Revival of Vertical Integration System †Free Samples to Students

Question: Discuss about the Revival of Vertical Integration System. Answer: Introduction: Strategic management is the formulation and implementation of the primary objectives and initiatives of the of a business top management (Carpenter Sanders, 2007). The application of the goals depends on the availability of resources and an overall assessment of the environment using PESTLE and SWOT analysis. Every company, therefore, must have a strategy on how to penetrate in the target market and how to develop the market and increase the market share (Nikolaou et al. 2011). The case of study focus on Sony Group which is engaged in the manufacture of electronic equipment, game consoles and software also it engages in the financial services business, i.e., insurance operations. According to the Mc Kinsey 7 model, every company has a defined organizational structure that outlines authority and responsibilities. A good structure helps maintain the company in a competitive edge whole a bad one leads to losing the market share (Ovidijus, 2013). Therefore it has to change to result in company's success. Responsibilities are given to the skilled staffs depending on the positions. Again, some strategies that are laid help in the achievement of the primary objectives. They are flexible as they change if the previous ones did not succeed as expected. Appropriate systems support changes are i.e. the procedure and policies for execution of plans. Sony has a democratic style of management that promotes good interaction between top management and the organization as a whole. The form is good as it improves the image to the world (Zhang, 2013). Challenges Sony faced and how they overcame In 2003, Sony faced significant challenges that led to declined profits to less than half as at five years back. Sony suffered "Sony shock" whereby the stock price plunged 24% in two days and lost $3.8 billion of its value. Sony shock was due to the weak response to the cheap products from Japanese electronics; there was also hyper competition from foreign competitors of basic audio and video equipment. The company had to lay off employees by 20% so as to reduce costs (Nilay, 2015). The challenge of having a CEO who was not a Japanese speaker(Stringer) lead to some of his contribution to Japanese hardware business was ignored thus financial loss occurred. By 2011 Sony was still relying on Japanese manufacturing base that was too expensive. Sony was also late in the market for flat screen TVs, as the world was transitioning from CRT TVs Sony was late to capture that opportunity, and therefore the profits it made with the new entry was lower than had it gotten the market share early enough. To overcome these challenges, Sony sought a new CEO who had Japanese background (Hiram) whose fundamental aim was to restructure the organization and strategize a new. The primary strategy was to integrate the hardware and software business targeting emerging markets where the competition is less hyper such as India. Sony is hitting a global comeback. Sony got into a joint venture with Samsung in manufacturing flat-screen TVs so as to get in action since it was late, and also committed self to bringing it to profitability after eight years of losses (Wilkie et al. 2015). Company analysis The company embraces the 7s model, focusing mainly on the Hard 's', the study outlines five strategies that were to Mr. Hirai came up with, they include strengthening core business and bring back TV business to profitability by mainly targeting developing markets such as China. Also, promote innovation and realign its business portfolio with divestments expected of non-core business such as the legacy chemical business. The team structures were initially vertical. The first CEO- Stringer broke it to horizontal structure for being of little coherence. However, it was not as productive since it had five big groups and had remained in a competitive disadvantage as shown by the financial results of the year 2010-2011; the five big groups were later broken by Mr. Hirai to multi-division and horizontal structure. That created 12 stand alone businesses. Multi-division helped improve the production as there was intense specialization and focus on a product line, again, it would be easy to assess the performance of a product. The systems and structure enabled Sony to internationalize; this was going outside Japan market and North America where competition was intense and globalized to small markets such as China and India. The structure also enabled the Sony team to take part in CSR thus improving the image globally (Pollach et al. 2012). However, the Hirai structure was bureaucratic, and decision-making process would take long. Sony and Samsung had a venture in the production of liquid crystal display, and it broke it in 2011, this was to enable Sony to expand its business and have a solo profit share. Also, it broke off with Eriksson in mobile phones manufacture (the two had come together so they would manufacture a phone with very high digital photography abilities) this was after the birth of Walkman phones (The star, 2009). Again Sonys main core businesses remained three i.e. Sony Pictures, the play station division and selling image sensors to Apple for the I-Phone. Sony is no longer in the electronics company which was originally a core business alongside TV business. A part of VIAo laptops was recently sold. The market share of Sony has recently stabilized, and there are profits realized from mobile, tablets and laptop sales and also image sensors. Sonys main objective is on the sustainability of environment; this is because clients views are more important than company views, they ensure the employees keep advancing their knowledge by various training programs and again it takes care of both local and global environment accordingly. Recommendations With the increasing competition, Sony needs to discover market leadership in the commodity that is performing well such as semiconductor, medical imaging, and financial businesses. Again it should seek other suppliers for image processor raw material (rare earth); this is because the sole China supplier has deteriorating political relations with Japan. The organization structure should provide for innovation as the corporation is basically about technology and innovations. The company should engage more in CSR to keep improving the public image. Finally, Sony should aggressively merge with performing businesses to help remain in market with a competitive edge In conclusion, a business must have systems that support flexible strategies that are to be undertaken to achieve the core objectives. A group should embrace technology and change with changes in technology. The structure too should be open for quick decision making which should not lag down innovation and creativity. The Sonys structure was bureaucratic and this delayed decision making. References Carpenter, M.A., Sanders, W. G. (2007). Strategic Management: A Dynamic Perspective. Pearson Education Nikolaou, E. I., Ierapetritis, D., Tsagarakis, K. P. (2011). An evaluation of the prospects of green entrepreneurship development using a SWOT analysis.International Journal of Sustainable Development World Ecology, 18(1), 1-16. Nilay, P. (2015) Sony is no longer an electronics company. Available on https://www.theverge.com/2015/2/18/8063269/sony-electronics-future-selling-off-pc-smartphone-tv accessed on May 2, 2017 Ovidijus, J. (2013) McKinsey 7s model. Available on https://www.strategicmanagementinsight.com/tools/mckinsey-7s-model-framework.html accessed on 2nd May 2017 Pollach, I., Johansen, T. S., Nielsen, A. E., Thomsen, C. (2012). The integration of CSR into corporate communication in large European companies: Journal of Communication Management, 16(2), pp. 204216. The star, (2009) Sony shock as sales slumps. available at, https://www.thestar.com/business/2009/01/13/sony_shock_as_sales_slump.html 'Sony shock' as sales slump accessed on May 2, 2017 Wilkie, D., Johnson, L., White, L. (2015). Overcoming late entry: The importance of entry position, inferences and market leadership. Journal of Marketing Management, 31 (4), pp. 424 Zhang, D. (2013). "The Revival of Vertical Integration: Strategic Choice and Performance Influences". Journal of Management and Strategy.