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Internationalization on Example of Sony Company

Introduction

In the modern world, Sony is a multinational enterprise that produces and sells various goods, such as gaming consoles, TVs, smartphones, technological devices, and even movies. Sony is a Japanese corporation with its headquarters in Tokyo; however, it developed over time and currently functions in regions like China, Europe, and the United States. This essay focuses on one of Sony’s daughter companies, called Sony Computer Entertainment, especially on the production and internationalization of gaming consoles called PlayStation.

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Main body

The first gaming console from Sony Computer Entertainment was produced in Japan in December 1994 and later in North America and Europe in September 1995. PlayStation can be considered an innovation in the gaming industry because, by that time, it did not have any substitute product of the same quality and functional abilities. In the 1990s, Sony was a multinational enterprise; therefore, the introduction of this new good to the international market was comparably easy. Hence, the fact that the PlayStation gaming console possessed uncopied and original functional characteristics allowed the good to penetrate the international market even faster. The company did not have any experience in the production of computer games; hence, to popularize its PlayStation and establish video games for this gaming console, Sony bought a European company Psygnosis. Later it was renamed Sony Interactive Entertainment, and such programs as WipEout and Destruction Derby were created here. It can be considered the first step in the internalization of Sony’s gaming products.

The process of the internationalization of the good did not take as much time as it could. As mentioned before, the first presentation of PlayStation in the United States happened in September 1995 and brought success to this device from the very beginning. The main aim that the company wanted to achieve by entering the international market was winning leading positions in the gaming industry and forming a positive image not only in Japan but also abroad. Additionally, Sony aimed to create a good that would satisfy potential customers by meeting all of their needs, functional requirements, and aesthetic preferences. Kenichiro Yoshida, the CEO of Sony, noted that the meaning of technology tends to change rapidly, and currently, he sees it not only as electronics but also as a tool involving entertainment and content creation (Zamborsky, 2021). Therefore, Sony aimed to acquaint the international market with a product that would bring its customers joy, entertain them, and become a mass trend. Definitely, one of the integral goals was increasing profit, demand, and social status because Sony Computer Entertainment is a commercial company.

The first criterion that allowed this Japanese gaming console to succeed abroad is the pricing strategy that the company chose for its product. By the time of entering the market, PlayStation’s price was much lower in comparison with its main competitors – Nintendo and Sega. Hence, with the introduction of this new good, customer preferences were obvious. Moreover, Zamborsky (2021) states that Sony has a long tradition of breakthrough innovation. Therefore, this statement is generally true in the case of PlayStation as well because the product introduced by Sony showed high competitive advantages that were correctly exploited by Sony Computer Entertainment during the overseas expansion.

Moreover, one of the results of buying Psygnosis for the sake of game production led to diverse positive advantages that allowed the good to attract customers. For example, various games invented for PlayStation were unlike other programs popular in the 1990s. In addition, specific functional characteristics such as the ability to save previous results, restart the game, or continue playing from the previous position were relatively new for gaming goods and helped increase PlayStation’s competitiveness. Although this Japanese product shows a high level of competitive advantage, Events (2018) explains that Japanese MNEs tend to remain their innovation process inward-oriented and prefer not to correlate with the rest of the world. Such an approach does not always play a good role in Sony’s internationalization process because of the long time spans between the introduction of a good to Japanese and foreign markets. This can be supported by the example of PlayStation, which was presented in Asia 10 months earlier than in Europe and America.

Internationalization allowed Sony Computer Entertainment to achieve more competitive advantages. The execution of one of the main competitors can be taken as one of the most considerable results of entering the international market. Due to large price differences, the company SEGA Saturn was forced to back up its production of gaming consoles and almost leave the industry of gaming. In addition, the integration with foreign markets allowed Sony to better analyze customer demands, preferences, needs, and requirements and modify their products according to the preferred characteristics. Moreover, over the last several decades, Sony has always been modifying its product, and currently, PlayStation is one of the most popular gaming consoles with the most developed functional characteristics and interfaces. According to Cha (2020), Sony’s global strategy has always been focused on internationalization and economies of scale, which allowed the company to sustain competitive advantages for a long time. The strategy allowed the company to analyze foreign experiences, learn from them, form innovative characteristics, and win large audiences.

Conclusion

In conclusion, the success of PlayStation can be described with the help of the eclectic paradigm (OLI model). Diverse location advantages such as supportive governmental regulations, comparably low transportation costs, and comfortable infrastructure help Sony succeed. Additionally, the company’s ownership advantages include a highly innovative environment, the existing reputation, and the absence of direct competitors. Hence, Sony gets such benefits from internationalization as leading positions in the gaming industry, ideas for next modifications, a large target audience, and an increasing image in foreign markets.

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References

Cha, H. (2020). A paradigm shift in the global strategy of MNEs towards business ecosystems: A research agenda for new theory development. Journal of International Management, 26(3), 1-12. Web.

Ervits, I. (2018). Geography of corporate innovation: Internationalization of innovative activities by MNEs from developed and emerging markets. Multinational Business Review, 26(1), 25-49. Web.

Zamborsky, P. (2021). A blueprint for succeeding despite uncertain global markets. Journal of Business Strategy, 42(3), 168-176. Web.

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StudyCorgi. 2023. "Internationalization on Example of Sony Company." January 12, 2023. https://studycorgi.com/internationalization-on-example-of-sony-company/.

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StudyCorgi. (2023) 'Internationalization on Example of Sony Company'. 12 January.

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