Graduate Diploma in Management (GDM)

Model Paper
Question and Answers

Restructuring Sony
The electronics and media giant Sony was struggling through the late 1990s and early part
of the 21st century. With each disappointment, it seemed that Sonys management launched
another restructuring of the company. By 2003, commentators were beginning to ask
whether restructuring was part of the solution or part of the problem. How should Sony be
managing its strategic renewal?
At the beginning of the new millennium, Sony faced increased competition from domestic
and foreign players (Korean companies like Samsung and LG) in its electronics and
entertainment businesses. The domestic rivals Matsushita and NEC were able to capture a
substantial market share in the internet-ready cell phones market. Analysts felt that the USbased software giants like Microsoft and Sun Micro-systems and the networking major Cisco
Systems posed a serious threat to Sonys home entertainment business.
Analysts criticised Sonys management for spending a huge amount on frequent
restructuring of its consumer electronics business, which accounted for nearly two-thirds of
Sonys revenues. In 2003, the sales of the consumer electronics division fell by 6.5 per cent.
Notably, Sonys business operations were restructured five times in the past nine years.
Analysts opined that Sonys excessive focus on the maturing consumer electronics business
(profit margin below 1 per cent in 200203), coupled with increasing competition in the
consumer electronics industry was severely affecting its profitability
In 1989, Norio Ohga (Ohga) took over as the chairman and CEO of Sony from Morita. Under
Ohga, Sony began to place greater emphasis on process innovations that improved
efficiency and controlled product costs. Explaining the rationale for the new system, Ohga
said, By revitalising its organization, Sony aims to introduce appealing products in the
market in a timelier fashion while further strengthening cost-competitiveness companywide.
By 1994, Sonys businesses were organised into three broad divisions Electronics,
Entertainment and Insurance and Finance. The companys growth was propelled by the
launch of innovative products and by its foray into the music and films business.
In March 1995, Nobuyuki Idei (Idei) was appointed the President and Chief Operating Officer
of Sony. Under his leadership three network companies were created, the Home Network
Company, the Personal IT Network Company and the Core Technology & Network
Company. Each network company was governed by a network company management
committee (NCMC) and a network committee board (NCB). The NCMC was responsible for
1

BMS

developing management policies and strategies. Its members included the officers and
presidents of the concerned network company. The NCB was responsible for managing the
day-to-day operations of the network company while keeping in mind the overall corporate
strategy of the entire organisation.
In April 1999, Sony announced changes in its organisational structure. Through the new
framework, the company aimed at streamlining its business operations to better exploit the
opportunities offered by the internet. Sonys key business divisions Consumer Electronics
division, Components division, Music division and the Games division were reorganised
into network businesses. This involved the reduction of ten divisional companies into three
network companies, Sony Computer Entertainment (SCE) Company and the Broadcasting &
Professional Systems (B&PS) Company. The restructuring aimed at achieving three
objectives strengthening the electronics business, privatising three Sony subsidiaries, and
strengthening the management capabilities. The restructuring also aimed at enhancing
shareholder value through Value Creation Management.
The new structure aimed at decentralising the worldwide operations of the company. The
corporate headquarters gave the network companies the authority to function as
autonomous entities in their corresponding businesses. To facilitate more functional and
operational autonomy, the corporate headquarters also transferred the required support
functions and R&D labs to each network company.
To give a further boost to Sonys electronics business, the management created Digital
Network Solutions (DNS) under the purview of headquarters. The role of DNS was to create
a network business model by charting strategies and developing essential technologies for
exploiting the opportunities offered by the internet. The basic aim of creating DNS was to
develop a network base that would provide customers with digital content (such as music
and movies) and financial services.
By: Vivek Gupta and Konakanchi Prashanth

The theories and points for the model answers are drawn from the Principles of
Management text by Daft, the core module text for the students.
Question 1
a) Explain briefly what it means to restructure an organisation based on an organisations
external environment
[10 marks]
The concept of restructuring an organisation is generally known in the management studies
as a process aimed at substantial change in strategic , financial and operational level with
the view to improve productivity, cost reduction, increase in shareholder value and a better fit
within its changing environment. This could involve changes in assignment of task to
individuals and departments, changes in reporting relationships and its design; and the
system how employees are coordinated across departments.
A companys external environment can be discussed under task and general environment.
The response was shown in the form of restructuring the organisation. Sony responded to
2

BMS

the stagnation experienced in the electronic industry by restructuring, giving focus to the high
growth products. In its task environment the competition was very high from companies such
as LG and Samsung as well as NEC and Matsushita.
The competition further increased by the entrance of Microsoft and CISCO into the home
entertainment industry. Yet, no significant responses were made by Sony, despite of few
attempts towards product innovation. Further the consumer electronics business was said to
be at the maturing state in 2002-2003. The response made to this was criticised as Sony
pumped significant amount of capital inappropriately.
Similarly, Sony did not respond to economic factors such as Yens appreciation against
Dollar and recession experienced in Japan. The case study pointed that the organisation
was unable to do any product innovation during these periods to retain export revenue.
However, Sony was positive to respond to the technological changes. Its move into IT
related business including introduction of virtual company concept was an evidence for its
effort to exploit the opportunities. The organisation also responded to the internet boom and
emerging age of broadband by creating DNS and restructuring into Personal broadband
network solutions respectively. However, its responses failed due to its lack of response to
the low internet penetration in Japan (socio-cultural aspect). The overall view of Sonys
responses to the changes in environment looked moving towards a horizontal structure to
cope with uncertainty.
b) Briefly explain the meaning of the term Organisation Structure and discuss an
organisation structure such as Sony Corporation.
[10 marks]
Organisational structure can be defined as the formal system of task and reporting
relationships showing how workers use resources. Further, it can have an integration of the
following:
1. The set of formal tasks assigned to individuals and departments.
2. Formal reporting relationship including lines of authority, decision responsibility, number of
hierarchical level and span of managers control.
3. The design system ensures effective coordination of employees across departments.
Organizational Structure depends on a variety of contingencies. The right structure is
designed to fit the contingency factors of strategy, environment, and technology. These
three areas are changing for organizations, creating a need for stronger horizontal
coordination. Two strategies proposed by Porter are differentiation and cost leadership;
these strategies require different structural approaches. The pure functional structure is
appropriate for achieving internal efficiency goals. The vertical functional structure uses
task specialization and a chain of command. It does not enable the organization to be
flexible or innovative. Horizontal teams are appropriate when the primary goal is innovation
and flexibility. The firm can differentiate itself and respond quickly to change. Other forms of
structure represent intermediate steps on the firms path to efficiency or innovation. The
functional structure with cross-functional teams and project teams provides greater
coordination and flexibility than the pure functional structure. The divisional structure

BMS

promotes differentiation because each division can focus on specific products and
customers.
The visual representation of organisation structure can be denoted by an organisation chart.
Sony, over the past 9 years has used many different organisational structures and latest
being in April 2003. This was focussed on strengthening its corporate values and
organisational efficiency. During this restructuring process, Sony was reorganised into seven
business entities; four network companies and three business groups. These business
entities were given the authority to frame short-term and long-term strategies.

c) Discuss the leadership philosophy (thinking) and practices and discuss the leadership
styles adopted by the leaders of Sony
[20 marks]
Leadership can be defined as a process by which one individual influences others toward
the attainment of group or organisational goals. Three points about the definition of
leadership should be emphasized. First, leadership is a social influence process. Leadership
cannot exist without a leader and one or more followers. Second, leadership elicits voluntary
action on the part of followers. The voluntary nature of compliance separates leadership
from other types of influence based on formal authority. Finally, leadership results in
followers' behaviour that is purposeful and goal-directed in some sort of organised setting.
Many, studies of leadership focus on the nature of leadership in the workplace.
The Ohio State studies discuss two factors, termed consideration and initiating structure,
consistently appeared. Initiating structure, sometimes called task-oriented behaviour,
involves planning, organizing, and coordinating the work of subordinates. Consideration
involves showing concern for subordinates, being supportive, recognizing subordinates'
accomplishments, and providing for subordinates' welfare.
The Michigan leadership studies took place at about the same time as those at Ohio State.
The conclusion of the Michigan studies was that an employee orientation and general
instead of close supervision yielded better results.
The thinking behind the management of Sony was built around the above two theories on
leadership. Ibuka and Morita gave concern for innovation and high quality products to
customers.
Ohgas leadership thinking is evident through his delegation to the divisional presidents and
making those presidents accountable for the success of their unit. Ohga has also given
concern for task through process innovation and thereby led cost efficiency. The statements
of Ohga reflected supportive leadership behaviour. The Co-CEO Ideis leadership was
authoritative and task oriented - by having imposed role clarity, separation of policy makers
from operational staff and the focus on functional and operational autonomy. However, it
could also been seen that the top management provide less opportunity to individual leaders
to perform. The challenges were often addressed by newly formed committees such as
CISS, NCMC and NCB as well as executive board.
[Total 40 marks]
4

BMS

Answer any THREE questions only

Your answers should adequately demonstrate various management concepts and theories
discussed in the module. You may also use appropriate examples from industry to elaborate
the answers.

Question 2
Discuss the concept of globalisation and explain with examples how it impacts on local
organisations.
[20 marks]

Provide a definition of globalization:

E.g. Globalization describes the process by which regional economies, societies, and
cultures have become integrated through communication, transportation, and trade.
Another definition is process enabling financial and investment markets to operate
internationally, largely as a result of deregulation and improved communications" (Collins)
To "make worldwide in scope or application" (Webster)
The application of globalization can mean different things to different people depending on
the industry and whether you are on the supply side or servicing demand.
The student can provide a definition along the themes or substituting the words given above.

Impact of local organizations and business:

Organizations no longer have isolated, protected markets but compete with each other on an
international scale. This is enabled by improvements in communication infrastructure, use of
information technology and the drive to continually cut down price or improve margins.
As competition becomes global, organizations can find themselves competing with other
manufacturers who may not follow the same business practices, ethics or health and safety
practices, enabling such competitors to offer products at a lower price.
Sweatshops, child labour, exploitation of workers are some of the hidden aspects of global
business. The student can provide any examples relating to this area.
A key driver is to have work done at a location with a lower cost advantage, without
compromising on quality. This results in the 'off shoring' phenomenon where companies
strive to have work performed in locations offering the best cost advantage or access to
resources.
Globalization can restrict local industry from developing or offering any competitive product
as the extent of mass production and flood of goods from established suppliers will not leave
room for a new supplier to enter the market even on a local scale.
The student can offer suitable examples from any industry to support the discussion.

BMS

Question 3
Operating in overseas environments create challenges to managers. Illustrate these
challenges that managers face when they operate in global environments.

[20 marks]

The answer can be structured across the economic environment, legal-political environment
and socio-cultural.
The economic environment:
Economic development: awareness of whether it is a developed or developing country.
Awareness of the nations per capita income.
Infrastructure: physical facilities including airports, highways and utilities.
Resource and product markets: evaluate product consumption as well as raw material
and labour to produce goods and services.
Exchange rates: Volatility in exchange rates can impact profitability.
Students can also provide examples.

The legal-political environment:

Political risk and instability: deal with the unpredictability and change with local
governments. Consider factors such as corruption and political instability as well.
Laws and regulations: laws of host governments covering areas such as consumer
protection, employment, health and safety, wages, hiring and retrenchment.
Students can also provide examples.

The socio-cultural environment:

Social values: the difficulty to comprehend local cultures and deal with different situations
Cultural implications for leadership/management styles covering areas such as leading,
decision making, motivating people, acceptable forms of command and control, and use
of power.
Students can also provide examples.

International trade alliances:

Understand the impact of trade alliances.
References to GATT, WTO, EU and NAFTA.

Managing in a global environment:

Consider the additional effort to understand cultural sensitivities.
Developing cultural intelligence (CQ) ability to use reasoning and observation skills to
interpret unfamiliar gestures and devise appropriate behavioural responses.
Culture shock frustration and anxiety can result from being bombarded with unfamiliar
messages and situations.
6

BMS

 Difficulty in dealing with different languages, value systems, beliefs, food and customs
may also deal with homesickness and loneliness.

Question 4
Describe the major components of the classical and humanistic management perspectives
as historical foundations of management.
[20 marks]

Classical perspective:
Refers to the formal early studies of management emerged during the nineteenth and early
twentieth century.
The roots are from the factory system that started in 1800s and the problems organizations
faced as a result in dealing with organization structure, training employees, scheduling
operations and dealing with labour.
Creation of the 'salaried manager' a person responsible for the performance of others.
Three subfields within classical management: (a) scientific management (b) bureaucratic
organizations (c) administrative principles proposed by Taylor, Weber and Fayol.
(a) Scientific management: Key contributors are Fredrick Winslow Taylor, Henry Gantt,
Frank and Lillian Gilbreth who pioneered time and motion study. The main concept within
scientific management is of arranging work based on careful analysis of tasks for maximum
productivity.
(b) Bureaucratic organizations: An approach developed in Europe by Max Weber, a German
theorist that looked at the organization as a whole.
Weber identified key dimensions of organizations across division of labour with clear
definitions of authority and responsibility, positions and hierarchy, rules and procedures to
provide reliable, predictable behaviour, management and ownership being separate,
administrative acts and decisions recorded in writing, personnel selected and promoted
based on technical qualifications. The student can list some of these attributes.
(c) Administrative principles: In the administrative principles approach again focused on the
total organization. Key contributors were Henri Fayol, Chester Bernard and Mary Parker
Follett.
(d) Fayol's key principles: unity of command each subordinate receives orders from only
one supervisor, division of work specialization leads to greater efficiency, unity of direction
similar activities grouped together under one manager, scalar chain (chain of authority).
Mary Parker Follett: Importance of common super ordinate goals for reducing conflict in
organizations. She brought in concepts of ethics, power and how to lead to get the best from
employees.

BMS

Chester Bernard: Stressed on the importance of the informal organization and the impact of
this within the workplace. The references to Follett and Bernard are optional Taylor, Weber
and Fayol are considered to be the core contributors.
Humanistic perspective:
Mary Parker Follett and Chester Bernard are considered early advocates of the humanistic
perspective.
The emphasized the importance of understanding human behaviour, needs and attitudes,
social interactions and group (team) processes in the workplace.
Three subfields within humanistic perspective: (a) Human relations movement, (b) Human
resources perspective, (c) Behavioural sciences approach.
(a) Human relations movement: The results and findings of the Hawthorne studies at the
Hawthorne plant of the Western Electric Company, where the subjects of the study
demonstrated greater productivity when there was more interest in them. The student can
describe the Hawthorne incident in their own words.
(b) Human resources perspective: Espouse a dairy farm view of management, where
contented cows will give more milk, so satisfied workers will give more work or output.
Combines suggestions for job design, consider employee motivation, avoid dehumanizing or
demeaning work, allow workers to use full potential. Two important contributors were
Abraham Maslow and Douglas McGregor.
The student can give a short description of Maslow (touch of Maslow's hierarchy of needs)
and of McGregor (Theory X and theory Y) styles of management.
(c) Behavioural sciences approach: Develops theories of human behaviour based on
scientific methods and study. They draw from fields such as sociology, psychology,
anthropology, economics and other disciplines to understand employee behaviour and
interactions. A specific approach of behavioural sciences is the organizational development
(OD) approach.
The student can also identify that the humanistic perspective looked at the whole person at
work (head, heart and hands) as opposed to just a unit of labour (hands only).

Question 5
a. Discuss the different roles of a manager.

[12 marks]

Different roles of a manager:

Definition: a role is a set of expectations for a manager's behaviour.
The student can use the framework by Henry Mintzberg as a framework to the answer or
simply touch on each of the different areas. Types of categories are informational (managing
by information), interpersonal (managing through people), and decisional (managing through
action).
8

BMS

Informational: Monitor, Disseminator, Spokesperson the manager seeks and receives

information, forwards information to others and transmits information to outsiders through
speeches, reports and memos.
Interpersonal: Figurehead, Leader, Liaison the manager performs ceremonial and
symbolic duties, directs and motivates subordinates, trains, counsels and communicates
with subordinates, maintains contact with those inside and outside the organization.
Decisional: Entrepreneur, Disturbance handler, Resource allocator, Negotiator the
manager drives new ideas and delegates execution to others, takes corrective action during
disputes of crises, resolves conflict among subordinates where required, decides who gets
resources and priorities for budgets and schedules, represents department interests with
other parties.
The student can write about the areas described above without directly referring to
Mintzberg.
b. Discuss the relevant skills managers need to develop in order to improve performance of
the organisation.
[8 marks]
Relevant skills that managers need to develop:
Managers require a range of skills summarized into three categories as, (a) Conceptual
skills, (b) Human skills and (c) Technical skills.
Definition: Conceptual skills are the cognitive ability to see the organization as a whole and
the relationship among its parts. Knowing where ones department fits and ability to think
strategically to take a broad, long-term view.
Definition: Human skills are the manager's ability to work with and through other people and
the ability to work effectively as a group member. Demonstrated in the way the manager
relates to other people and the ability to motivate, facilitates, coordinate, lead, communicate
and resolve conflict.
Definition: Technical skills are the understanding and proficiency in performing specific
tasks. Include the mastery of methods, techniques, and equipment in a specific discipline
such as engineering, manufacturing or finance. Include specialized knowledge, analytical
ability, and the competent use of tools and techniques to solve problems in that specific
discipline.
The balance of these skills can vary based on the level of management, e.g. top
management, middle managers, first-line managers, non-managers (individual contributors).
Conceptual skills are most important at the top while human skills are least important for
individual contributors, whose technical skills and contribution matters significantly.
The student can provide examples covering for some of these skills.
[Total 20 marks]

BMS

Question 6
Define the concept of Management by Objective (MBO) and explain the benefits and
drawbacks of the concept.

[20 marks]

Definition of the concept

Definition: a method whereby managers and employees define goals for every department,
project and person and use them to monitor subsequent performance.
Four major activities must occur in order for MBO to be successful. The student can cover
these key steps in their own words as well.
(a) Set goals looks beyond day to day activities and have some longer term objective (e.g.
answer the question What are we trying to accomplish?) These goals have to be realistic
and measurable, have a clear timeframe and responsibility assigned.
(b) Develop action plans defines the stated course of action to achieve the stated goals.
Can be either at an individual, department level, or even at both levels.
(c) Review progress a progress to review to ensure that the action plans are working.
Frequency can vary. The objective of the MBO process is to achieve organizational goals.
(d) Appraise overall performance evaluate whether the planned goals have been achieved.
This can be linked to the rewards system.
Benefits

Manager and employee efforts are focused on activities that will lead to goal attainment.
Performance can be improved at all company levels.
Employees are motivated visibility of expectations and targets.
Department and individual goals are aligned with company goals.
Flexibility for the organization is to tie in rewards with strategic goal achievement.

Drawbacks
Constant change prevents MBO from taking hold (i.e. having effective use).
An environment of poor employee-employer relations reduces MBO effectiveness.
Strategic goals can be displaced by operational goals.
Mechanistic (rule based, job description based, low trust culture) organizations and
values that discourage participation can harm the MBO process.
Too much paperwork and tracking effort saps MBO energy.

10

BMS

Question 7
Explain the following concepts:
(a) Authority and Responsibility
Definition of authority: the formal and legitimate right of a manager to make decisions,
issue orders, and allocate resources to achieve organizationally desired outcomes.
Characteristics of authority (a) authority is vested in organizational positions, not people,
(b) Authority is accepted by subordinates, (c) Authority flows down the vertical hierarchy
each of these points can be made, optionally with some supporting detail.
Definition of responsibility: the duty to perform the task or activity as assigned.
Typically managers are assigned responsibility commensurate (or in proportion to) their
authority. When managers have responsibility but no authority, the job becomes difficult.
When managers have authority exceeding responsibility, they become tyrants, using
authority towards frivolous (selfish or personal) outcomes.
(b) Centralisation and Decentralisation
Definition of centralization: means that the decision authority is located near the top of the
organization.
Definition of decentralization: decision authority is pushed downward to lower organization
levels.
Organizations typically experiment to find the correct hierarchical level at which to make
decisions. The trend towards decentralization: relieve the burden on top management, make
better use of employees skills and abilities, decisions are made close to the action by well
informed people and permits a more rapid response to external changes. Factors that
influence centralization versus decentralization can be provided, covering one or more of the
items given below.
Greater change of uncertainty in the environment is usually associated with
decentralization
The extent of centralization or decentralization should fit with the firm's strategy
In times of crisis or company failure, decision authority can be centralized to the top
The student can provide industry examples to support the above, which will also be
considered as valid points.

(c) Re-engineering
Definition of reengineering: sometimes is also called business process reengineering, is
the radical redesign of business processes to achieve dramatic improvements in cost,
quality, service and speed.

11

BMS

Reengineering focuses on process rather than on function, and as a result leads to a shift
away from a strong vertical structure to one emphasizing a stronger horizontal coordination.
This horizontal coordination will give the organization greater flexibility in responding to
changes in the environment.
Reengineering forces managers to think about how work is done in their organizations.
Forces managers to look at core processes that span the across the company and involve
teams of employees who work together to provide value directly to customers.
Definition of a process: an organized group of related tasks and activities that work
together to transform inputs into outputs and create value. The student can provide
examples.
Reengineering can also squeeze out the dead space and time lags in workflows (i.e. ways of
improving efficiency)
Challenges of reengineering: The effort required to map out an organizations business
processes can be high, difficulty in balancing stakeholder power struggles and generating
the most optimal business process flow. The expected benefits are not always realized,
estimated that 70% of reengineering efforts fail to reach their intended goals.
(d) Work Specialisation
A fundamental principle is that work can be performed more efficiently if employees are
allowed to specialize. Work specialization, sometimes called division of labour, is the
degree to which organizational tasks are subdivided into separate jobs. Production is
efficient because employees perform small, well-defined tasks.
Organizations are moving away from this principle because too much specialization leads to
employees being isolated and doing only a single boring job. Many companies are
enlarging jobs to provide greater challenges or assigning teams to tasks so employees can
rotate among the jobs performed by the team.

[5x4=20 marks]

[Total 60 marks]

12

BMS