Business strategy analysis - Case Study Example

A BETA format video recorder was manufactured and produced by many companies like Sanyo, Toshiba etc. But this technology was going to meet a violent end. It was a hit in its introducing year since Sony went ahead to produce a Beta format home video system and Sanyo was producing the top selling beta format video recorder. Beta grabbed one-third of the UK market in 1975. Sony was in an agreement with JVC and the two companies had signed a deal formerly, to produce U-Mat technology and this deal was known as the U-Matic deal.

Sony had taken one wrong step during this deal since they were too arrogant and aggressive enough to take most of the credit for the technology in the market. Thus, JVC had a grudge against Sony for this unfair treatment. When Sony produced Betamax they were still in a deal with JVC and once again Sony made the mistake of not accepting JVC's advice on replacing Betamax with JVC's new find which was better in all aspects, "Video Home System" (VHS) technology. Sony was once again to arrogant to accept the advice from JVC and they paid a price for it.

JVC launched VHS in 1976 and this format swarmed the market. By 1980, VHS had a 70% market share in North America. By 1984, all strategic companies started to produce VHS format video recorders. Everyone adopted this new and better technology. But there are specific reasons to why Betamax failed due to Sony's bad strategy management. (SJ. Liebowitz, Stephen E. Margolis; 1996)Sony's strategy had flaws and the major flaw was that they had not conducted a proper market research about what the customer really wants.

Sony had a wrong perception about what the customers really wanted. They believed the customers would go for the high quality of recording and not the length of the recording. VHS could record up to 4hrs of video whereas; Beta could record up to 3hrs and 35minutes. Customers wanted greater length and not quality of the video. So, VHS sold more and became a HIT! Beta was a high quality video format so the costs involved were high compared to VHS; therefore, the retail price for Beta was higher than that of VHS.

This market is price sensitive and Sony took another wrong decision. Sony should have taken informed decisions in the market to avoid the embarrassment and the failure of their baby product that died in its infant stages. Sony could have both gracefully let go of Beta and taken JVC's advice to adopt VHS technology. But the company should have had conducted a market research to know the consumer demands. This would have saved them from making uninformed decisions that were a fatal risk and ended in a failure.

Otherwise Sony could have marketed Beta with a different approach by targeting the right market. They could have targeted their product to a niche market that preferred quality over quantity. This way VHS and Beta would be competing in two different markets since VHS was mass marketed. BLU-RAY and HD-DVDBLU-RAY and HD-DVD (High Definition) are the latest buzz in the video format market but history is repeating itself since once again the two formats are in a war to gain the highest market share.

BLU-RAY is considered to be more superior to HD-DVD because RAY can record two hours of digital HD (high definition) video and thirteen hours of SD video. HD-DVD has 40% less storage capacity comparatively. Sony's BLU-RAY or Toshiba's HD-DVD need