Management Systems Analysis
INTRODUCTION
Operation management has gained immense importance in the management science since recent past. It leads to exploitation of the organizational resources and capabilities to optimum level. In the competitive environment posed to business, organizations are required to develop the systems all across functions and divisions that are able to maximize the potential and contribute towards organizational goal. In similar context, the aim of this report is to propose a plan which will improve the operations management of the organization. The organization selected for this review is Sony Corporation. On identifying the operational issues and suggestions are proposed for improving the operations of the company. Recommendations are made to the upper management identifying their theoretical and practical relevance for improving the operations of the company. In this report the complete organizational structure and all the issues which the selected company is facing are elaborately discussed. The theoretical concepts are applied on the organization to suggest practical propositions. Hence, the report concludes on comprehensive review of the organization’s operation, its issues and respective solutions in specific reference to the operations management.
DESCRIPTION OF THE COMPANY & GENRE OF BUSINESS
Sony Corporation is a Japanese origin company which was found in 1946 by the name of Tokyo Tsushin Kogyo. The founders of the company are Masaru Ibuka and Akio Morita. In 1955 the company took the name of Sony with which it has expanded the business globally. The headquarters of the company is in Minato, Tokyo, Japan (Sony, n.d.).
The primary focus of the business is in the field of electronics, games entertainment and in the financial services sector. The company has successfully acquired the position of being a leading manufacturer of the electronic products. The organization takes pride with its history of being a market leader but recently the company has undergone severe and huge losses. The reason behind the losses is increasing competition that is centrally pose from the innovative edges that other technological companies like Apple and Samsung are pursuing (News Wires, 2012; Fahey, 2012)., .. It has forced Sony to sell its chemical division as a result of restructuring plan (News Wires, 2012). ,
Sony Corporation has a diversified range of products. Being in the tech industry the organizations requires being proactive while making business decisions. The Sony also requires continuing innovation constantly to sustain the competition. After sustaining severe losses the company has planned to reform its strategies and invest highly in the business functions which are showing potential growth (Baumfled, 2013). The organization is planning to excel in the fields of digital imaging gaming and entertainment. The profitability in these areas is higher and hence the company expects that investing in these domains will prove to be beneficial for the company.
STRUCTURE UNDER WHICH THE COMPANY CURRENTLY OPERATES
The organizational structure of the Sony Corporation is centrally driven by emphasis on self motivation and innovation. The business dynamics require the company for continues innovation. This allows the company to excel and grow all across the organizational hierarchy. The roles and responsibilities of the employees are determined within the organization which allows the flow of information and cooperation at different levels of management. The structure of the organization is framed on the basis of the division it operates.
On the hierarchical basis, the structure of the Sony Corporation is divided into major departments based on functions. The electronics, entertainment and financial services segment of the organization form the basis of the division. Each division is further divided on the basis of the nature of the product; hence, with sub divisions organization ensures that the set goals and objectives are successfully accomplished.
IDENTIFYING THE COMPANY’S ISSUES THAT INHIBIT OPERATIONS
The existing issues which the company is facing are linked to the lack of innovation and incompetency of the company in sustaining the competition. Sony is facing this problem because the products which it was manufacturing earlier were expensive as compared to the products of the competitors. The company only sustained because of the strong Brand image which was possessed by the company. The following image reflects the sales and the operating income of the company for different business segments.
(Sony, 2012a)
If the operations of the company are observed then it can be noted that the profitability and the sales of the company in the area of Financial Services, Sony Mobile segment and other small units of Sony are highly profitable. These are the factors and segments of the business which are highly growing. This in turn suggests in developing the future prospects of the business. The company has built a strategy which is emphasizing on the units which are already profitable and bear the chances for potential growth. This in turn improves the performance of the organizations.
INFORMATION ISSUES
In the light of an article published about Sony in a local Journal on April 11, 2012 it stated clearly about the structural problems of the company. Sony and its personnel blamed the weak sales in the US for the record net loss. The analysts have clearly interpreted that the company has bigger problems with the overall structure of the company. The fiscal financial forecasts of the company are subject to constant revision. The sales of the company are falling and overall performance of the company is deteriorating as compared to its competitors (Nagasaki and Kamiguri, 2012).
Several problems of appropriate strategies for promoting the business are turning down the company and its share price. The overall performance of the company relies on few flourishing products. Rest of the products is not observing prominent responses from its customers. The problems which have been identified show that the company spends a lot of money on its administrative units and other unnecessary segments of the organization. This spending is not required and the new strategy of the company includes downsizing and letting go of the excess baggage.
The company requires a strategy which can change the existing business methods and can propose the methods which are highly profitable. These strategies require to be implemented so that the desired organizational goals and objectives can be attained.
The biggest problem with Sony as a brand is that it is losing its image over the period of time. Sony has the same logo on its high end products and it also has the same on its low end products. This has made Sony desperate for a strategy. The organization needs complete assessment of its environment and it requires forming strategies which affect the performance of the company as a whole. This helps the company in growing. Moreover, the sales of the consumer products and services have remained an important segment for the company. However it is important for the management of Sony to make sure that the sales from other segments are also increasing with the passage of time and the focus is not kept on only one or two major segments. The following image reflects the proportion of sales of Sony by different business segments.
(Sony, 2012a)
MANAGEMENT HIERARCHY
Organizational structure at Sony Corporation has been shown in the figure below. The figure below shows the management structure and the organizational hierarchy as well as the figure also reflects the organizational basis of division:
Organizational structure shows that Sony is divided on the basis of business divisions and departments are formed on this basis. Hierarchy of an organization has an important aspect in the organizational success and failure as it influences the interaction with the customers, decision making, information flow, and other important operational aspects.
CUSTOMER INTERACTION
One of the important success factors for any business is the interaction of the consumers and how much focus the company puts in interacting with the consumers. Sony works hard to form an interactive relationship with the customers. The company has always given emphasis on providing high quality products and services. The company aims to ensure constant enhancement of the services and products from its portfolio for an appropriate quality to be delivered to the consumers. Advancements in the technology also require innovation which leads to the making of multifunctional and complex products. Sony considers the feedback of the consumers as important and therefore it focuses a lot on what the complaints of the consumers, inquiries, opinions etc. Moreover, the company uses the consumer data in order to improve the quality of products and services being offered. This helps the company in utilizing the feedback of the consumers as presented in the model below:
(Sony, 2013a)
INFORMATION FLOW
The information flow within the organization internally and externally plays an extremely essential role. For ensuring the safety and security of the organizational information, the internal compliance teams have been formed at Sony. Continuous measures are taken by the organization for ensuring that the compliance system is completely strengthened. For this the company has set up the hotline system formed which enhances the compliance monitoring program which relies on self assessments and compliance audits. At the same time the anti bribery program has also been developed. For the internal security the information security and the personal information management system have also been developed which assess the awareness of employees and at the same time provide the appropriate training required. The compliance model used by Sony has been presented in the figure below:
(Sony, 2013b)
SPEED OF INFORMATION
With the changing business environment, it is important for firms to have a system in which information can be shared quickly. Quick sharing of information allows businesses to understand the changing consumer needs and understand the changes in the external environment in a better way. Moreover, as the information is shared quickly, this allows the company to take adequate steps in order to take steps to mitigate the factors that could negatively influence the company and at the same time, take advantage of the opportunities in the market. Sony has developed a highly centralized system that allows sharing of information with the concerned department and thus it is one of the important aspects of Sony for years. However, the company has not been able to cope up with the changing environment as some of the products of the company are not able to meet the industry trend. So it is important for the management to make sure that it is using the information in improving the business processes, products and services.
CORPORATE GOVERNANCE STRUCTURE
The corporate governance structure within the organization shows the contribution of the management in the progress of the organization. Initiatives Sony takes for managing its workforce is by designating the respective tasks to the appropriate personnel. This in turn improves the functionality of the company and it improves the ability of the firm in managing risks. The corporate governance structure implemented at Sony has been presented in the figure below:
(Sony, 2013c)
DETAILS OF A PLAN DESIGNED TO IMPROVE THE COMPANY’S OPERATION
Analyzing the company’s existing position and operations, it can be clearly understood that the company requires stabilizing its operations and improving methods of how it is managing its operations. The company has faced severe losses in the past due to obsoleteness. The past performance of the business shows that the company failed to maintain the appropriate pace with its competitors. This shows that the company lost its competitive edge as the time passed. The company has failed to keep the same pace with the changing product attributes and this has detracted the customers from buying the products of Sony. The cost of production was high and this has made it difficult for the company in sustaining the competitive pressure. The competitor firms started engaging in diversified industries.
ORGANIZATIONAL THEORY
There are several aspects of organizational behavior that can be analyzed to identify and evaluate the problems being faced by the company. Moreover, these aspects can be used to improve the business processes at Sony.
Information technology:
The flow of information within the organization must be appropriately designed so that the organizational information is appropriately secured (Barlow, 2005). Although, Sony has an appropriate information sharing system, however the management needs to make sure that it uses this system effectively.
Operations and Supply chain
The value chain management system of the organization must be improved so that the efficiency can be observed in the functions of the business (Gaur, Raman, & Swaminathan, 2009). It is critical for Sony to add value at each step; this would allow the company to offer a highly valuable product and can result in improving customer satisfaction level eventually.
Team Work
Team work is important for businesses in highly changing environment (David, 2007). Businesses need to form teams for smaller as well as larger products. By encouraging team work, the organization can formulate teams that can manage unique projects.
Organizational culture
While discussing the organization the conceptual model is the primary area which must be emphasized. This area of the organization is built on the basis of environment. The organizational environment comprises of the segments like Culture at the work place, social structure at the work place, physical structure of the organization and the technological advancements which are primary for the organizational development within the organization. If the internal environment of the organization will be appropriately designed and the goals of the organization will be achieved then the external goals of the organization will be easily accomplished (Martin, 2006).
Communication
Another important aspect of organizational behavior is the use of information (Martin, 2006). Sony needs to improve how it is using the information and then making changes in the internal environment and processes. Consumer behavior and preferences have been changing with the passage of time, so it is critical for businesses like Sony to consider these changes in the environment and make changes accordingly.
Innovation
Sony is operating in different industry however the main sales are generated from the consumer products and services. In this industry, innovation and creativity are important aspects that lead to the success of the companies. Businesses such as Apple, Samsung, and others have been successful because of innovation and understanding the consumer needs and preferences in a better way. Sony has proposed that it would pay significant amount of attention and investment in the areas which are growing significantly and are profitable. However it is also important for Sony to invest in areas that have not been so successful.
In the light of all the theories it is said that the goals of Sony Corporation are to regain its position and develop its position in the industry through suitable amount of innovation, better communication, team work, better use of information technology and better managing its operations. Sony as an organization has proposed different changes and has planned to invest more on research and development than before. However, the company needs to make sure that these strategies are implemented appropriately and the company is able to succeed with these strategies. .
RECOMMENDATIONS FOR ADDRESSING THOSE ISSUES
Sony Corporation is undergoing several issues. It is facing problems with its technological development, cost effectiveness and innovation in its production practices. For this reason, in the year 2012 the company faced around 67.3 billion yen operating loss and the overall net loss which the stock holders of the company faced was estimated at 456.7 billion yen (Sony, 2012b).
The recommendation for the organization is that it must start investing and focusing on areas which have more chances of potential growth. The segment of Sony Mobile Communication and Picture are showing significant growth over the last few years. However, the company must focus its growth in this area. The sustainability of the business is solely dependent on diversification. It has been realized that Sony has emphasized less on the growth segments of the business. The company spends a much higher amount of money on the administrative segment and it neglects the need of investing on research and development.
For the future growth the company should transform the existing electronic business. Some important measures should be taken by the organization for improving the business practices. The electronic market is rapidly changing and is highly competitive. This in turn is groundbreaking for product, services and technologies. Selective investment plans should be undertaken by the organization, which propose that improvements must be done to improve and strengthen the core business. Besides this the company should work to turnaround the television business, expand businesses in the emerging markets, create new businesses and accelerate innovation. The company should realign the business portfolio and optimize the resources. The diligent execution of the business requires that the company transforms its operating methods.
CONVINCING FACTORS FOR THE PLAN
The proposition suggested for the improvement of the operations of the company is all based on few strategies. Sony Corporation requires implementing the following strategies so that the challenges which are being faced by the company can be accomplished.
The suggested strategies are
- The Comeback strategy suggests that the company must maintain talent and cut all the other costs applicable.
- The organization must maintain low inventory and must tend to utilize the working capital available to sustain the competition. This provides the company with flexibility, continuous optimization and eases the repositioning of the inventory.
- The company must plan mergers and executions which benefits the cost minimization function. This make the products production cost competitive.
- The organizational effectiveness must also improve. This increases the effectiveness of the brand image and it improves the position of the company.
- The company must make sure that the sales are to the optimum level. The inventory management for the product must be planned accordingly so that the resources of the organization are used with optimal efficiency.
- The planning of the company must be done strategically. The dynamics of the industry must be analyzed and assessed and with it the plans must be carried forward. For technological products innovation is the key aspect.
- A healthy relationship with the supplier must be managed so that the so that all the inefficiencies of the system can be omitted.
- The supply chain risk factors must be assessed and systematic reviews regarding the plans must be made for the future.
- The decisions which the organization takes must be backed by feasi9bility and sustainability. Manufacturing practices, cost benefits and governance which leads the organization are practically important for the sustainability of the organization.
- Collaboration and taking the measures which improve the business functions are essential for the organization. Association of the workforce the business objectives is the most important factor for efficient management practices.
CONCLUSION
This report is addressing the issues relating to operations which Sony Corporation is facing. The company is facing severe problems regarding its stabilization. Over the years the company has lost its credibility, its cost advantage and the quality of the deliverables. Operating in the technology industry the company requires constant innovation with its products. The products of the company lack the required innovation which has affected the brand image of Sony very badly.
This report also discusses the failures in the operations of the company. All the issues have been discussed and the remedial measures for improving the functionality of the company have been elaborately discussed. The aims of the company for the improvement and creating a balance in the sales of technology products have been suggested. The association of the employees and the product development techniques are the major expansion practices which the company will implement.
This report includes assessing the structure of the organization, discussing the detailed description of the company and highlighting the issues which the company is facing. Along with this the organizational theories will also be discussed proposing the methods for improving the problems which the company is facing. The organization is facing problems linked to appropriate innovation and discrepancies of the management. For this the methods have been proposed which can help Sony in regaining the position of market leader which it had previously held.
All the propositions and recommendations for suggesting the methods which help in improving the performance of the company have been discussed in this report. Assessing the organizations theory and then reviewing the factors which contribute to improve the operations of the company have been discussed and the propositions for improving the business practices have been prepared accordingly.
REFERENCES
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