Sony is a world-renowned electronic manufacturer originated in Japan, having led the electronic industry for a long time in its 67 year history. However, with technological ad-vancement and emerging companies’ development, the position of Sony in the market was greatly threatened. Sony has faced unprecedented challenges since the late 1990s. This deteriorating situation forced Sony to an organizational reconstruction. The ineffi-ciency of the first reconstruction led to another one and the replacement of its CEO. Overall, Sony witnessed radical changes regarding its organizational structure, internal relationships, organizational culture and leadership over the last decades.
Structure of Sony
Sony’s Structure seemed to be divisionalised, according to Mintzberg’s contingency framework. After the restructuring in 1999, Sony unified its ten divisional companies into three network companies: Electronics Business, Entertainment Business and Insurance and Finance Business aiming at exploiting the opportunities offered by the Internet. The new model aimed that resources within the Group would complement each other.
The key part of a divisionalised structure is the middle line connecting the operating core to the strategic apex. The main design parameters are market grouping, performance con-trol and decentralisation. Sony restructured the company based on three prime markets: electronics, entertainment and Finance & Insurance. Sony’s headquarters gave autonomy and authority to the decentralised divisions, along with the required support functions and R&D labs in order to facilitate their operations. Moreover, Sony also created Digital Network Solutions that would eventually provide customers with digital content and fi-nancial services.
These design parameters are consistent with Sony’s contingency factors. Its features of old age and large size required more formalised structure. Sony diversifies in markets that vary from personal computer to portable music devices. Each product may undergo through several changes during the year and the divisionalised structure provides with the necessary flexibility.
First phase of reconstruction (1999-2003)
Sony was impacted by several factors including competitors, society and market. In terms of competitors, Apple, Samsung and Microsoft were taking up into Sony’s market share in games, electronics and music devices business industry. In the beginning of the 21st century, the world's electronics economy was becoming more network-centralized. Meanwhile, people were more likely to pursue quality of life improvements through ad-vanced technology.
In order to deal with these issues, Sony announced its reorganization into network busi-nesses. With more investment in R&D and more sophisticated equipment, Sony tried to evolve its technology to catch up with its competitors. However, the IT industry’s and the financial markets’ free-fall during 2000-2001 dealt a major blow to Sony’s sales and product...