1 billion losses (Jones, 2013). Apart from the losses, the company’s brand image deteriorated.

In conclusion, the choice of improper organizational and leadership approaches affected Sony’s business success. The decline in Sony’s operation and the deterioration of its position in the global market was associated with the company’s high regard for organization and insufficient attention to organizational objectives. The appointment of the new CEO allowed the company to utilize the best organizational structures that empowered their employees to achieve corporate goals. The CEO facilitated adaption to the current market dynamics and reduced uncertainties at Sony. Finally, the use of the mechanistic organizational structure and the contingency theory of leadership allowed the company to reclaim its position in the market.