Sony's Expansion

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Consumer electronics is becoming increasingly competitive and cost driven. Companies must have a balance of creating products for an existing market as well as creating markets for new product. Morita once said, “We don’t market products that have already been developed; rather, we develop markets for the products we make.” This mindset may be why Morita is no longer CEO of Sony Corporation.

An example of failing to create a market for its product is the Sony Beta Max system. It started developing this product in 1960 and didn’t get to market until 1976. Because of its heavy investment in R&D and production, Sony didn’t license the technology to other manufacturers. Instead, it tried to dominate the market by itself in the hopes of recouping costs and making a profit. At the same time, Matsushita Electric came out with the VHS format and licensed it to everybody. The end result is beta max failed and ceased production in 1986. Sony ended up having to write off a ...

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Less upward mobility keeping them out of the top ranks. (Bamboo curve)
- Less true decision making made them feel more like figure heads than executives.
- The reluctance of Sony to allow for market assessments before committing large sums to developing and production of new products.
- Feeling second guessed by the Japanese.
- Culture barriers were impossible to overcome even though American executives made every effort to learn the language and customs of their parent company.

In 1988 through 1991, Sony’s major commitments were almost all in the United States. It invested $6 billion to acquire CBS Records and Columbia Pictures and formed a joint venture with Time-Warner. It ...

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