Sony Corporation and the New Trade Theory | Free Essay Example

Sony Corporation and the New Trade Theory

Words: 722
Topic: Business & Economics
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Introduction

The New Trade theory is referred to as an economic theory which was developed by several economists in the 1970s. This theory contradicted some of the arguments which upheld the unlimited free trade as they were popular during that time. The economists behind this theory suggested that countries which had the opportunity of producing products or certain commodities had an economic advantage of sustaining their interest in the future. According to this theory, monopolies or oligopolies are not necessarily bad, especially with regard to the world market (Barney 1997). It is worth noting that this theory also states that in cases where there are increases in the scale of production, the output level of given products increases. This serves to protect the status of the given brand. This aspect has clearly been elucidated by the Sony corporation.

Case analysis: Sony

A classic example of such an organisation is the Sony Corporation. This company was founded on May 7, 1946. Its headquarters are located in Tokyo, Japan. The major products of this company include home audios and portable music. In addition, it has ventured in electronic components, information and communication gadgets. The company has an internationally recognised brand which has ensured that the corporation enjoys a market share with regard to electronic devices. It is worth noting that Sony has not enjoyed a smooth sailing with regard to portable music, especially in the MP3 industry (Gershon 1996). This has largely been brought about by massive competition from Apple Company. Despite the competition, this company has registered a remarkable brand that has made it stay at the top in this area.

There are special privileges that this company has enjoyed based on the fact that it has been the first mover of the portable music concept. Some of the advantages which Sony has enjoyed over the past include the fact that this company has been able to enjoy a ready market. This has been the case due to the fact that the Sony brand is well recognised across the globe. Furthermore, this company has been in the business for long, and some of the products which it has been able to produce have been welcomed in the market. It is also important to note the fact that this company has got an elaborate supply chain and market, which has ensured that it functions and meets the expectations of the customer base. Being a first-mover in the portable music industry, it has led the company to seek avenues of ensuring that it maintains its customer base (Gershon 1996). This has been achieved through investing elaborately in new products and items such as the MP3. Some of the approaches which have been associated with the success of this company in this industry are the alliances that this company has created with other companies. For instance, Sony has been linked to some record labels which have enabled the company to enhance the market share of its commodity. Among other advantages which have been associated with the first mover is the tendency of the buyers to sticking with the first choice. In this case, the portable music phenomenon which has been captured by Sony has ensured that this company has a slight advantage over the other companies.

Despite the fact that this company has got a slight advantage, what needs to be understood is the fact that there are other companies which have also come up in this industry (Porter 1998). This is advantageous to the buyer since it ensures that the buyer gets the products which are of the best quality and price. Essentially, the competition further enhances the technological advancement that ensures that the needs of the buyers are met. Sony Corporation has continued to hold a large market share due to the fact that it has a reputable brand which has maintained its standards of quality (Porter 1998). Finally, these companies have applied new approaches in marketing which have been based on monopolistic competition which has been geared towards increasing returns on scale.

Reference

List Barney, J 1997, Gaining and sustaining competitive advantage, Addison-Wesley Pub. Co., New York.

Gershon, R 1996, The Transnational Media Corporation: Global Messages and Free Market Competition, Routledge, New York.

Porter, M 1998, Competitive Strategy: Techniques for Analyzing Industries and Competitors: with a New Introduction, Simon and Schuster, New York.