THERELATIONSHIPBETWEENGROWTH STRATEGY&ORGANIZATIONAL STRUCTURE

PREPAREDBY

KOUSAYBADRAN
ID.NO:55070010

THESUPERVISOROF

DR.ManiSridhar

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DECLARATION
WedeclarethatthisprojectentitledcasestudyofSonyCorporationis outcomeoforiginalresearchcomposedundertheguidanceand supervisionofDr.ManiSridhar Wedeclarethatthisprojecthasnotbeensubmittedbeforeforanydegree oruniversityrequirement

KousayBadran ID.NO:55070010
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CERTIFICATE
ThisistocertifythatMr.KousayBadranhassuccessfullydischargedhis projectintherelationbetweenGrowthStrategy&Organizational Structure. Thisprojectistheresultofgenuineandreliableresearchworkandis sufficientlyhighstandardtowarrantitspresentationtoOpenUniversity Malaysiafortheawardoffulfillmentofmasterdegreerequirementinthe MBA,ithasbeencarriedoutundermysupervisionIalsocertifythatthe projectisapartoftheMasterdegreecourseandhehasnotsubmittedthis projectforanyotherdegreeortoanyotheruniversity.

DR.ManiSridhar

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ACKNOWLEDGMENT

Iwouldliketothankallpeoplewhohavehelpedandencouragedmeto

completemyMBA.Firstofall,Iwouldliketoexpressmydeepestsenseof appreciationtomysupervisorDr.ManiSridharforhissupport,guidance, andadvicethroughoutthestudy. AlsoIwouldliketothanktomyfamilyfortheirpatienceandfull supportduringthestudyperiod,allmyfriendsandcolleagueswho havehelpedmetocompletethisstudyandForOpenUniversity Malaysia,fortheirhelpandsupporttodevelopmyselfandto achievenewpracticalskillseverydayinmyyearsofstudy.

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ABSTRACT

SonyCorporationisoneoffamouscorporationsaroundtheworld

butasanycompanyitmadesomesortofinstabilityduringits growth.Thepaperisdividedintothreechapters.Theintroduction describesabriefbackgroundaboutthecompany.Thefirstchapter presentsthemethodologywefollowedinthispaperbeginningwith definitionofResearchProblem,ResearchObjectives,Research Hypotheses,ResearchmodelandendingupwithResearchVariables whichisdividedintothreepartswhichareTypesofgrowth strategies,Theelementsoforganizationalstructureandfinallya Valuechain.Thesecondchapterisdividedintosevendivisionsand eachdivisionisdividedintosubdivisions.Firstofall,thischapter presentstheconceptofGrowthstrategywhichisdividedinto definition,benefitsofthestrategyandtheadvantages.Then,this chapterpresentsOrganizationalstructureandthisisdividedinto fivetypeswhicharePrebureaucraticstructures,Bureaucratic structures,PostBureaucratic,FunctionalStructuresandMatrix Structure.ThenitpresentsClassificationofOrganizationStructure, KeyDeterminantandInfluencesonOrganizationalStructure, OrganizationalEffectiveness,Theorganizationsvaluechainand Activatesinthevaluechain.Thelastpartofthesecondchapteris dividedintofoursubdivisionswhicharePrimaryactivities,Support activities,SubactivitiesandLinkageswithinthevaluechain.The
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thirdchapterisanAnalysistosolvetheproblembeginningwitha CriticalAnalysisofCurrentProblem,Solutions,Conclusionand endingupwithaRecommendation.

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Contenttable

Declaration..2 Certificate.3 Acknowledgement4 Abstract.5

ChapterOne

ResearchMethodology:
Introduction................................................................................................10 1ResearchProblem11 2ResearchObjectives..12 3ResearchHypotheses.12 4Researchmodel.13 5ResearchVariables..14
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51:Typesofgrowthstrategies..14 52:Theelementsoforganizationalstructure.14 53:Valuechain.15

ChapterTwo
ITheconceptofGrowthstrategy: 11:Growthdefined16 12:Benefitsofgrowthstrategy17 13:Advantages.18 2Organizationalstructure19 21:TypesofOrganizationalStructure.....................................................20 Prebureaucraticstructures20 Bureaucraticstructures..21 PostBureaucratic.....................................................................21 FunctionalStructures..22 MatrixStructure..........................................................................23 3ClassificationofOrganizationStructure...............................................24
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4KeyDeterminantandInfluencesonOrganizationalStructure.26 5OrganizationalEffectiveness................................................................28 6Theorganizationsvaluechain.31 7Activatesinthevaluechain.....32 71:Primaryactivities33 72:Supportactivities.34 73:Subactivities..34 74:Linkageswithinthevaluechain..35

Chapterthree
Analysistosolvetheproblem..37 1CriticalAnalysisofCurrentProblems.........................................37 2Solutions.39

Chapterfour
1Conclusion41 2Recommendation...............................................42 References.44 Appendix.47
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ChapterOne

ResearchMethodology

Introduction
SonyCorporationisoneofthelargestcorporationsthatspecializedinthe productionofelectronicstoolssuchasvideogames,televisions,Cameras,accessories andmuchmore.SonyCorporationwasfirstestablishedin1946,itwasfoundedby MasaruldukaandAkioMoritawhoareoriginalfromJapan(Sayer,P.2008).During thegrowingcompetitionintheinternationalmarket,itisamustforSonyCorporation tosecurecompetitiveadvantageintermsofinternalstabilityandtechnological development.Nowadays,mostconsumersprovidesmorepremiumonthemost advancedproductsinthemarket,andthisistheprimaryreasonwhySony Corporationallotsignificantamountofresourcestoresearchanddevelopmentto maintainthepaceoftheirtechnologicaldevelopment. Furthermore,Sonyhasdesigneditsorganizationstructureinsuchawaythatitcould easilyrespondtovariousnewmarketchallenges.However,theforcesofmarket competitionandglobalizationblocksthetechnologicaladvantagesofSonyaswellas destabilizedtheinternalstabilitythroughattackingtheirorganizationdesignas variousdepartmentsandkeypersonofthesaidcompanyshouldersbroader responsibilitiesasthecompanycontinuestoexpandintheinternationalmarket.
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Sony'scompetitors,Panasonic,Toshiba,Apple,Microsoft,andDellarejustfewofthe manyelectronicscompaniesalsooperatingintheinternationalmarketwithfast pacedtechnologicaldevelopment(lsuppli.com,2006).Duetothisscenario,Sony's productsappearstobelesstechnologicallyadvancedcomparedtoitscompetitors leadingtoanunexpecteddownturnontheirsalesandprofitinternationallyastheir customersshifttotheircompetitors(Eetimes.com,2008).

1 ResearchProblem.
DuringthepeakofSony'sinternationaloperation,variousdepartmentsandtop levelmanagerswasbombardedwithmoretasksandresponsibilitiesinorderto supporttheirmarketexpansionwhichpresentlyleadtothedeteriorationoftheir performances.Distributionoftaskandresponsibilitiesisweakandmostofthe organizationdesignofSonyisalreadyobsoleteconsideringthepresentconditionof competitionandglobalizationintheinternationalmarket.Theonlyproblemlieson thefactthateveryexecutiveofSonystartsgainingmoreresponsibilitiesinhis/her assignedgroup.Inotherwords,theinternationalexpansionofSonyintherecent yearswasnotaccompaniedbyexpansionofinternalresponsibilitiesofvarious executivesofthesaidcompany,therebyleadingtoadownturnontheiroverall performance.Sotheproblemis"whatistheinfluenceofgrowthstrategyonthe organizationalstructure?"
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2ResearchObjectives.
Explaintherelationshipbetweengrowthstrategyandorganizationalstructure. Distinguishbetweenorganizationalstructureandvaluechain. Describehoworganizationgetspositioninitsenvironment. Describehowtransferthecorecompetencetocompetitiveadvantage.

3ResearchHypotheses.
Thisresearchproject'shypothesesobservethatorganizationalstructureand valuechainisamajorroutetocreateahealthycompetitionandsuccessofgrowth strategy.Thefollowinghypothesesareimportanttobetestedinthisresearchby usingtheoreticalsciencesandSonyCorporationcasestudy. HI:Thereisarelationshipbetweenorganizationalstructureandvaluechain. H2:ThereisarelationshipbetweenGrowthStrategy&OrganizationalStructure.
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 4Researchmodel Figure(1) Researchmodel

OrganizationalStructure Organizationdesign Workspecialization Effecton Chainofcommand Unityofcommand Spanofcontrol Effecton ValueChain Progressionof activities

GrowthStrategy DirectExpansion Merger Acquisition

Source:formulationofresearchers

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5ResearchVariables.
51:Typesofgrowthstrategies. DirectExpansion:Involvesincreasingacompany'ssize,revenues,operation,or workforce. Merger:Occurswhentwocompanies,usuallyofsimilarsize,combinetheir resourcestoformanewcompany. Acquisition:Occurswhenalargercompanybuysasmalleroneandincorporates theacquiredcompany'soperationsintoitsown. (StephenP.Robbins&DavidA.DeCenzo,2006) 52:Theelementsoforganizationalstructure. Organizationdesign:Aprocessinwhichmanagersdeveloporchangetheir organization'sstructure. Workspecialization:Acomponentoforganizationstructurethatinvolveshaving eachdiscretestepofajobdonebyadifferentindividualratherthanhavingone individualdothewholejob. Chainofcommand:Thecontinuouslineofauthoritythatextendsfromupper organizationallevelstothelowestlevelsandclarifieswhoreportstowhom. UnityofCommand:Themanagementprinciplethatnopersonshouldreportto morethanoneboss. Spanofcontrol:Thenumberofsubordinatesamanagercandirectefficientlyand effectively. (StephenP.Robbins&DavidA.DeCenzo,2006)
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53:Valuechain. Thevaluechainiscompletebusinesssystemoftheorganization;itcomprisesallof theactivitiesthattheorganizationperforms. (Cavusgil,KnightandRiesenberger,2007) Figure(2) Sonyinternationalvaluechain

Market Research
Consultant Market research firmlawyer

Distribution Channel

Innovatio nfairs Research and Develop ment

Universities Research labs

Trading company Broker Importer Sourcing

Commercial bank Logistics service provider Insurance company Customs broker

Production

Export Management Company Sales representative Distributor

Intermediaries
Facilitators

Marketing

Export Management Company Trading company sales representativ eDistributor Broker Importer Retailer

Retailer After Sales Service

Designated customer Servicefirm

Distribution

TypicalPositionsofIntermediariesandFacilitatorsintheInternationalValueChain Source:Cavusgil,KnightandRiesenberger,2007

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ChapterTwo

1TheconceptofGrowthstrategy:
11:Growthdefined. Wedefinegrowthintermsofrevenue,profitsandtalent.Somecompanieshavea greaterfocusonrevenues,someonprofits.Ourresearchandexperienceindicates thatwithoutabalanceofrevenues,profitsandtalent(thepeopleofthebusiness), sustainedgrowthwillnotoccur. (http://www.growthstrategypartners.com/discipline/research.asp) Astrategybasedoninvestingincompaniesandsectorswhicharegrowingfasterthan theirpeers.Thebenefitsareusuallyintheformofcapitalgainsratherthandividends. Aconcentratedgrowthstrategyinvolvesfocusingonincreasingmarketsharein existingmarkets.Thisstrategyisalsosometimescalledaconcentrationormarket dominancestrategy.Inastableenvironmentwheredemandisgrowing,concentrated growthisalowriskstrategy. Concentrationmayinvolveincreasingtherateofuseofaproductbycurrent customers;attractingcompetitor'scustomers;and/orattractingnonusers/new customers.(http://www.investorwords.com/5597/growth_strategy.html)
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12:Benefitsofgrowthstrategy. Growththatiswellplannedcanbringmanybenefits,including: .Agreaterdiversityofpeople,culturesandlifestyle,leadingtoamorevibrantand cosmopolitansociety .Alargerlaborsforceandskillsbase .Agrowingmarketforgoodsandservices .Potentialforincreasedinvestmentandproductivity .Greaterdiversityinresourcesandemployment .Developmentofavarietyofcommunityfacilities,entertainmentandevents .Ahigherprofilenationallyandinternationally .Alargeratingbase,whichresultsinmoreopportunitiestoaddressthe environmentalandinfrastructuralissuesfacingtheregion Althoughgrowthcanbringgreateconomicandsocialbenefits,italsoplacespressure infrastructureandutilities(roads,pipes,powerandpublictransport),onthenatural environmentandheritage,onhousingavailability,andonsocialandcommunity facilities(schoolsandmedicalservices). ToensuregrowthiswellmanagedtheAucklandRegionalGrowthStrategy(RGS) wasadoptedbyallcouncilsintheAucklarldRegionin1999.Thisstrategysetsouta50 yearvisionformanaginggrowthwhichistosustain: .Strongsupportivecommunities
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.Ahighqualitylivingenvironment .Aregionthatiseasytogetaround .Protectionofthecoastandsurroundingnaturalenvironment (http://www.arc.govt.nz/albany/mainlauckland/aucklandsgrowth/aucklands growth_home.cfm) 13:Advantages. Theconceptandattendantpolicieswillguidemoreintensivegrowthand developmenttoconcentrateincompactandwelldefinedcenters.Thecenterswillbe easilyaccessiblebybothtransitandpedestrianmeans,therebyimproving convenienceforresidents,employeesandvisitorswithincentersandnearbyareas. Growthwillalsobeencouragedwithinconcentrationsandinnodesalong transportationcorridors. Concentratinggrowthwithinmixedusecenterswillalterthemannerinwhich developmenthasoccurredinthepast.Itwillstrengthentheexistingdevelopment pattern,protectneighborhoodsandtheenvironmentandcreateattractiveurban livingandworkingenvironmentswhichencouragewalking,cyclingandpublictransit.
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Encouraginggrowthwheredevelopmentalreadyexistsandwhereadequatecapacity forutilitiessuchassewerlines,watermainsandotherpublicfacilitiesareinplacecan significantlyreducepublicinvestmentcosts.Theuseoftransitasatravelalternative willbeencouraged.Awelldevelopedtransportationsystemwillbenecessaryto provideefficienttravelbetweenhomesandemploymentorretailcenters.

2Organizationalstructure.
Anorganizationalstructureisamostlyhierarchicalconceptofsubordinationof entitiesthatcollaborateandcontributetoserveonecommonaim. Organizationsareanumberofclusteredentities.Thestructureofanorganizationis usuallysetupinoneofavarietyofstyles,dependentontheirobjectivesand ambience.Thestructureofanorganizationwilldeterminethemodesinwhichitshall operateandwillperform. Organizationalstructureallowstheexpressedallocationofresponsibilitiesfor differentfunctionsandprocessestodifferententities.Ordinarydescriptionofsuch entitiesisasbranch,site,department,workgroupsandsinglepeople.Contractingof individualsinanorganizationalstructure Normallyisundertimelylimitedworkcontractsorworkordersorundertimely unlimitedemploymentcontractsorprogramorders.

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21:TypesOFOrganizationalStructure. Prebureaucraticstructures Prebureaucratic(entrepreneurial)structureslackstandardizationoftasks.This structureismostcommoninsmallerorganizationsandisbestusedtosolvesimple tasks.Thestructureistotallycentralized.Thestrategicleadermakesallkeydecisions andmostcommunicationisdonebyoneononeconversations.Itisparticularlyuseful fornew(entrepreneurial)businessasitenablesthefoundertocontrolgrowthand development. Theyareusuallybasedontraditionaldominationorcharismaticdominationinthe senseofMaxWeber'stripartiteclassificationofauthority. Bureaucraticstructures Bureaucraticstructureshaveacertaindegreeofstandardization.Theyarebetter suitedformorecomplexorlargerscaleorganizations.Theyusuallyadoptatall structure.Thentensionbetweenbureaucraticstructuresandnonbureaucraticis echoedinBurnsandStalkerdistinctionbetweenmechanisticandorganicstructures.
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 PostBureaucratic Thetermofpostbureaucraticisusedintwosensesintheorganizational literature:onegenericandonemuchmorespecific.Inthegenericsensetheterm postbureaucraticisoftenusedtodescribearangeofideasdevelopedsincethe1980s thatspecificallycontrastthemselveswithWeber'sidealtypeBureaucracy.Thismay includeTotalQualityManagement,CultureManagementandtheMatrixOrganization amongstothers.Noneofthesehoweverhasleftbehindthecoretenetsof Bureaucracy.Hierarchiesstillexist;authorityisstillWeber'srational,legaltype,and theorganizationisstillrulebound.Heckshcer,arguingalongtheselines,describes themascleanedupbureaucracies,ratherthanafundamentalshiftawayfrom bureaucracy.GideonKunda,inhisclassicstudyofculturemanagementat'Tech' arguedthat'theessenceofbureaucraticcontroltheformalization,codificationand enforcementofrulesandregulationsdoesnotchangeinprinciple..itshifts focusfromorganizationalstructuretotheorganization'sculture'. AnothersmallergroupoftheoristshavedevelopedthetheoryofthePost BureaucraticOrganizationprovideadetaileddiscussionwhichattemptstodescribe anorganizationthatisfundamentallynotbureaucratic.CharlesHeckscherhas developedanidealtypePostBureaucraticOrganizationinwhichdecisionsarebased ondialogueandconsensusratherthanauthorityandcommand,theorganizationisa networkratherthanahierarchy,openattheboundaries(indirectcontrasttoculture management);thereisanemphasisonmetadecisionmakingrulesratherthan decisionmakingrules.Thissortofhorizontaldecisionmakingbyconsensusmodelis oftenusedinHousingcooperatives,otherCooperativesandwhenrunninganon
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profitorCommunityorganization.Itisusedinordertoencourageparticipationand helptoempowerpeoplewhonormallyexperienceOppressioningroups.Stillother theoristsaredevelopingaresurgenceofinterestinComplexityTheoryand Organizations,andhavefocusedonhowsimplestructurescanbeusedtoengender organizationaladaptations.Forinstance,Minerandcolleagues(2000)studiedhow simplestructurescouldbeusedtogenerateimprovisationaloutcomesinproduct development.Theirstudymakeslinkstosimplestructuresandimproviseslearning. OtherscholarssuchasJanRivkinandSigglekow,andNelsonRepenningrevivean olderinterestinhowstructureandstrategyrelateindynamicenvironments. FunctionalStructures Thefunctionalstructuregroup'semployeestogetherbaseduponthefunctionsof specificjobswithintheorganization.Forexample,adivisionofaninternetservice provider(ISP)withafunctionalorganizationalstructuremightbeasfollows: VicePresident SalesDepartment(salesfunction) .CustomerService .AccountingDepartment(accountingfunction) AdministrationDepartment(administrationfunction)
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 MatrixStructure Matrixstructuregroupsemployeesbybothfunctionandproduct.Thisstructure cancombinethebestofbothseparatestructures.Amatrixorganizationfrequently usesteamsofemployeestoaccomplishwork,inordertotakeadvantageofthe strengths,aswellasmakeupfortheweaknesses,orfunctionalanddecentralized forms.Anexamplewouldbeacompanythatproducestwoproducts,"producta"and "productb".Usingthematrixstructure,thiscompanywouldorganizefunctions withinthecompanyasfollows:"producta"salesdepartment,"producta"customer servicedepartment,"producta"accounting,"productb"salesdepartment,"product b"customerservicedepartment,"productb"accountingdepartment.Matrix structureisthemostcomplexofthedifferentorganizationalstructures. .Weak/FunctionalMatrix: Aprojectmanagerwithonlylimitedauthorityisassignedtooverseethecross functionalaspectsoftheproject.Thefunctionalmanagersmaintaincontrolovertheir resourcesandprojectareas. .Balanced/FunctionalMatrix: Aprojectmanagerisassignedtooverseetheproject.Powerissharedequally betweentheprojectmanagerandthefunctionalmanagers.Itbringsthebestaspects
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offunctionalorganizations.However,thisisthemostdifficultsystemtomaintainas thesharingpowerisdelicateproposition. .Strong/ProjectMatrix: Aprojectmanagerisprimarilyresponsiblefortheproject.Functionalmanagers providetechnicalexpertiseandassignresourcesasneeded.Amongthesematrixes, thereisnobestformat;implementationsuccessalwaysdependsonorganization's purposeandfunction. http://en.wikipedia.org/wiki/Strategic_management.

3ClassificationofOrganizationStructure
Organizationalstructureisabouttherelationsandresponsibilitiesorganizedina waytoenabletheorganizationtoperformitsfunctionssimply.SonyCorporationhas beenusingdivisionaltypeoforganizationaldesignasillustratedbytheir organizationalchart,(seeappendix1).DuringtheearlyyearsofSony'soperationin themarket,thedivisionaltypeoforganizationdesignenablesthemtoeasily implementstrategiesanddecisionstoproblemsthatneedimmediatesolution.Since Sonywasonlyonitsdevelopmentstage,theywereabletofullyutilizetheoptimal gainsthatcanbederivedfromusingdivisionalorganizationstructure.Thefastrelay ofinformation,decisionmakingandimplementationofstrategiesthroughtheuseof divisionalorganizationdesignprovidedSonywithtremendousamountofgainsinthe internationalmarketastheystartsuccessfullypenetratingtheirtargetmarketand
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outperformedtheircompetitorsinthemarket,makingthemoneofthesuccessful multinationalcompaniesaroundtheglobe(Goliath.ecnext.com2007:1).Moreover, thedivisionalorganizationdesignenablesSonytospecializeits"groups"since therebyimprovingthequalityoftheirproductsinthemarket(MarketWire,2005).In instance,SonyEricsonMobileCommunicationsGroupconcentratesonlytodevelop andproducemobilecommunicationproductsinthemarket.TheheadofEricson MobileCommunicationsGroupisdirectlybelowtheCEOofSony,andsowiththeir othergroups(Sony.net,2008).ThedirectrelationshipbetweentheheadofSony's groupsanditsCEOprovideseaseondecisionmakinganddistributionofinformation aswellasstrategiesonbranddevelopment. However,thisorganizationalstructurestartstoprovideinstabilitiestoSony Corporationasitcontinuestogrowaselectronicsindustrysuperpowerinthe internationalmarket.Asthecompanygrewintheinternationalmarket, responsibilitiesofeachheadofvariousgroupsalsoincreaseduptothepointwherein theystartperforminginefficientlyastheirtimebeingspentoneveryvitalaspectof theiroperationbecomelesserandlesser(Sony.net,2008).Inthisregard,thepresent statusofdivisionalorganizationdesigntoSonybecomesineffectiveandonlyprovides instabilitiesastheexecutivesofthecompanystartstoperforminefficientlyontheir respectivefields,althoughdivisionalorganizationdesignfitsSonythananyother organizationstructureavailableinthebusinessmanagementrealm.SinceSonyhavea diversityofproductsinthemarket,andeachgroupspecializesintotheproductionof theirownproductlines,then,divisionalstructurealreadyfitsSony.
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4KeyDeterminantandInfluencesonOrganizationalStructure
AStrategyisalongtermplanofactiondesignedtoachieveaparticulargoal. Strategiesareusedtomaketheproblemeasiertounderstandandsolve.Oneofthe mainstrategiesofSonyinexpandingitsshareontheinternationalmarketwouldbe thediversificationofitsproductlinefromelectronicstoB2Bbusinesssolutions,which lateronenablesthecompanytotapvariousresources,sinceeachproductlineof Sonyneedsdifferentproductionprocessescomparedtoothers.Sonydecidedtouse divisionalorganizationalstructureinordertoeasilymanagetheentirecompany withoutcompromisingthequalityoftheirproductlines(Reuters.com,2008).For example,SonyFinancialHoldingsGroupprovidesbusinesssolutionservicestothe marketandneedsdifferentoperationalprocessescomparedtoSonyEntertainment BusinessGroupthatprovidestelevision,digitalcameras,andvideocamerasinthe market.Eachofthesegroupsrequiresdifferentsetofoperationalstyle,setofskills andequipments,andsetofstrategies,therebyprovidingenoughroomtothese groupstooperateindependentlyfromoneanotherwouldenhancetheirproductivity andefficiencyastheyspecializeintotheirproductionprocess.Thisisthemainreason whySonychosetousedivisionalorganizationdesigninordertoprovideenoughroom foreachproductlinetobedevelopedseparatelybyworkersspecializedon producingitfromotherproductline.Inthisregard,thestrategyofSonytodiversify itsproductlinegavewayfortheuseofdivisionalorganizationstructure.

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AnotherfactorthatservestobethekeydeterminantofSonyCorporation's organizationstructurewouldbeitsgrowthrate.SonyCorporationhasroughly.4 percentsalesgrowthrateinternationallyasofthismonthwhichisrelativelyhigher comparedtoitsrivalcompanieslikePanasonicwith2.78percentsalesgrowthrate (Reuters.com,2008).DuringtheinitialstageofSony'sgrowthintheinternational market,astheirproductbecomemorediverseleadingtoafastpacedgrowth,Sony choosetousedivisionalorganizationstructuretoallowthecompanytocopeupwith thesaidgrowthratesincedivisionalorganizationstructureprovidesenoughroomfor Sonytofurtherdeveloptheirdiverseproductlinethroughspecialization.Presently, therootoforganizationstabilityofSonyrootsonthefactthattheywerenotableto accompaniedtheirmarketgrowthandexpansionwithinternalexpansioncausingfor thedivisionalorganizationstructuretoworkinefficiently.Oncetheinternalgrowth rateofSonyalreadyaligneditselftoitsmarketgrowth,then,thatistheonlytime whereinSonycanfullyutilizethepotentialgainsofusingdivisionalorganization structure.Inthisregard,itisthereforevitalforSonytokeeptrackitsmarketgrowth andinternalgrow1hifwhetherthesetwostillaligneachothersincetheseaffectsthe performanceoftheirorganizationstructure. ThestrategyandgrowthofSonyisinterrelatedtooneanotherandthisisthe mainreasonwhythesetwofactorsgreatlyaffectitsorganizationstructure.The strategyofSonytodiversifyitsproductlineprovidedthemwithenoughopportunity toincreasetheirmarketshareintheinternationalmarket.Thesaidproductline expansionandincreaseofmarketshareenableSonytoeasilypenetratetarget marketandoutperformeditscompetitors(Forbes.com,2008).Also,asSony continuestosuccessfullypenetrateitstargetmarketandoutperformedits competitors,itstartstogainimpressivegrowthinthemarketduetohighersalesand
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profit,althoughtheysaidmarketgrowthofSonywasnotaccompaniedbyinternal expansionwhichpresentlyleadstotremendouslossesaskeypersonnelofitsgroups startsperforminginefficientlyandineffectivenessoftheirorganizationstructure. Moreover,asthesekeypersonnelofSonyperforminefficiently,theresearchand developmentoftheirproductsstartstodrop,givingenoughroomforitscompetitors tostepupintheelectronicsandbusinesssolutionsindustryandprovidefinancial lossestothecompany(Forbes.com,2008).Therefore,atthispointintime,itisvery importantforSonytoaddresstheseinstabilitiesonitsworkforceinordertorestore theircompetitivenessintheinternationalmarketwithrespecttotheirmarket strategiesandtechnologicaladvancement.

5OrganizatonaIEffectiveness
Organizationaleffectivenessisabouttheabilityofanorganizationtofulfillits goalsthroughwellorganizedmanagement,wellbuiltgovernanceandrededicate perseverancetoachievingresults(Robbins&Bamwell,2006).OnewayinwhichSony CorporationevaluatesperformancewouldbethroughtheuseofInformationand CommunicationsTechnologySupplierSelfAssessmentQuestionnairewhichaimsto determineifwhethertheirsuppliersupholdtheElectronicIndustryCodeofConduct. SincesuppliershaveadirectimpactontheoverallperformanceofSonyintermsof productquality,alongwithotherelectronicscompaniesaroundtheglobesuchasHP, IBM,andMicrosoft,SonyCorporationcreatedtheElectronicIndustryCodeof ConductwhichencompassestheICTSupplierSelfAssessmentQuestionnaire.
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ThroughtheICTSupplierSelfAssessmentQuestionnaire,Sonycanmonitorthe productqualityoftheirsuppliers.Bysecuringtheperformanceoftheirsuppliers, SonyCorporationhasbeenabletomaintainitsintegrityofproducinghighquality productsinthemarket.TherewerecaseswhereinSonyCorporationwassuedfor releasingsubstandardproductsinthemarket.Likewhathappenedrecentlywhena couplesuedSonywhenthebatteryofaSonylaptopexplodedcausinginjuriestothe complainants. Duetothis,Sonyhadtopulloutallofthebatteriesthatwerebeingsuspectedas substandardandreplacedwithanewoneinordertopreventhavingmoreaccidents. Inthisregard,throughtheICTSupplierSelfAssessmentQuestionnaire,Sony Corporationcanstoptheabovementionedaccidentcausedtosubstandardproducts thattheyreleaseinthemarketwhichmostlycamefromtheirsuppliers.Dell,the makerofthesaidsubstandardbatteryofSonylaptop,isnowmakingcollaboration withSonyinpullingoutthosesubstandardlaptopbatteriesinthemarket. AnotherwaybywhichSonyevaluatestheirperformanceisthroughtheuseof balancescorecard.Balancescorecardhelpeveryorganizationinthemarketto determineifwhethertheirsmallerscaleoperationalactivitiesarestillalignedwith theirlargerscaleactivities.AsforthecaseofSonyCorporation,itusesbalance scorecardindeterminingthealignmentoperationalprocessesofitsgroups,suchas SonyEricsonMobileCommunications,GameBusinessGroup,EntertainmentBusiness Group,andSonyFinancialHoldingsGroup,tothevisionandstrategyoftheentire organization.Forinstance,thebalancescorecardisbeingusedbySonyCorporationin determiningifwhethertheprocessesusedinproducingSonyEricssoninthemarket arestillalignedwiththeCorporateSocialResponsibilityoftheentirecompany.
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Throughthis,SonyCorporationcankeeptheirvariousgroupsintacttothevisionand strategiesoftheir"parent"companySonyCorporation.Justrecently,SonyEricsson phonewasawardedasthemost"EcoFriendly"phoneinthemarketandthesaid awardisbeingattributedtothecontinuessuccessofSonyCorporationtoupholdits CorporateSocialResponsibilityonminimizingthewastesbeingemittedinproducing thesaidproduct(Sayer,2008).ConsideringthesaidsuccessofSonyEricssonphonein themarket,thereisagreatpossibilitythatitcanearnpositivebalancescorecardby upholdingtheCSRofSonyCorporation,whichcaneventuallyserveasthebasisfor furtherdevelopmentofSonyEricssonphoneinthemarket(Ericsson.co.jp2005). Therefore,balancescorecardprovidesenoughroomforSonyCorporationto determinethealignmentoftheirproductlinestotheirvisionandstrategyespecially whenitconcernstheintegrityoftheirbrandname. Atthispoint,theperformanceevaluationtoolsofSonyCorporation,ICTSupplier SelfAssessmentQuestionnaireandBalanceScorecard,hasbeenabletosolveits problemregardingmaintainingthequalityoftheirproductsinthemarketbysecuring thecomplianceoftheirsuppliersandaligningtheproductionprocessesoftheir productlinesintotheirCorporateSocialResponsibilities.Therefore,lCTSupplierSelf AssessmentQuestionnaireandBalanceScorecardfittothevisionandstrategiesof SonyCorporationbasedfromtheirsuccessfulsolutionregardingthelowqualitylevel ofSony'sproductsinthemarket.Thisissueonqualitylevelandonhowtheabove identifiedevaluationtoolsofSonyCorporationsolveditwillbethoroughlydiscussed inthenextpartofthepaper.
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6Theorganizationsvaluechain.
Whilestrategicsuccessdependsuponthewayinwhichtheorganizationasawhole behavesandthewaysinwhichmanagersandfunctionsareintegratedcompetitive advantagestemsfromtheindividualanddiscreteactivitiesthatafirmperforms.A costadvantagecanarisefromlowcostdistributionefficientproductionoran excellentsalesforcethatsucceedsinwinningthemostappropriateorder. Differentiationcanbetheresultofhavinganexcellentdesignteamorbeingableto

sourcehighqualitymaterialsorhighqualityproduction. Figure(3) Valuechain

Inbound Operationsand Manufacturing Outbound Logistics Marketingand Sales Customer Service

Logistics Core

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Administration Firminfrastructure HumanResources TechnologyDevelopment Procurement

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Source:(strategicmanagementawarenessandchange5theditionjohn Thompsonwithfrankmartin) Valuechainanalysisissystematicwayofstudyingthedirectandsupportactivities undertakenbyafirmthisanalysisshouldarisegreaterawarenessconcerningcostand thepotentialforlowercostsandfordifferentiation.Quitesimplearguesporter 1985competitiveadvantageiscreatedandsuestaintedwhenaffirmperformsthe mostcriticalfunctionseithermorecheaplyorbetterthanitscompetitors.Butwhat arethemostcriticalfactors?Why?Howandwheremightcostsbereduced?How andwheremightdifferentiationbecreated?

7Activatesintilevaluechain
Thevaluechaindevelopedbytv1ichaelporterisillustratedinFigure(3)Therefive primaryactivities,namelyinboundlogistics,Operations,Outboundlogistics, marketing,salesandservice.Inthediagramtheyareillustratedasachainmoving fromlefttoright,andtheyrepresentactivitiesofphysicallycreatingtheproductor serviceandtransferringittothebuyer,togetherwithanynecessaryaftersaleservice. Therearelinkedtofoursupportactivities;procurement,technologydevelopment, humanresourcemanagement,andthefirm'sinfrastructure.Thesupportactivitiesare drawnlaterallyastheycanaffectanyoneormoreoftheprimaryactivities,although
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thefirmsinfrastructuresgenerallysupportthewholevaluechain.Everyoneofthe primaryandsupportactivitiesincurscostsandshouldaddvaluetotheproductor serviceinexcessofthesecosts.Itisimportantalwaystolookforwaysofreducing costssensibly;costreductionsshouldnotbeattheexpenseoflostqualityinareas thatmattertocustomerandconsumers.Equally,costscanbeaddedjustifiablyifthey addqualitiesthatthecustomervaluesandiswillingtopayfor.Thedifference betweenthetotalcostsandthesellingpriceisthemargin.Themarginisincreasedby wideningthegapbetweencostsandprice.Theactivitiesaredescribedingreater depthbelow. 71:Primaryactivities. *Inboundlogisticsareactivitiesrelatingtoreceiving,storinganddistributing internallytheinputstotheproductorservice.Theyincludewarehousing,Stock controlandinternaltransportationsystems. *Operationsareactivitiesrelatingtothetransformationofinputsintofinished productsandservices.Operationsincludemachining,assemblyandpackaging. *Outboundlogisticsareactivitiesrelatingtothedistributionoffinishedgoodsand servicestocustomers. *Marketingandsalesincludessuchactivitiesasadvertisingandpromotion, pricingandsalesforceactivity. *Servicerelatestotheprovisionofanynecessaryservicewithaproduct,suchas installation,repair,extendedwarrantyortraininginhowtousetheproduct.Eachof
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thesemightbecrucialforcompetitiveadvantage.Thenatureoftheindustrywill determinewhichfactors\arethemostsignificant. 72:Supportactivities. *Procurementreferstothefunctionorprocessofpurchasinganyinputsusedin thevaluechain,asdistinctfromissuesoftheirapplication.Procurementmaytake placewithindefinedpoliciesorprocedures,anditmightbeevidencedwithinanmber offunctionalareas.Productionmanagersandengineers,forexample,arevery importantinmanypurchasingdecisiontoensurethatthespecificationandquality areappropriate. *Technologydevelopment:technologyisdefinedhereinitsbroadestsenseto includeknowhow,researchanddevelopment,productdesignandprocess improvementandinformationtechnology. *Humanresourcemanagementinvolvesallactivitiesrelatingtorecruitingtraining

developingandrewardpeoplethroughouttheorganization. *thefirmsinfrastructureincludesthestructureoftheorganizationplanning financialcontrolsandqualitymanagementdesignedtosupportthewholeofthe valuechain. Againeachofthesesupportactivitiescanbeveryimportantincreatingandsustaining competitiveadvantage.

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73:Subactivities. Porterarguesthatitcanoftenvaluabletosubdividetheprimaryandsupport activitiesintotheircomponentpartswhenanalyzingcostsandopportunitiesfor differentiation.Forexampleitislessmeaningfultoarguethatanorganization providesgoodservicethantoexplainitintermsofinstallationrepairortraining.The competitiveadvantageislikelytoresultfromspecificsubactivities.Similarlythe marketingmixcomprisesassetoflinkedactivitieswhichshouldbemanagedto complementeachother.Howevercompetitiveadvantagecanarisefromjustone activityinthemixpossibleTheproductdesignitspriceoradvertisingtechnical supportliteratureorfromtheskillsandactivitiesofthesalesforce. 74:Linkageswithinthevaluechain. Althoughcompetitiveadvantagearisesfromoneormoresubactivitieswithinthe primaryandsupportactivitiescomprisingthevaluechainitisimportantnottothink ofthechainmerelyasassetofindependentactivities.Ratheritisasystemof independentactivities.Linkagesinthevaluechainwhicharerelationshipsbetween theactivitiesareveryimportant.Behaviorinonepartoftheorganizationcanaffect thecostsandperformanceofotherbusinessunitsandfunctionsandthisquite frequentlyinvolvestradeoffdecision.Forexamplemoreexpensivematerialsand morestringentinspectionwillincreasecostsintheinboundlogisticsandoperations activitiesbutthesavinginservicecostsresultingfromthesestrategiesmaybe greater.Thechoiceoffunctionstrategiesandwheretoconcentrateeffortswillrelate totheorganizationscompetitiveandcorporatestrategiesconcerningcompetitive advantage.Similarlyseveralactivitiesandsubactivitiesdependoneachother.The
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extenttowhichoperationsoutboundlogisticsandinstallationarecoordinatedcanbe asourceofcompetitiveadvantagesthroughlowercosts(reducedstockholding)or differentiation(highqualitycustomerorientatedservice).Thislastexampleuses linkagesbetweenprimaryactivitiesbuttherealsoclearlinkagesprimaryandsupport activities.Productdesignaffectsmanufacturingcostspurchasingpoliciesaffect operationsandproductioncostsandsoon.Havingintroducedanddiscussedthe conceptofthevaluechainitisnowimportanttoconsiderhowitmightbeappliedin theevaluationofcostsanddifferentiationopportunities. (JohnThompson&FrankMartin,2005)

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 Chapterthree

Analysistosolvetheproblem

1CriticalAnalysisofCurrentProblems.
Actually,themainproblemofSonyCorporationwouldbethemisalignmentofits marketandinternalexpansionthateventuallyleadtovarious"branchproblems"like lowperformanceratefromtheworkforceofthecompanyaswellasthedeterioration ofthequalityleveloftheirproductlinesinthemarket.ThefastpacedgrowthofSony inthepastyears,whileleavingtheirinternalconditiontoremainuntouched, providedinefficienciesonthepartoftheirworkforceastheresponsibilityofone anothercannolongerbeperformedasefficientasbefore,andlowproductqualityas thesaidinefficienciesontheirworkforcestartedtoreflectonthequalityleveloftheir productlines.ThisisthemainreasonwhySonyCorporationsuffersfromreturnon investmentandprofitonitsoperationastheircustomersshifttothesideoftheir competitorssincethelatteralreadyhaverelativelytechnologicallyadvancedproduct linesinthemarketcomparedtoSonyCorporation.Inordertoprovidealongterm solutiontothisproblemofSonyCorporation,itisamustforthemanagementofthe
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saidcompanytoexpandtheirworkforceeitherbyaddingnewpositionstoreinforce thekeypositionsinthecompanyorhiremoreworkerstodelegatethetasksoptimally amongtheirworkforce.Butatpresent,SonyCorporationisapplyingshortterm solutionstotheseproblemsthroughtheuseofevaluationtoolsasdiscussedonthe previouspartofthispaper. First,theICTSupplierSelfAssessmentQuestionnaireprovidedsolutionon securingthequalityoftheirsupplier'sproductswhichlateronbeusedonthe productionprocessofSonywiththeICTSupplierSelfAssessmentQuestionnaire,Sony canmonitorifwhetherthesuppliesoftheirsuppliersaresubstandardorcomplies withtheElectronicIndustryCodeofConductwhichsetsupthestandardsfor electronicproductsinthemarker(Greenwald,2005).SonyCorporationcannow minimizetheincidenceofproductmalfunctionorsubstandardcomponentsoftheir productlinesjustlikewhathappenedtothebatteriesofSony'slaptopthatexploded duetooverheating.ICTSupplierSelfAssessmentQuestionnairewillimprovethe qualityofSony'sproductlineevenuptoasmalldegreesinceitonlysolvestheir problemonthesideoftheirsupplierandnottherootoftheproblemwhichstilllies ontheinternalstabilityoftheirworkforce.WiththeriseofICTSupplierSelf AssessmentQuestionnaireandElectronicIndustryCodeofConduct,casesof substandardelectronicproductsinthemarketwillbeminimizedleadingforSonyto improvethequalitylevelofitsproducts(UnitedNationsEnvironmentProgram, 2005).Inthisregard,throughtheuseoflCTSupplierSelfAssessmentQuestionnaire, SonyCorporationmanagestoimprovethequalityoftheirproductlinesevenuptoa smalldegree.

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Ontheotherhand,thebalancescorecardofSonyCorporationprovidesenough roomforthesaidcompanytoimprovethequalityoftheirworkforce'sperformance sincethecompanycandetermineifwhetheragroupordepartmentalreadyperforms outsidetheboundariesoftheirvisionandcorporatestrategies.Therearetimes whereinthemisalignmentofSonyCorporationsproductstotheirvisionand corporatestrategiesrootsontheinefficientperformanceofworkforceofagiven departmentorgroup,andbalancescorecardcandetermineifwhetheragivengroup ofSonyCorporationperformsinefficientlybasedfromtheevaluationoftheproducts beingproducedbythatgivengroup.Throughthis,SonyCorporationcaneasily determinewhichgroupamongitscompaniesneedstoundergoworkforceexpansion tosolvethesaidinefficiencyoftheirworkers.Inthisregard,thebalancescorecard providestwoservicestoSonyCorporation,evaluationoftheirproduct'sperformance inthemarketanditsalignmenttothevisionandcorporatestrategiesofthecompany, andonwhichgroupofthecompanyneedsworkforceexpansioninordertoimprove thequalityoftheirproductlinesjustlikewhathappenedtoSonyEricssonphonein themarket(Esato.com,2007).

2Solutions.
InorderforSonyCorporationtohavelongtermsolutiontotheirproblem regardingthemisalignmentoftheirmarketandinternalexpansionasthe consequenceoftheirfastpacedgrowth,itisadvisableforthemtoexpandtheir workforceeitherbyaddingnewpositionsintotheirorganizationstructureto optimallydelegatethetasksamongtheworkersofthecompany;or,themanagement couldhiremoreworkersthatwillhandletheadditionalresponsibilitiesprovidedby
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themarketexpansionofthecompany.Furthermore,throughaddingnewpositionto theorganizationstructuretovariousbusinessgroupsofSonyCorporation,e.g. executiveassistantswillgivetheirkeyexecutivestodelegatesomeoftheless importanttasksandresponsibilitiestotheirassistantssotheycanconcentrateto moreresponsibilities.ThedivisionalorganizationstructureofSonyCorporationwill stillbeusedintheorganizationdesignofSonyunderthesaidstrategyconsidering thatitistheonlyorganizationdesignthatfitstothebusinessnatureofSony Corporationasdiscussedonthepreviouspartofthispaper.Ontheotherhand,with regardstohiringmoreworkersthatwillberesponsibleonshoulderingtheadditional tasksprovidedbythemarketexpansionofSonyCorporation,thiswillprovideSony withenoughroomimprovetheefficiencyoftheirworkforceseverypersonontheir workforcecannowperformtheirresponsibilitiestotheiroptimallevelsincetasksare nowwelldistributedontheirworkforce. Finally,thesestrategieswillimprovethequalityofSony'sworkforceandsowith thequalityoftheirproducts.Theonlyproblemwithhiringofadditionalworkers wouldbethefactthatitiscostlytohiremoreworkersforthecompanyconsidering thatSonyispresentlysufferingfromlowprofitabilityinthemarketcomparedto addingnewpositiontotheorganizationstructureofSonyCorporation.
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Chapterfour

Conclusion&Recommendation

1Conclusion.
WiththemisalignmentofmarketandinternalexpansionofSonyCorporationdue toitsfastpacedgrow1hintheinternationalmarket,itprovidedvariousproblems intothesaidcompany.TechnologicaladvancementofSony'sproductsdropswhile theefficiencyofitsworkforcedeclineduetothesignificantincreaseontasksand responsibilitiesontheworkplacecausedbythefastpacedgrowthofSonyinthe recentyears.ThroughaddingnewpositionsontheorganizationstructureofSony,it canalreadyimprovetheefficiencyofitsworkforceandsowiththerateofitsproduct line'stechnologicaladvancementinthemarket.Notedthatthereisarelationship betweenthegrowthstrategiesandthestructureoftheorganizationandvaluechain strategyofgrowthaffectthestructureoftheorganizationandstructureofthe organizationaffectthevaluechain.

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 2Recommendation.
Bothoftheabovementionedstrategiesprovidessameimprovementonlifting theefficiencyofSonyCorporation'sworkforceandboostingitsproductqualitylevel, butintermsofcostsonthepartofthecompany,addingnewpositionstothe organizationstructureofSonyisrelativelycheaperthanhiringmoreworkers. Inthisregard,alongsidewiththeperformanceevaluationtoolsofSony Corporation,itisamustfortheirmanagementtoaddnewpositionsintothe divisionalorganizationstructureofthecompanytoprovidelongtermsolutionon theirlowqualityproductintermsoftechnologyandimprovingtheefficiencyoftheir workforceconsideringtheextentoftheirmarketexpansionintheglobalmarket. InorderforSonytorestorethestabilityofitsinternalaffairs,itdoesnothaveto changeitsorganizationdesign;rather,Sonymanagementcanmakeimprovementson theirdivisionaltokeypositionsonvariousgroupsofthesaidcompany.Thisstrategy willprovideenoughroomforthekeypersonneloftaskstotheirassistanceornew positionsinthegroup.Inotherwords,thisstrategywillgivewayfortheinternal expansionofSonywhilemaintainingtheiroriginalorganizationdesignthatwas alreadyproventobeeffectiveandfittothebusinessstructureofSonyCorporation. Choosingorganizationstructureotherthandivisionaldesignwouldprovidegreatrisk sinceSonyoperatesonvariousgroupswithdifferentproductlinestoproduceintothe
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market.Sincethereisarelationshipbetweenthegrowthstrategyandtheseriesof values,affectingthekidneysforeachotherwhentheintendedexpansionofthe growthstrategytoexpandinthestructureoftheorganizationinordertobeparallel tothegrowthstrategy,includingthestructureoftheorganizationthathasimpacton thevaluechainmustbeexpansionofthevaluechain,evenwiththeparallelstructure oftheorganizationandgrowthstrategy.

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9Reuters.com,(200S)Ratios:SonyCorp(NewYorkStockExchange) [Online]availablefrom http://www.reuters.com/finance/stocks/ratios?symbol=SNE.N&rpc=6 6[30May2008] 10Sayer,P.(2008)SonyEricssonPhoneDeclaredMostEcoFriendly [Online]availablefromhttp://www.pcworld.com/article/id.143134 c,recycling/article.html[30May2008] 11Sony.net,(2008)SonyOrganizationalChart[online]availablefrom http://www.sony.net/SonyInfo/CorporateInfo/Data/orgariIzation.html [30May2008].0 12UnitedNationsEnvironmentProgram,(200S)ChainReaction:New ToolHelpsSuppliersBecomeSustainable[online]availablefrom http://www.unep.org/Documents.Multilingual/Default.asp?Documentl D=4SS&ArticleID=4971&I=en[30May2008] 13Strategic(managementawarenessandchange5theditionjohnThompsonwith frankmartin LCT;InformationandCommunicationsTechnology CSR:CorporateSocialResponsibility

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