The Internationalization Case Study of Sony

1. Company Origins (The Period from 1945 until the 1980s)

In September 1945, a thirty-eight-year-old engineer named Masaru Ibuka, with about twenty employees and USD 1,600 of his personal savings, established a telecommunication-engineering firm, Tokyo Tsushin Kogyo K. K. Another engineer by the name of Akio Morita soon joined the team. At the beginning, the company con­sidered producing everything from electric rice steamers to miniature golf equipment. However, the company was never able to make a steamer that worked properly, so Ibuka and Morita decided to manufacture sound­recording devices instead (Frisch 2004).

Tape recorders had been developed in Germany in the 1930s by Grundig and Telefunken. In the United States after 1945, Ampex led the market in developing and manufacturing tape recorders. At that time, Matsushita, Hitachi, and Toshiba, the largest Japanese electronics manufacturers, were developing their first semiconduc­tors under the technical license of Radio Corporation of America (RCA). In 1952, the business focus of Ibuka shifted from magnetic tape recorders to transistors. He learned that Western Electric, the parent company of Bell Laboratories, where semiconductors had been discovered in 1948, was offering a technical license for manufacturing transistors in return for a royalty. The agreement stipulated a USD 25,000 advance payment against royalties (Nathan 1999).

The company began using the Sony trademark on its products beginning with the TR-55 transistor radio in 1955. In the late 1950s, Sony expanded its consumer use manufacturing portfolio to microphones, cassette- tape players, and television apparatuses. In 1957, the company introduced the world’s smallest transistor radio with built-in speakers. By January 1958, the firm had grown to 500 employees and was worth more than USD 100 million and officially changed its name to Sony Corporation (Frisch 2004; Nathan 1999). In 1960, Sony’s engineering team introduced the world’s first transistor television.

Japanese firms are well known for their complex network of interlinked companies (keiretsu). A classic keiretsu consists of a bank, a trading company (sogo shosha), and various manufacturing companies. Be­sides this horizontal network of associated business groups, there are vertically connected manufacturing firms at the core and suppliers at the periphery. These networks of companies represent a ‘network of knowl­edge,’ which aims to make the core company independent from outsiders, such as banks, and invulnerable to competition (Chang 1995; Imai 1987). Following the philosophy of ‘keiretsu organization,’ Sony began to expand its business fields in the 1960s. For example, Sony founded Sony Enterprise Co. Ltd. in 1961 to manage the Sony Building in Ginza. Over the next years, Sony Enterprise added Sony Plaza, a retail chain, to market imported goods; a French restaurant named Maxim’s de Paris; Sony Travel Service, an insurance agency; and other services such as financing. Building on the theme ‘not hardware but heartware for everyday life’ to unite a diverse range of businesses, Sony Enterprise continued to move in new directions. Similar to a trad­ing house, it put together a plan to import fine foreign goods and, in the mid-1970s, started to import sports equipment and fashionable luxury items. Sony was at the same time successfully exporting its consumer electronics products and expanding its overseas operations (Sony 2008a).

Sony opened its first overseas branches in Hong Kong in 1958, in the US in 1959, and in Zurich, Switzerland, in 1960. Most of Sony’s entrances into new areas of business were through international joint ventures with foreign companies. One of the first international joint venture operations involved products connected to Sony’s core electronics business. In March 1965, Sony and US-based Tektronix Inc. formed Sony-Tektronix Corporation in Japan with equal start-up capital from each company. At the time, it was highly unusual for a foreign company to have more than a 49 percent share in a joint venture with a Japanese company. Tektronix was a well-known instrumentation and measuring equipment manufacturer, commanding over 80 percent of the global market for oscilloscopes. The international joint venture expanded its operations into new fields, including the further development of electronic measuring instruments, graphic displays, broadcast equip­ment, and optical devices. With such a variety of products, Sony-Tektronix was able to meet the needs of a wide range of customers. Interestingly, in 1966, Sony signed a contract with IBM aimed at cooperation on production of magnetic computer tapes, which, however, turned out to be rather unsuccessful (Sony 2008a).

Until the 1970s, Sony mainly relied on domestic battery suppliers for its transistor radios, transistor tele­visions, and tape recorders. But the demand for batteries was growing as Sony focused manufacturing on portable consumer electronics. If Sony had its own battery manufacturing facility, the company could not only meet its own requirements but also tap into the rapidly growing market for small batteries used in cam­eras, watches, and calculators. Therefore, Ibuka and Morita wanted to have their own battery manufacturing facilities. In February 1975, Sony and the Union Carbide Corporation (UCC) of the US established a battery manufacturing and marketing joint venture called Sony-Eveready Inc. UCC manufactured and marketed bat­teries under the Eveready brand name, was the largest producer of batteries in the world, and wanted to do business in Japan. An equal amount of the initial capital was provided by both parties, and Morita was ap­pointed president. The international joint venture began importing dry cell batteries from the United States and marketing them under the Sony-Eveready name in Japan (Sony 2008b). From today’s perspective, using products such as smart phones and electric cars as examples, Sony was ahead of its time when the company entered the battery manufacturing business within its consumer electronics core business in the 1970s. Un­fortunately, Sony did not focus very much on the further development of the battery business and, instead, searched for other businesses in order to achieve additional diversification.

2. Diversification Towards Movie and Entertainment

In the late 1980s, Sony diversified away from its core competencies in consumer electronics and entered the movie, music, and entertainment industry. In January 1988, it bought CBS Records. In November 1989, Sony purchased Colombia Pictures Entertainment, one of the biggest motion-picture companies in the world, and integrated it into the company in new business units called Sony Music Entertainment and Sony Pictures Entertainment. These two major acquisitions generated mixed media coverage throughout the United States and Japan (Sony 2008a). In 1995, a new Sony division called Sony Computer Entertainment launched a home video game system and the play station (Frisch 2004).

Entering these fields reflected Morita’s ambitions for the entertainment business and his naturally close rela­tions with the US market, which had been developed over decades ever since Sony’s foundation. Moreover, Morita intended to serve the entire value chain by combining the making of and watching of movies with Sony’s hardware (e.g., cameras, studio equipment, audio, video, and televisions sets). However, resource allocations toward unfamiliar segments, such as the movie and music business, weakened its position in electronics, the core business of the Japanese firm. In order to develop its new diversified business fields, Sony started to reroute its financial, research and development, and human resources away from the firm’s technological and innovative resource competencies in electronics.

Over the years, Sony became involved in diversified business fields away from consumer electronics to gaming pictures; financial services; music; movies; banking; life insurance; cameras, semiconductors and others. The current organizational structure reflecting the diversified business of Sony (status: 2019) is illustrated in Figure 4.2.

3. Loss of Core Competencies in Electronics

Recall that in 1968, Sony introduced the Trinitron television technology, with superior color and brightness performance relative to its competitors (Frisch 2004). The transistor radio and the Trinitron television tech­nology were state-of-the-art and led the worldwide markets and, thus, supported the successful growth of Sony until the 1980s. During this time, Sony continuously increased its in-house supply network up to about seventy-five manufacturing plants. The firm’s ‘optimization sharing plan’ enhanced supply chain innovation. This helped Sony achieve an efficient supply chain management system within and across its units, which incorporated upstream suppliers and downstream distributors and retailers within the organization (Samiee 2008: 4). The introduction of the Walkman in 1979 further boosted the reputation of Sony as the driving pi­oneer in the consumer electronics industry, which contributed at the same time to the overall vitality and strength of the firm.

Sony kept major know-how and expertise with respect to its electronics technology inside the company. Sony neither agreed to further joint ventures with other firms – for example, those operating in the television set industry – nor purchased major components such as displays from suppliers outside Sony’s group periph­ery. This firm culture gave Sony an invulnerable, independent, ‘going it alone’ reputation in the electronics industry but, simultaneously, created the risk of making the firm blind to emerging technological innovation outside its organization. And soon Sony would need to pay the bill.

In the 1990s, Sony’s management failed to recognize new, upcoming trends in consumer electronics, such as flat panel technologies. This went along with unsuccessful developments in other business operations when, for example, Sony failed against competitors at setting the technological industry standards for sev­eral electronic systems, such as the Betamax-Video, the Multimedia-Compact-Disc, and the Atrac MP-3 for­mat. Further joint research and development activities concerning the multimedia disc with Philips started in 1979 and were renewed in 1992 (joint development towards the introduction of a DVD industry standard). Unfortunately, the Sony and Philips partnership failed against the high-definition DVD of the rival alliance of Toshiba; Hitachi; Pioneer; JVC; Thomson; Mitsubishi Electric; and, later, Panasonic, which had supported Sony at the beginning of the technological battle (Sony 2008a).

In 2008, there were some bright spots when Sony, with its Blu-ray Disc technology, succeeded in the compe­tition against its Japanese rival Toshiba, which was the leading firm in developing the high definition DVD standard (Sony 2008a). However, the hardware-based Blu-ray Disc business performed below expectations. At the initial stage of its market launch, customers hesitated to switch their movie collection from DVD to Blu- ray. A couple of years later, emerging internet-based movie streaming technologies invited new players such as Amazon, Netflix, and others and limited the Blu-ray Disc sales to a considerable extent. Technology and product life cycles in consumer electronics became significantly shorter compared to the 1970s and 1980s, as Sony’s management realized to their regret.

Sony has tried to regain competitive strength as a technological leader in the electronics industry by concen­trating on the next flat panel generation technology, called organic light-emitting diode (OLED) technology. OLED displays are supposed to replace LCD/LED soon, thus driving the flat-panel TV business in the future. In 2008, Sony was the first company to launch commercially-available OLED TVs (11-inch, 960×540-pixel, model XEL-1), which were selling in limited quantities for about USD 1,700 in Japan and USD 2,500 in the US. Sony developed the OLED technology mainly by itself (DisplaySearch 2008b). However, Sony’s main com­petitors, such as Samsung, LG Electronics, Panasonic, and others, were not sleeping and further improved the LCD and OLED technologies utilized in their television sets. As result, 4 K technology was launched for LCD/LED television sets, which caused Sony to announce in 2015 (seven years after the XEL-1 was introduced) that the company would further delay sales plans for serial production of large quantities of its OLED TVs. Instead, Sony would concentrate as well on 4 K technology for the time being (Cox 2015). Another drawback for Sony’s Blu-ray business is the fact that 4 K technology indicates an advanced 4096 x 2160 pixel display solution, while Blu-ray only reaches 1920 x 1080 pixels.

One of Sony’s biggest mistakes was that it was delayed too much, relative to its competitors such as Sharp and LG Electronics, in the building of its own LCD and OELD module assembly lines. The modules contribute 70-80 percent to television set value-added activities. Thus, naturally, the question arises, how will Sony manage to reset in the television set industry?

4. Access to Screen Technology Through Joint Venture Networks

The lack of LCD manufacturing capacities led Sony to establish a joint venture called S-LCD Corporation with its Korean rival Samsung (Ihlwan 2006). In 2004, the final contract was signed to establish a seventh generation LCD panel joint production line at Tangjeong, Chung Cheong Nam-Do, South Korea (Sony 2006b). Through the international joint venture with the well-branded television set manufacturer Sony, Samsung, for its part, could increase its marketing, sales, and distribution assets and balance the investment risk in LCD module manufacturing. The international joint venture formed the common supply basis to provide LCD modules to Sony Corporation and Samsung Electronics, which, at the same time, are competitors in the final industry stage of LCD television sets. A dilemma?

At the beginning of the joint venture operations with Samsung, Sony had concerns about quality. The com­pany not only dispatched its own engineers to the joint venture to vet LCD displays it also insisted that every panel it used should be shipped through its LCD-TV factory in Inazawa, near Nagoya, Japan. There the pan­els went through another rigorous quality check before electronics components, such as digital tuners, power units, and other parts were added. At the end of that quality check procedure, approved displays were assem­bled into television sets or shipped off as modules to Sony’s assembly plants in Spain and Mexico (Ihlwan 2006). After the initial period of joint venture operations, manufactured panels were shipped directly from S-LCD to the assembly plants of Sony without a double inspection.

Sony confirmed that the joint venture has been instrumental in the company’s introduction of the successful Bravia LCD TV line-up. At the same time, Samsung’s own LCD television set business has made considerable progress. The South Korean Cheabol has emerged as a trend-setter in the LCD panel industry, aided by Sony expertise that has helped ensure high-quality display performance. ‘The Sony-Samsung alliance is certainly a win-win,’ declared Lee Sang Wan, president of Samsung’s LCD unit (Ihlwan 2006). Sony’s executive deputy- president, Katsumi Ihara, who had led Sony’s television set division and then was appointed to oversee key consumer-electronics product lines, also credited the alliance with helping to revive the company’s LCD tele­vision set business fortunes (Ihlwan 2006). In July 2006, Sony and Samsung announced they would expand their cooperation towards an eighth generation amorphous LCD panel production line (Sony 2006a, 2006b).

Surprisingly, only two years later, Sony reviewed its ambitious relationship with Samsung and announced plans for a new alliance partner, Sharp Corporation of Japan. ‘This is a major step toward attaining our goal of becoming the top TV manufacturer worldwide,’ proclaimed Ryoji Chubachi, president of Sony Corpora­tion of Japan, at the start of the press conference in April 2008. Through the joint manufacturing facilities at Sharp’s Sakai factory, the first tenth-generation plant in the world, Sony thought it would be able to take advantage of higher assembly efficiency and achieve price superiority over its main competitors, such as Sam­sung Electronics (Otani 2008). Sony’s new joint venture ambitions with Sharp not only influenced Samsung, Sony’s previous panel investment partner, but also Taiwanese panel makers such as AU Optronics, which also has supplied large numbers of LCD panels to Sony (DisplaySearch 2008a).

What is the truth behind the sudden joint venture termination with Samsung? Over the years, Sony became engaged in severe competition in LCD TVs with Samsung Electronics in the leading worldwide markets, uti­lizing their common supply of LCD displays created through the joint venture. Outside the European and North American markets, Samsung Electronics often holds a larger share than Sony, such as in promising markets in the newly emerging economies of Brazil, Russia, India, and China. According to Torii Hisakazu, vice president of Display Search market research institute, ‘No matter what market Sony might decide to go after, Samsung Electronics is always its biggest competitor’ (Otani 2008).

Additionally, Sony has lacked any real way to differentiate its products from those of Samsung Electronics. One of the main reasons has been the common LCD panel. Sony and Samsung use LCD panels of the same dimension, produced with the same efficiency, and manufactured by the joint venture S-LCD Corporation, located in South Korea. Thus, both firms use panels with similar cost structures. Naturally, Sony injects its own technology in the form of backlights and other components when it comes to building the panels into modules, thus creating Sony panels. Even so, as long as Sony and Samsung Electronics use the same basic panels, it is difficult to end up with any real difference in price, according to Chubachi, Sony Corporation’s president (Otani 2008).

5. Market Entry Strategies for Europe as Part of a Global Value Chain

In Europe, Sony operated two wholly owned production facilities for the manufacture of LCD television sets, which were located in Barcelona, Spain, and in Trnava, Slovakia (Sony 2006c). The Spanish sub­sidiary was established in 1973 (EU_Japan 2010). In order to meet the rapidly increasing demand for LCD TVs in Europe since 2005/2006, Sony decided to construct a new factory in Nitra, Slovakia, located 40 kilometers east of Trnava. Sony has been producing TV sets there since February 2006. At that time, Sony developed ambitious plans to regain competitive strengths in the television set business, among other busi­ness segments, through expanding their European market presence. Sony opened a new LCD TV manu­facturing plant in Nitra (Slovakia) in 2007, one of the largest state-of-the art plants worldwide (Sony 2007, 2013).

In August 2007, the Nitra site began producing a limited number of Bravia LCD TVs, followed by successful serial production starting in October 2007. Sony invested 73 million euros in the brand new factory, which serves as a typical example of a greenfield investment. Production lines that had operated in the Trnava fac­tory were scheduled to be relocated to the Nitra factory in 2008. By the end of 2008, the Nitra plant had a production capacity of three million LCD TVs per year and around 3,000 employees. Following the relocation of the LCD TV production lines to Nitra, the Trnava factory continued producing tuners for Bravia LCD TVs and providing technical support for PlayStation computer game devices. After the transfer from Trnava to Nitra, Sony continued to run its LCD TV assembly in Barcelona, Spain, along with Nitra, Slovakia (Sony 2007, 2008d).

The Barcelona factory was supposed to serve as a nearby manufacturing base for western European mar­kets, while Nitra, due to its geographical location, could focus on central and eastern European markets. The Barcelona site also operated as the European technology center for Sony’s LCD TV assembly. The Nitra factory would make use of its state-of-the-art equipment to concentrate mainly on large-size, high-end Bravia LCD sets for the common European market (Sony 2006c). As Katsumi Ihara, corporate executive officer of Sony Corporation, commented, ‘Following our ten-year experience producing television sets in Trnava, Slovakia, we are very pleased to officially announce the foundation of a brand new factory in Nitra. This will allow us to expand our LCD television set business in Europe. We are convinced that the new plant will have an outstanding importance with regards to market penetration of Sony’s superior technology and design perfor­mance. We seek to develop Sony’s Bravia brand to become the leading LCD television set brand in Europe’ (Sony 2006c).

With regard to procurement flexibility and transportation cost economics for component supply in Europe, Sony’s joint venture with Sharp made sense. At that time, the major LCD panel assembly lines of Sony’s pre­vious partner, Samsung, were located in Asia (Sony 2006b). Thus, these transportation-sensitive electronic LCD modules needed to be shipped and imported to Europe, causing time delays and greater costs. Sony’s new LCD manufacturing partner, Sharp, was able to deliver its LCDs from Torun, Poland (Sharp 2008a). The modules produced at Sharp in Poland could be delivered in less than one day to Nitra, Slovakia. Both Japa­nese firms make use of the expanded common European market, which profits from the cessation of country border controls. The future was supposed to be bright, but something went wrong.

The LCD market in Europe became saturated in 2008; and, within a very short time, Sony’s management realized that its LCD television set business performed far less well than expected (Sony 2008e). In parallel, the entertainment business (movies and music) did not develop as successfully as planned, which further weakened the firm’s overall business performance. Net sales stagnated and went down. The analysis of net income (loss) presented in Figure 4.4 underlines Sony’s worsening situation. The data indicate, for example, for 2009 (loss of USD 1.1 billion), 2010 (loss of USD 0.492), 2011 (loss of USD 3.13 billion), and 2012 (loss of USD 4.85 billion) (Sony 2014; Sony_Financial_Holdings 2014).

Concerning the highest loss in the firm’s history, in 2012, Sony announced various reasons, such as the unfa­vorable impact of foreign exchange rates, the impact of the Great East Japan Earthquake, the floods in Thai­land, and the deterioration in market conditions in developed countries (Jordan 2012). The main reason for the loss, however, was the performance of Sony products in its major markets. As a former executive of Sony, Mr. Yoshiaki Sakito, commented, ‘Sony makes too many models; and for none of them can the company say, “This contains our best, most cutting-edge technology.” Apple, on the other hand, makes one amazing phone in just two colors and says, “This is the best”’ (Tabuchi 2012).

Considering the fact that Sony was accumulating further losses, the management decided to reorganize its business, which came along with plans to reduce its stake in the television set business. Thus, the manage­ment started looking for investors. Finally, the Taiwanese Hon Hai Precision acquired 90 percent equity in the Nitra plant from Sony in 2010. Today, most of the television sets in the European markets are assembled by Hon Hai, based on an original equipment manufacturing (OEM) contract relationship with Sony. Nitra re­mains the most important production location of LCD televisions for Sony in the European region, based on its OEM relationship with Hon Hai (Hon_Hai 2013).

In 2010, Sony Barcelona Tec was sold to a joint venture between the Spanish companies Ficosa International SA and Comsa Emte SL (EU_Japan 2010). Finally, at the end of June 2012, Sharp and Sony announced that their joint venture relationship to produce and sell large-sized LCD panels and modules would terminate and that Sony would sell its shares (representing 7.04 percent of the issued shares) in Sharp Display Products Corporation (SDP) to SDP (Sony 2012). For its part, Sony was not happy with the joint venture because of quality issues and lack of punctual delivery of the displays manufactured at the joint venture.

Businesses other than LCD panel and television sets – for example, personal computers (PC) – also performed below forecasts and caused the management to try to sell them out. Consequently, in 2014, Sony officially gave up on laptops and desktops, announcing plans to sell its Vaio PC business to a Japanese investment group. The company sold 7.5 million units in 2013, and its products have been available all around the world. Sony positioned itself as a manufacturer of high-end laptops but maneuvered its products too far into high-price markets, where PC buyers are usually reluctant to go. At the same time, the Chinese Lenovo, which meanwhile has become the world’s largest PC maker, has seen further growth for its PC revenues (Newman 2014).

For decades, Sony ranked as one of the most reputable and best-known brands in the global and European consumer electronics markets. Sony was known for its unique ability to develop and manufacture all of the major components used in television sets. However, Sony missed upcoming flat panel technologies in the television set industry and also mobile handheld as well as emerging screaming business because, it had routed too much of its resources to the movie, entertainment, and gaming business since the 1990s. As of today, it seems difficult for Sony to gain back its technological leadership position in consumer electronics manufacturing. As the Sony management experienced to their regret, product and technology life-cycles have become shorter. Continued adaptation to the fast-changing technological environment has become a pivotal strategic issue for organizations’ management (Wu & Wu 2014:543).

6. Entrepreneurship and Firm Culture

Entrepreneurial models in the academic literature stress the importance of a firm’s founders and their in­fluence on the strategic orientation of the enterprise and its internationalization paths (Zahra, Korri, & Yu 2005). Sony’s entry into the entertainment business was, to a great extent, caused by the ambitions of Akio Morita, one of the firm’s cofounders. Morita’s affinity for the US contributed to Sony’s early commitments in the American market and, despite its traditional Japanese roots, the firm’s open mindset towards a multina­tional management philosophy. Sony’s company culture and global reputation still serves as a valuable com­petitive advantage because it represents one of the most internationalized enterprises among Asian-based electronics firms involved in the high-technology business.

Despite Sony’s difficulties against the background of increased competition worldwide, Sony has tried for a long time to maintain traditional Japanese firm values, reflected in its employee treatment philosophy, such as long-term employee relationships. In return, the firm expects unconditional loyalty from its company staff (Chen 2004; Frisch 2004). As a vital part of its company culture, Sony stresses the importance of human cap­ital for the success of the firm. From executives to assembly-line workers, the philosophy of the co-founding entrepreneur, Morita, was designed to make sure that Sony employees were treated well. ‘Sony has a prin­ciple of respecting and encouraging one’s ability and always tries to bring out the best in a person,’ Morita once said. ‘This is a vital force of Sony’ (Frisch 2004).

However, at the end of 2008, Sony’s difficulties, particularly in the electronics business, became so severe that the firm had to decide, against its traditional values, on a drastic lay-off program. Sony announced plans to cut 8,000 jobs in the midst of a financial crisis that had many consumers distancing themselves from the electronics consumer markets in order to save money. In the biggest layoff announced by an Asian firm so far in the financial crisis, the Japan-based electronics firm said it would cut about 4 percent of its 160,000 employee workforce, scale back investments, and pull out of businesses as it aimed to cut USD 1.1 billion in costs from its ailing electronics operations. ‘These initiatives are in response to the sudden and rapid changes in the global economic environment,’ Sony stated in its press release. About 10 percent of the company’s fifty-seven plants were shut down. Sony also intended to reduce its investments in the electronics sector by approximately 30 percent in the fiscal year ending March 2010. The cutbacks would save Sony more than USD 1.1 billion a year (Sony 2008c, 2008e).

As a result of the investment cuts, it became questionable whether and when Sony would gain back its tech­nological leadership position in consumer electronics. At one time, the consumer electronics business helped develop Sony’s valuable reputation worldwide. It can be assumed that business success or failure in the con­sumer electronics segment is of vital importance for the firm’s future destiny. In 2012, Sony revealed that it would eliminate 10,000 additional jobs. The announcement followed a corporate realignment that demoted its once-sacred television business. Looking ahead, Sony’s new chief executive, Kazuo Hirai, said Sony would focus more on games, digital imaging, and mobile products (Pham 2012). Mobile products? This is not a new story.

Already by the second half of the 1990s, Sony had experimented in the mobile phone business but with lit­tle success. Therefore, Sony transferred its mobile phone device business to an international joint venture with the Swedish Ericsson Group in 2002 (Sony 2008a, 2008d). Unfortunately, the international joint venture Sony Ericsson Mobile Communications has never reached a reputation as a technological leader compared to, for example, Apple Inc. Around one decade later, in 2011, Sony took over full control of the international joint venture operation in the course of their revised company strategy to re-enter the smart-phone device business (e.g., launching a new brand series called Xperia) and connect its mobile-gadget offerings with an online network of music, videos, and games. Sony paid Euro 1.05 billion (USD 1.46 billion) in cash for Eric­sson’s 50 percent share in the international joint venture (Grundberg 2011). Sony Xperia smart phones are competing against Apple’s iPhone and Samsung’s Galaxy. And new competitors such as Xiaomi from China are coming up.

Sony’s most serious mistake was that it failed to recognize important waves of technological innovation in recent decades, such as digitalization, a shift toward software, and the importance of the internet (e.g., movie and music streaming). One by one, every sphere where Sony competed – from hardware to software to com­munications to content – was turned upside-down by disruptive new technology and emerging rival com­petitors. With its portfolio of music and its foundation in electronics, Sony had the tools to create a version of the iPod long before Apple introduced it in 2001 (Tabuchi 2012). In 2012, Sony Corporations chief executive officer, Kazuo Hirai, has vowed to turn things around, telling investors that ‘Sony will change’ (Pham 2012). Three years later, in 2015, Sony acquired machinery, equipment and plant facility of Toshiba’s semiconductor manufacturing division. Semiconductors are very important components used in a wide range of electronics products (Sony 2015).

7. Promising Business During the Recent Years – How About the Future?

The fruits of Sony’s business restructuring have been visible in recent years. In 2018, the year when Kenichiro Yoshida, was selected to become the new CEO, Sony generated a profit of more than five billion US dollars (net sales around sixty-eight billion US dollars) (Sony 2018b, 2018c). While the smartphone business (e.g., Sony Xperia) is still generating losses, the gaming (PlayStation) and music business are contributing the most to Sony’s current operating profits in recent years. Meanwhile Sony is better positioned in the movie and music streaming business (CNBC 2017). The movie business (Columbia Pictures) is highly dependent on blockbusters such as ‘Spider-Man’ or ‘James Bond’ and, therefore business forecasting is difficult. In the music business Sony owns reputable brands such as Warner Music Group, Sony Music, Universal and others and contracted various well-known singers.

Sony is further expanding its movie business. In 2017, Sony Pictures Television Networks reached an agree­ment to acquire a substantial majority stake in the Japanese anime distributor Funimation Productions, Ltd., (‘Funimation’). Funimation licenses and distributes Japanese anime content in the US, and operates the subscription streaming service FunimationNOW, available via the PlayStation Store, iTunes Store, Google Play, Amazon Apps, Xbox Store and mobile devices. Additionally, the company sells merchandise and DVDs through its website, Funimation.com. Sony Pictures Television Networks operates channel brands including AXN, Sony Channel, and ANIMAX, and digital brands including CRACKLE around the world, AXN Now in Europe and Asia, and Sony LIV in India (Sony 2017a).

Sony aims to further develop its professional camera business where Sony has been cooperating with Carl Zeiss, Germany (supplier of camera lenses) since the 1990. Cameras (and sophisticated lenses) are required by self-driving vehicles and robotics. Both belong to promising future markets. In the compact digital camera segment, however, competition is intense and rivals such as Nikon, Canon, Olympus, Panasonic (Lumix) have developed strong market positions. In order to further differentiate Sony from its competitors, Sony signed an agreement on a product and marketing collaboration with Lino Manfrotto Co. SpA (Italy) in 2017. The collaboration spans a range of products, including both premium models aimed at professionals and those geared towards travellers and camera enthusiasts. Sales and customer support for these products will be overseen by Manfrotto’s sales & marketing team. Through this collaboration, Sony aims to contribute to the further development of digital imaging by stimulating photographers’ and videographers’ creativity through an expanded line-up of accessories (Sony 2017b).

In 2018, Sony signed an agreement with Carnegie Mellon University (CMU) to strengthen its activities in future business fields such as artificial intelligence and robotics. Initial research and development efforts will focus on optimizing food preparation, cooking and delivery. This area of research and development was selected because the technology necessary for a robot to handle the complex and varied task of food preparation and delivery could be applied to a broader set of skills and industries. Applications could include those where machines must handle fragile and irregularly-shaped materials and carry out complex household and small- business tasks. Additionally, robots that are developed for food preparation and delivery would have to be able to operate in small areas, an ability which could be valuable for many other industries (Sony 2018a).

Source: Glowik Mario (2020), Market entry strategies: Internationalization theories, concepts and cases, De Gruyter Oldenbourg; 3rd edition.