What Helped Sony Corporation Become One of the Strongest Electronic Brand Globally - Case Study Example

Organizational Analysis Name Professor Institution Course Date Organizational Analysis 1.0 Introduction Change is one of the highly debated topics among organizational behavior theorists in the 21st century. According to Owens and Valesky, many theorists have been in concurrence that organizational success highly depends on change process. A research conducted by McKinsey & Company (2008, p.3) about executives established that a continual change is that major factor in survival. This is a manifestation that the ability to transform is core competency for every organization all over the globe. Despite becoming a common topic among contemporary managers, change has been greatly misunderstood. Change is complex process which is influenced by several perspectives (Graetz, & Smith 2010, p.135). As such, various perspectives have been used to explain this topic. Therefore, drawing from various literatures, this report will explain how rational and institutional perspectives of change could influence perceptions in terms of what is important and relevant to the process of organizational change and the implications for organizational decision-making, action and behavior. In addition, this paper wills the two perspectives to critically analyze a familiar organization and in this case, Sony. 2.0 Literature Review Describing why and how firms engage in change agenda has been a key and continuing pursuit of management scholars (Graetz & Smith 2010, p.140). The series of process of events which take place during such change like the transition of careers and jobs, organizational innovation, group setting and development, growth restructure and dropping have been complex to describe (Westover 2010, p.45). To know how firms change, theorists have formulated numerous theories and perspectives. Many literatures have been reviewed concluded that rational and institutional are some of the significant perspectives of change that explains and influences the change process. Rational perspective The ration perspective perceives management as a rational administration of the unitary firms. This belie portray a company as the social technology logically created so as to achieve goals. Birkinshaw and Heywood (2010) argued that in this setting, the manager serves as a technician or applied scientists whose major task is to make rational decision in order to attain effectiveness and efficiency. In addition, the theory perceives decisions or outcomes as planned choices which maximizes some operations. On the other hand, Baunsgaard and Clegg (2013, p. 1300) claimed that the rational concept entails the arrangement between an organization’s competencies, state over time, composition and the environmental context. Sometimes called planned change or teleological perspectives, rational theory is based on the premise that firms are adaptive and purposeful (Graetz & Smith 2010, p.141). With this perspective, the change process is linear and rational similar to life cycle and evolutionary approaches and with the managers being the drivers of change. Strategic choice scholars are rational perspective proponents are argue that managers and leaders hold decisive control of the firms. The increase in number of management ‘experts’ like Huber and Glick and Kotter who recommended each other’s own change interventions, match this theoretical classification (Graetz & Smith 2010, p.141). The two management gurus claim that every incident outside a business is exogenous; in other words effective change is strongly contributed by the managers. The basis of this argument is that ineffective change is the roe of the managers, though at times there is a belief that managers cannot override the resource and environment constraints. This is an elaborate argument that when change becomes successful, it is because the manager or managers of such organization who were prescient and insightful, but when it fails it is attributed to unforeseen circumstance. Graetz and Smith (2010, p.14) asserted that rational perspective hypotheses that change can be resulted at any scale and pace which is thought to be suitable. Also, change process is often directed and controlled internally. According to Dooley (2002, p.1516), rational philosophy is about setting creating mission, vision and goals which translates to strategic management. The mission, vision and goals provide direction to the company. Therefore, an organization has to determine objectives, and then define means to attain such goals and create a strategy of activities which assist in implementing the goals (Frigo and Anderson 2009, p.27). The fundamental motivating aspect of this model is often the profits for an organization. Thus the decision makers under this perspective are considered autocratic in a big way compared to other theories. The managers using this approach are always motivated by the financial positions and have the tendency of leaving their staff less inspired. Graetz and Smith (2010, p.11) claimed in their research found that a manager focusing on rational perspective in his decision making is unlikely to be perceived as a visionary leader by the personnel and is likely to thought to be autocratic. Institutional Perspective Institutional perspective is one of the major factors which influences change in an organization. This perspective is based on the premise that some change process is determined by the industry or institutional pressure. Institutional theory was developed by Meyer and Rowan’s in 1977 and argued that in every industry or sector, firms use the same forms. The two management theorists explained this perspective by drawing from the effects of the social environment in which firms are rooted. Such environment has some ‘strict institutional rules; which define acceptable and appropriate ways of organizing. In fact, Meyer and Rowan notified the scholars that firms are not just production systems operating within an environment which is composed of consumers, competitors and supplies, but, cultural and social systems entrenched in an ‘institutional’ environment, consisting of different actors such as the interest groups, state, the media, professions and public opinion among others (Greenwood, Kodeih & Lounsbury 2011, p.7). An organization’s behavior cannot be comprehended without consideration of institutional perspective. Furthermore, this effect is resilient and significant. Organization are considered not to be islands of rationality of political pragmatism; but instead are greatly limited by the social anticipations and the features of the legitimacy. In evaluating why and how the individual organization cope with new practices or ideas it is therefore required to understand the responsibility and outcomes of the policing mechanisms and field isomorphic. The strategies which are in agreement with rational perspectives give priority to strategic management and effective planning of the organizational objectives.Therefore, it is one of the popular perspectives for managers who aspire to show direction for an organization. The institutional perspective makes key assumptions within the context of the sensitivity of the environment organizations are always located. Similarly to ecologists, the institutionalists usually expect the organizations to raise homogeneity in their sector in the due course but perceive the shaping up of the industry to be a pressure of an institutional environment as opposed to scramble for the resources. Management experts argue that it is not just the competition or strategy which spur growth but also the pressure within the broader institutional framework. DiMaggio and Powell (1991) asserted that such pressure could emerge in form of financial, legal or regulatory conditions. Regardless of the particular pressures, change is mostly as a result of a changing industrial setting. The effect is that thriving firms are successful owing to that fact that their system efficiently tolerates the industrial forces to which they should react. The argument to this perspective opinion is that firms are influenced to change by the forces from their institutional settings. The intelligent strategy cannot outsmart the tenets created by the institutional environment. Meyer and Rowan (2006, p.45) argued that since organization shape is vital to the institutional perspective, it becomes crucial in studying how the resemblance are impacted by the external forces which influence organizations to create structures and patterns. One of the major attributes of the institutional perspective is that it describes the resemblances between companies and the stability of the company’s arrangement in a sector. For instance, the proponents of the institutional perspective would report to legal companies as a show of the institutional compliance in which majority are organized in a similar manner since they have used the best strategy for growth (Graetz & Smith 2010, p.142. Therefore, institutional theory is significant in describing the manner in which economic, social and legal factors influences organizational practices and structures, and how ability of an organization to adapt to such play an important role in shaping up organizational prosperity and survival. On the contrary, Van de Ven and Poole (1995, p.513) opined that institutional perspective has the tendency of downplaying the internal pressures and the influence that company actors have on their challenges. This theory views change as a slow process which is small in scale, though the pressure that influences it can push for fast pace and an expanded scale of change. The driver of change is external, and here control is majorly not directed and the certain remain at moderate level. Institutional perspective has the feature such as reflexivity. An explanation of this feature is that an organization has a destabilizing ‘joints’ which arise from external environmental. Greenwood, R, Kodeih, M & Lounsbury (2011, p.24) These ‘jolts’ consist of technological disruptions, social upheaval, regulatory change and competitive discontinuities. Such factors prompt an entry of new market players into the industry and leads to decline or growth of the existing actors. Another explanation of the reflectivity is anchored on the concept that industry has several logics and deinstitutionalization which arises from evolving conflicts and tensions within the industry (Greenwood, Kodeih & Lounsbury 2011, p.11). 3.0 Application Exercise The rational and institutional perspectives of change have been experienced by various companies in the last decade. One of the outstanding companies is Sony Corporation. After series of poor performance before Howard stringer took over in 2005 (Schermerhorn et al. 2014, p.34). In the following years, Sony has had a high growth which was highly attributed to rational perspective. As stated before, rational perspective is a theory which believes that change is planned. Planning implies to setting organization mission, vision and goals. During Howards reign, Sony adopted an elaborate mission, vision and goals which steered the company to prosperity. When Stringer was appointed the CEO he sidelined ineffective managers and later laid them off to reduce chances of influencing others. Similarly, Stringer promoted young energetic employees to managerial positions (IBS Case Development Centre, 2007). This was a strategy by the new CEO to inject motivation and effectiveness in Sony. Motivated employees reciprocate by working hard towards achieving organizational goals. These practice to be successful when Sony’s stoke improved by 30 percent in 2006. Also, sale of TVs rose by 44 percent while that of computers increased by 28 percent (IBS Case Development Centre, 2007). Sony growth was shaped by its mission statement which reads ‘a corporation which motivates and satisfies your curiosity’ (Sony Corporation 2017). The company also created and adopted a vision which influences company’s change agenda. Sony’s vision is to apply its passion for technology, services and content and to deliver high quality in a manner that it can. The curiosity and passion is shown through its marketing and fulfilled through delivery of high quality products. Sony products such as television sets, Hi-Fi, computers and PlayStation are some of the high quality product which has enabled the company to compete (Sony Corporation 2017). Today Sony stands out as one of strongest Electronic brand globally. In addition, when the Howard his tenure, he observed the personnel planned to do away with less committed middle level managers and employees. Sony needed employees needed motivation to improve its performance. One of the ways leadership can contribute to motivation is by aligning organizational objectives with staff goals (Burnes & Jackson 2011, p.136). The practice needs strategic planning and articulations of the goals and letting the staff understand what the leader expects. Braun, Wilcox and Sparrow (2007, p. 23) asserted that the practice was clearly evident in Stringer’s leadership when he created strategic plan which included shirt term, mid-term and long goal and communicated it to the employees. If the employees have no set standards they will not be motivated to work. The leader can use various means to motivate his employees. Some of the motivating factors include praise or encouragement, recognition, rewards, promotion and even work-life balance (Zhang & Bartol, 2010, p.110). However, the manager needs to assess what motivates every employee. At the same time the manager needs to do away with demotivating factors to ensure that not large percentage of employees are influenced. The company also planned for change by moving production process to foreign countries with low labor and production. In addition, the CEO improved the company profits by opening new business units while closing ineffective units (Sony Corporation 2017). As mentioned earlier, the CEO works as technician and major rational decision in order to attain financial improvement. Studies have proved that leadership plays a critical role on the management (Hargis, Wyatt & Piotrowski, 2011, p.53). Sony poor leadership led to lack of direction and vision. Poor management showed when deadwood managers ganged up to reject Stringer leadership and ideas (IBS Case Development Centre, 2007). Normally, the leadership and employees are tasked with a role assisting the company with new ideas and innovation. However, at Sony, the company had less transformative management hence could not help the company with innovation initiatives. Rational perspective has been found to less inspiring because managers concentrate on financial goals rather than motivating the employees (Graetz & Smith 2010, p.141). This theory was majorly used during Howard’s take over at Sony. In particular, he did away with deadwood managers and employees who were sabotaging his reforms. Instead of listening managers and employees plight he chose to work on strategy which aims at maximizing shareholders’ returns. On the contrary, Sony’s predicament can also be attributed to institutional change. Institutional perspective holds that change is resulted by industry or institutional pressure. The current challenges can majorly be blamed on environmental challenges. Globalization had led to increase in competition in the international markets (Burke & Cooper, 2006, p.84). In the process, many global companies in electronics have embraced strategies which could enable them achieve competition. Companies like Samsung, LG, Panasonic, Philips and Sharp had adopted innovation and product development to attract more sales. However, Shermerhorn et al., (2014) argued that Sony Corporation missed flatscreen television opportunity which received large sales in the electronic. It portrays leadership which could not spot opportunity and take advantage of it before everyone else venture into it. Similarly, Sony leaders failed to notice high sales in the game category hence did not innovate to capitalize (Shermerhorn et al., 2014). Shermerhorn et al., (2014) asserted that Sony has experienced hacking on its online database thus exposing clients’ confidential details. As stated earlier, environmental changes especially can also be blamed for Sony’s up and down. For instance, earthquakes which took place in Japan destroyed the company’s plants hindering them from making profits. Change in climate is unpredictable factor which a leader may not prevent hence cannot blamed on leadership (Lussier & Achua, 2004, p.64). 4.0 Conclusion Changes that have taken place in business arena in the recent past are the confirmation of the dynamics in the world of business. Despite change being a common theme highly analyzed by management theorists, some managers are yet to understand perspectives which influence change and decision making in their organization. As such, some managers or organizations have missed opportunities in the markets. One of such organization is Sony Corporation which has been discussed in this paper. A literature review done by this paper has found various perspectives which influences change and they include rational and institutional philosophies. While rational perspective also called planned hold that change only take place when managers feels it necessary, institutional theory on the other hand believes that change is influenced by the environment an organization operates in. The two perspectives hold rich intellectual practices and provide vital different description of change processes. Despite the benefits of these perspectives they have their own complexity and internal logic which can cause confusion. In conclusion, contemporary managers must understand that change takes place rapidly in every sector they operate in today hence need to use the discussed theory to handle the situation. References Barclay, A 2009, ‘Employee Change Agents: The Foundation for Effective Organizational Change’. International Business Research, Vol. 2, No. 4, pp. 3-7. Baunsgaard, VV & Clegg S 2013, ‘Walls or Boxes: The Effects of Professional Identity, Power and Rationality on Strategies for Cross-Functional Integration’. Organizational Studies, Vol. 34, No. 9, pp 1299–1325. Birkinshaw, J & Heywood, S 2010, ‘Putting organizational complexity in its place’, McKinsey Quarterly. Burke, R & Cooper, C 2006, ‘The new world of work and organizations: Implications for human resource management’. Human Resource Management Review, vol.16, no.2, pp. 83-85 Burnes, B & Jackson, P 2011, ‘Success and Failure In Organizational Change: An Exploration of the Role of Values’. Journal of Change Management, Vol. 11, No. 2, pp. 133-162. Braun, W, Wilcox, M, & Sparrow, P 2007, Case Study Series: Sony Europe - The Leadership Journey., Lancaster University Management School, pp.1-2 Dooley, K 2002, “Organizational Complexity,” In M. Warner (ed.), International Encyclopaedia of Business and Management, M. Warner, Thompson Learning, London pp. 5013-5022. Frigo, ML & Anderson, RJ 2009, ‘Strategic Risk Assessment: A first step for improving risk management and governance’. Strategic Finance, pp. 25-33. Graetz, F & Smith, A.C 2010, M’anaging Organizational Change: A Philosophies of Change Approach’. Journal of Change Management, vol.10, no.2, pp.135-154. Hargis, M.B., Wyatt, J.D & Piotrowski, C 2011, ‘Developing Leaders: Examining the Role of Transactional and Transformational Leadership across Contexts Business’. Organization Development Journal vol. 29, no.3, pp.51–66 Lussier, R & Achua, C 2004, Leadership Theory, Application, Skill Development, Southwestern, Minnesota. Meyer, H.D & Rowan, B 2006, The New Institutionalism in Education, SUNY Press, Albury. Van de Ven, A & Poole, M 1995, Explaining development and change in organizations. The Academy of Management Review, vol.20, no.3, pp. 510–540. Greenwood, R, Kodeih, M & Lounsbury, G 2011, Sustainability & Organizational Change: An Institutional Perspective, University of Alberta. Graetz, F., Rimmer, R., Lawrence, A & Smith, A 2011, Managing Organisational Change, 3rd Australasian Edn., John Wiley & Sons, Milton, Qld, Australia. IBS Case Development Centre 2007, Howard Stringer: Turning Sony Around, Viewed15 May 2017 from http://www.ibscdc.org/Case_Studies/Leadership/Leadership,%20Organizational%20Change%20and%20CEOs/LDS0024C.htm Schermerhorn, J.R, Davidson, P, Poole, D, Woods, P, Simon, A & McBarron, E 2014, Management Foundations and Applications, 2nd Asia-Pacific Edition, Wiley Direct, New South Wales. Sony Corporation 2017, Sony Corporation official Website, Viewed15th May 2017 from http://www.sony.net/ Westover, J.H 2010, Managing Organizational Change: Change Agent Strategies and Techniques to Successfully Managing the Dynamics of Stability and Change in Organizations, International Journal of Management and Innovation, Vol. 2, No. 1, pp.45-50. Zhang, X & Bartol, K 2010, Linking Empowering Leadership and Employee Creativity: The Influence of Psychological Empowerment, Intrinsic Motivation, and Creative Process Engagement. Academy of Management Journal, vol. 53, no. 1, pp.107-128. Read More