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Changing Structure: Sony BPE & The Introduction of Business Teams

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Claudia Foo

on 12 April 2014

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Transcript of Changing Structure: Sony BPE & The Introduction of Business Teams

Changing Structure: Sony BPE &
The Introduction of Business Teams

Sony Goes to Europe
Sony established Overseas S.A. to support independent distributors in European market, utilising a loose network structure, where European sales were facilitated through contracts with companies outside of the Sony group (Jones, 2010; Quintane & Mol, 2007).
Sony Acquires and Expands
As Sony’s European activities grew, the group acquired many of these independent distributors to increase control of the value chain. In an example of path dependency (Nicita & Parcu, 2013); whereby decisions are mostly influenced by past tendencies, regardless of whether better alternatives exist; the new heads of various regional operations were often former heads of Sony’s distribution companies. This led to country operations retaining much of their autonomy with regards to sales and marketing, as well as the direct negotiation and important links with plants in Japan. (Quintane & Mol, 2007)
Sony BPE is established
Sony Europe's path dependency continued into the establishment of Sony Broadcast and Professional Europe (BPE), which retained the geographic divisional structure of past operations.

Headquarters (HQ) had little control over country operations, only providing some central support functions such as product development under the two major business units: Broadcast and Business and Industrial; as well as a number of other smaller units (Quintane & Mol, 2007).

Each country unit was relatively self-contained with substantial decision-making authority over local operations (Jones, 2010); duplicating many support functions such as logistics, whereby products were shipped from Japan to Sony BPE warehouses, then resorted and delivered from each countries respective warehouses (Collins & Bechler, 2001).

European Dominance
Fortunately, the geographic structure was well suited to the environment at the time, allowing Sony BPE to establish market leadership and dominance across Europe (Quintane & Mol, 2007).
Time For (Structural) Change?
In line with Lawrence and Lorsch's contingency approach, Sony BPE decided to restructure their operations to achieve greater integration, communication and responsiveness; and maintain a close fit with the external environment (Jones, 2010)
Problems Introducing the Matrix
Europe Changes
External Snapshot

There was complexity and diversity across Europe, in both customers and market environment, with differing trade barriers (Quintane & Mol, 2007). Each country was effectively a separate market.
Geographic Structure Advantages

• Decentralised decision-making and organic structure gave country operations authority and flexibility to quickly respond to local needs.

• Employees became specialised in their country, and could tailor appropriate strategies such as pricing policy or ways to circumvent trade barriers

• Localised profit centres allowed HQ to compare performance between geographic divisions, to best allocate resources for maximum return. It also motivated managers to maximise country profits.
The harmonisation of trade barriers across countries increased the interplay between previously distinct markets, increasing the environmental complexity facing Sony BPE. Country divisions effectively began competing with each other for clients and other resources in this newly established common market (Braun, Wilcox & Sparrow, 2007). Furthermore, the accelerating development of digital technologies increased the dynamism facing Sony BPE. As such, there was an urgent need for cross-country coordination and information sharing on Pan-European strategy and product development (Quintane & Mol, 2007).
Restructuring to the Matrix
(Based on Quintane & Mol, 2007)
Matrix Advantages (Sy & D’Annunzio, 2005)

• Product and country coordination and communication increased responsiveness to the needs of the European market.

• Focuses employees on multiple business goals, creating a more collaborative nature, and overcoming sub-unit orientation.

• Increased learning between countries and product teams, and reduction of duplication, would have significant cost savings.

• Pan-European product development was likely to have a higher return than country specific R&D.

Country vs. Product
Country leaders were resistant as it challenged their existing authority

• Convince country operations of the need for Pan-European integration
• Adjust rewards and evaluation methods to motivate adoption of collaborative methods

Country and Business Team Heads could have conflicting views on the best strategy to pursue, resulting in role conflict, or competing demands, on employees (Jones, 2010); as well as decision strangulation, or slowdown, regarding key issues (Davis & Lawrence, 1978).

• Establish a conflict resolution system, possibility using a impartial third party arbiter (Jones, 2010)
Creating Pan-European Employees
Employees were used to working in a country specific way

• Euro-Graduate Program provided exposure and knowledge of the various aspects of Sony BPE in different countries. These graduates were then selected to be the next generation of managers, and therefore the catalysts for a shift in country-focus to Pan-European values (Quintane & Mol, 2007).

Employees may experience role ambiguity, as the responsibility or boundaries of their role may not be very clear initially (Jones, 2010). There may be confusion about the relative importance of country and business team objectives, or how evaluation is carried out.

• Clearly negotiate the expectations of both Business Team Heads and Country Leaders, and resolve differences before they affect team members
Geography Divides
As Sony BPE experienced an increase in environmental uncertainty; as measured by complexity, dynamism and richness (Jones, 2010), the limitations of the geographic structure became apparent.
• Decentralisation may have given rise to agency problems, whereby HQ did not have the appropriate information to determine whether the actions of each individual division were in the best interests of the company overall (Jones, 2010).

• Geographically isolated divisions developed subunit orientation, or a tendency to focus solely on their own unit's goals (Jones, 2010). The interdivision competition, and inherent lack of communication and sharing, which led to earlier successes, was now detrimental given the need to prevent cannibalisation of each other's sales.

• Duplications of functions was a significant cost that Sony BPE could no longer justify in the face of declining margins and fierce competition (Quintane & Mol, 2007).
Geographic Divisional Structure
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