Business Organization theory

Business Organization Theory: Sony

This is a paper that analyzes an article from the business organization theory perspective. It has 2 sources.

Organizations in the international business setting nowadays face tremendous competition as they are not only competing with local competitors but also with those abroad as well (Hill 1999). This had been the case with Sony whose arch rival Samsung and LG Electronics of South Korea have in the recent years replaced Sony products at the top positions. To compete effectively Sony according to an article by James Brook (2003) plans to cut down its staff in one of the operations units that would eliminate 20,000 workers from employment. Brook also reports that Sony plans to shift its operations to China and concentrate on business development in Japan.

Business organizations as competitive entities in the global setting are faced with multitude factors that affect their business competencies and competitiveness. Organizations not only have to consider like operations resources, total quality management, labor working standards along with financial and material resources they are also concerned with environmental factors. Strategy formulation, technology usage as well as product research and development all contribute to the success of a business. Sony in the recent years have declined and dropped down in its position as the top consumer electronic companies (Hill 1999). Brooke's report only confirms this fact.

From the employees point-of-view Sony had adopted a severe method in cost cutting and proved a threat to their livelihood. Yet, organizational theorists would agree and understand why Sony had to take these steps. According to analysts the need to cut down jobs is the first step towards stream lining the organizational structure. The second step which is most crucial for organizational restructuring is to divide and segregate operations so as to cut down cost of production. Sony in this article plans to shift its mass production unit to China, its neighboring country which has one of the cheapest labor resources. The reason why this is imperative in mass production is because, labor takes up a significant chunk of the revenue and hence in cutting down the workers as well as shifting the operations base to another cheaper place would allow the company to focus on strategic units and develop the business to become at par with competitors. Sony plans to keep its Japanese unit as the base for technology resource and organizational development. And finally as one observe with this announcement Sony plans to restructure its product line as well. With sales dropping by 36% Sony needs to. The business in the semi-conductor industry have declined so much that it is being replaced by its competitors. Without extreme measures such as product development and innovation and restructuring, it stands the risk of being eliminated from the market totally (Brooke 2003).