International Business Strategy Essay

The revolutionary journey of Sony in the consumer electronics industry started in the year 1946 when Akio Morita and Tokyo Sushin established a company named Tokyo Tsushin Kogyo K. K. in Tokyo. With a capital investment of ? 190,000 and 20 employees the company ventured into electronic repairs and maintenance segment and new product development. In 1954 the company gave Japan its first transistor and in 1958 the company was renamed Sony.

This was just the beginning of the technology revolution with Sony launching the Trinitron Color Television in 1968, the color videocassette in 1971, the world’s first home video system - the Betamax VCR in 1975, the Walkman in 1979, the electronic camera in 1981, the world’s first CD-player in 1982, the first consumer camcorder in 1983, the 3. 5inch micro floppy disk in 1983, 8mm video in 1988, the first digital VTR (video tape recorder) in 1985, and the memory stick in 1988. Sony was the first company to apply digital technology to audio products and ushered a new era in the world of entertainment with the launch of compact disc.

The further integration of multimedia technologies was used to redefine the way movies and entertainment industry was perceived. The company found new markets with its entry into the video games industry with an overwhelming success. The Sony Play stations have become a household name over the years. The globalization of the economies opened new avenues and markets for Sony. It set up its establishments in America in the year 1960 and UK in 1968. The company adopted a rapid expansion and growth strategy in these markets and realized the cost benefit of setting up manufacturing units in these areas.

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In 1988 the company acquired CBS Records Groups under the banner of Sony Music Entertainment. In 1989, it acquired Columbia Pictures Entertainment, a film and television company to form Sony Pictures Entertainment. In 2002, Sony acquired Aiwa Corp, a consumer electronics company. In 2004 Sony Entertainment merged with BMG to form Sony BMG Music Entertainment. Betamax Vs VHS In 1975 Sony had launched the Betamax targeted at the home video market segment. The product gained popularity in the market in the initial stages but competition came in the form of Video Home Systems (VHS) launched by Victor Company of Japan (JVC) in the year 1976.

The industry saw a battle for market dominance in the subsequent years with VHS emerging the winner. The market share of VHS far surpassed those of Betamax by 1986. The launch of Betamax had set a technological trend in the home video market segment. It was the first product of its kind that enabled the people to

• Record television broadcasts for later viewing
• View movies at home.

The launch of Betamax triggered a great enthusiasm among the consumers as they could get high quality home video product at reasonable prices in the market. It was the first of its kind in the market and a great success capturing nearly 100% of the market share till the entry of VHS. JVC launched its VHS model a year after the launch of Betamax. The VHS worked by running a magnetic tape between two spools that crossed over the playback and recording heads in the video cassette recorder (VCR) to produce an image. Technology Advantage The Betamax offered high quality recording but the tape offered recording for one hour only. In contrast the quality of recording in VHS was lower grade but the bigger size of tapes allowed two hours of recording capacity.

The consumers saw the greater recording capacity of VHS as a distinctive advantage since they could record entire movies or television programs in one cassette without any hassle. The Betamax on the other hand required the presence of one person to change cassette midway through the program. This feature ate up almost 30% of the market share of Betamax in the first few months of the launch of VHS. Sony took steps to combat this disadvantage by making changes to the cassette recording capacity so that it could cover three hours footage.

JVC stepped in to reform its cassette design and made allowance for eight hours of recording capacity. Initially Sony had revealed key technological features to JVC that were incorporated into the VHS. This came as a blessing in disguise for JVC and made a big success story. The scale of operations reduced the cost of manufacturing of VHS machines. JVC endeavored to make the VHS technology as superior and over time with continued improvements it caught up with Betamax. VHS offered its consumers the option to record four different television programs over the week using a built in timer.

The Betamax on the other hand offered an external timer that could record one program while the person is watching another. JVC continued to offer the consumer more options and choices by launching new models working on improving the existing format. This definitely held the consumer interest and lured the prospective buyers. Sony lost the battle to JVC in spite of having a better technology. Sony failed to market the technological features of the product and lost the market edge completely over a period of time.

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