Expansion of Sony Corporation in India - Case Study Example

Introduction

In the past one decade, the level of competition in the electronic industry has increased tremendously. The entry of the internet and social media has increased the demand for technological devices. In an attempt to maximize its profits, Sony Corporation has been expanding its operations to new but high potential markets across the world. However, other competitors have accumulated huge amounts of money which is used as a barrier of entry for other interested investors. This has made it hard for the business to segment the new markets and attract customer loyalty towards its products and services. This paper will therefore, analyze Sony entry in the Indian market and the best strategies to be used in order to the expansion program to achieve the anticipated success.

Background

Sony Corporation was started on May 7th, 1946. Since its inception, the company has designed, developed, manufactured, and sold different kinds of electronics equipments and devices that have been significant in revolutionalizing the technological sector in the world. The firm’s manufacturing facilities are mainly located in Asia especially in Japan. Its products are marketed and distributed by different sales subsidiaries that are located strategically in different parts of the world. Over the years, the company has focused its attention on its main segments that include mobile communications, gaming sector, imaging products and solutions, home entertainment, financial services, etc. However, over the past one decade, the company has faced intensive competition from other multinational companies such as Apple, Google Inc, Microsoft, and Samsung (Kaynak & Jain, 2012). With the increasing levels of globalization which has led to the liberalization of markets, it has become easy for these businesses to expand their operations in different parts of the world. Therefore, their expansion programs have threatened the position of Sony Corporation in the global market. In the past few decades, the company has diversified its operations in an attempt to reduce the risks and uncertainties that are associated with focusing on few products (Havaldar, & Havaldar, 2010). However, new entrants together with the changing technological sector are affecting the competitive advantage of the business. This paper will therefore, evaluate the company’s latest decision to enter the Indian market.

Environmental Analysis

For almost a decade, India has enjoyed a serene political environment. The political leaders have been ensuring that the country’s political environment does not affect the investors. For years, the country has been struggling with high unemployment rates in the country. Therefore, the political leaders have been very cautious not to scare away investors, an aspect that will escalate the current situation. As a result, the labor laws and tax policies have been favorable for the business. Furthermore, the country has removed trade restrictions and tariffs which might affect the competitive advantage of locally-based businesses. This is critical in ensuring the stability of the businesses (Dayal-Gulati & Jain, 2010). Currently, the Indian government is intending to set up tax incentives. The incentive will exempt a new business from the payment of taxes for a certain period of time. This will enable the new ventures to settle into the country before they are taxed. Sony Corporation should take advantage of this grace period to penetrate and position itself strategically in the market (Panda, 2008). This will be critical in segmenting the market.

Through various government interventions, the Indian economy has been able to stabilize after the global financial crisis of 2008. The country’s inflation rate has reduced drastically. The interest rates in the country have also gone down after several interventions. On the other hand, Indian Rupee has strengthened as a result of increased exports from the country and effective fiscal and monetary policy by the regulator. Analysts project that India will soon join the league of big players in the global economy issues (Lymbersky, 2010). Therefore, these indicators exhibit that the country will continue to grow even in turbulent times. Therefore, the Indian market is an ideal for Sony Corporation especially putting into perspective that the economy has been stable despite the integration of economies resulting from globalization.

Unlike other markets, India has a very strong culture. Therefore, any business that is intending to penetrate this market must understand the cultural values and beliefs of the local people. This is to enable it to stage a strong marketing campaign that does not collude with the cultural elements of the people (Majumdar, 2001). The reason is that many of the companies have failed to penetrate this market by failure to conduct an in-depth research in order to understand the tastes and preferences of the target market and the important cultural elements that must be observed before the ad is released to the media houses.

Indians like to be associated with products and services that are produced locally and by the locals. Sony has been exporting employees into its headquarters. The reason is that these employees understand the company’s goals, objectives, and ambitions. Furthermore, they are conversant with the internal culture of the organization. However, in the Indian market, the company has to change this strategy in order to attract the loyalty of the customers towards the brand. This is through ensuring that only the topmost positions are filled by non-locals. The reason is that the management must be experienced and conversant with the interests of the company in the market (Chambers, 2011). However, the rest of the employees must be locals. This will be critical in enabling the company to understand the unique tastes and preferences of the target market. The reason is that local subordinates are conversant with the main factors that affect the consumption behavior of the target market.

Since 2000, the Indian government has invested heavily on technical education. This has been critical in enabling the institutions of learning to produce high-qualified personnel in the technological sector. Furthermore, the country has been supporting the modern technologies. For instance, it has licensed several internet providers in the country. This has increased the demand for technological devices such as phones, tablets, laptops, etc. Furthermore, with the penetration of the internet in the Indian market, people have shifted their attention towards the online platform for downloading high quality music (Bijapurkar, 2008). This will be an opportunity for Sony to tap into this emerging trend which is being driven by the young people who forms the largest market segment for the business.

India has abolished some of the legal hurdles that have been affecting the success of the business in the market. However, it has very strict discrimination laws, consumer laws and health and safety laws (Choudhary, 2007). Any business that is intending to operate in this market must observe these laws in order to avoid any collusion with the government. These laws have been set to protect the local people from being exploited by multinational companies that are profit oriented. Therefore, the company should adhere to these rules in order to achieve success in the market.

With the increasing levels of global warming, Indians have not been left behind in a campaign to conserve the environment. Indians have shifted their attention towards companies that participates actively in reversing the worsening trends resulting from global warming. Therefore, companies have been forced to set aside part of its profits in order to protect the environment through planting of trees or rehabilitation of the water sources that are on the brink of becoming extinct from pollution (Benjamin, 2006). Therefore, a company that is planning to enter this market must be ready to put up the necessary measures that are meant to conserve the environment.

STP Analysis

Segmentation

Indian market has attracted many multinationals companies due to its market size. For instance, Apple Inc, Samsung, and Microsoft are operating in the market. Therefore in order for Sony Laptops and Phones to segment the market, the company should develop a comprehensive customer relationship strategy that will make it possible to understand the tastes and preferences of the market. The largest market segment in India is composed of the young people. These are people with a disposable income who are willing to spend their money on high-quality products. However, they are easily attracted to new products and influenced by the latest trends in the market (Neelamegham, 2000). Therefore, Sony should maintain a close relationship with the customers, an aspect that will enable it to collect their feedbacks from the customers. This is significant in ensuring that the phones and laptops are customized according to the needs of the target market.

Sony should segment the Indian market based on the social demographics. Social classes are significant in the Indian market. Therefore, phones and laptops should be customized to meet the varying interests of different classes. The company can achieve this aspect by pricing its products differently according to the target market. Furthermore, the firm should segment the market based on the behavior of the target market ( Panda, 2004). For instance, young people prefer flashy phones and laptops. Therefore, in order to segment this market, the company should develop products that meet these aspects.

Targeting

Sony should target the Indian market based on their age or generational cohort. The interests of young people vary differently when compared to those of other age groups. For instance, they purchase laptops and phones that are strong enough to support their active behavior such as playing games and frequent communication over the social media. The older generation in India purchase products based on the ability to handle heavy tasks in their workplaces. Therefore, the specifications of the laptops should meet these aspects.

The company should target the customers based on their income. Products that are marketed to consumers that have a higher income should have higher prices. The reason is that the rich people in India believe that high priced products are of high quality. Therefore, they are willing to spend a fortune in order to get such products (Dunn & Mutti, 2004). On the other hand, those in low social class cannot afford high-priced products. Therefore, failure to target them through pricing will force them to settle on cheap substitutes in the market.

Positioning

Indians are very sensitive when it comes to the quality of the products being offered in the market. In the past few years, there have been complaints from other markets that Sony is offering low quality products and services at very high prices. In order for the company to position its products strategically in the market, it should address these grievances and perceptions. This is through ensuring that customers get value for their money (Mathur, 2008). With a number of competitors in the market, the bargaining power of the Indian customers is very high. Therefore, the company should ensure that the phones and laptops are customized to meet the interests of the Indian people.

Sony should use competitive positioning in the Indian market. Currently, the Indian market is used to Apple and Samsung products. Therefore, Sony should use comparative advertising as a way of demonstrating that its products and services are of higher quality and better prices that those being offered by the competitors. This will play a significant role in enabling the customers to categorize the products as of higher quality than those being offered by the existing companies (Neelamegham, 2000). Through this strategy, the business will be able to compete effectively with the rest of multinational companies that have been dominating the market for a long time. This will be critical in expanding the market segment for the business.

Standardization and Adaptation

Although Indian market is unique and require special attention, the company should use similar products that are being supplied to different markets across the world. The main reason is that changing the design and quality of the products or services will require internal restructuring of the business. This is likely to affect the strength of the business (Atwal & Jain, 2012). For instance, the establishment of new departments that are focused towards the Indian market is likely to bring conflicts of interests among the employees. In case the situation is not handled amicably, it might affect the operations of the business in the market.

Standardization is critical in preventing Sony from focusing on one market and reducing its interests on others. Although Indian market is of great importance to the company, the company should not give the same attention to other markets. The reason is that with the integration of economies, the company might face political and economic threats, an aspect that might affect its position in the global market (Shah, Thomas, & Gorham, 2008). Therefore, standardized products and services will offer the company with an opportunity to deal with an opportunity to focus on all markets in a similar manner. However, the business should market the products differently in order to serve the varying interests of the Indian market. This is to ensure that issues related with perceptions, culture, and social classes are taken into consideration during the marketing campaign (Ramesh, 2007).

With the size of the Indian market, Sony should continue to use the designs and quality standards that have achieved success in other markets across the world. Currently, introducing new products or services in the market requires intensive research. Furthermore, the technologies involved in producing the products are expensive (Keillor, 2007). Therefore, with the company considering acquiring an existing firm in the Indian market, retaining its products would be significant in avoiding huge costs that might affect the financial position of the business (Sahoo & Sinha, 2010).

Currently, the company has an efficient supply system. Standardization will enable the company to study its progress in the market without having to adjust its operations, an aspect that might stabilize its operations (Piramal, Ghoshal, & Budhiraja, 2002). Furthermore, the employees are conversant with production systems. As a result, the company can invest on efficiency and expansion of its operations in order to meet the tastes and preferences of the Indian market.

In order for Sony Corporation to adapt to the new trends in the Indian market, it must employ local subordinates who understand the Indian market. As a result, they would enable the business to position itself strategically in the market (Bednarek, 2014). The reason is that they are conversant with interests of the market. As a result, Sony would stage a marketing campaign that does not contradict with local people’s cultures and beliefs (Bullis, 2007).

Sony should use local language and characters while staging an advert in the Indian market. Indians prefer to be associated with companies that recognize their cultures and language. As a result, the marketing campaign should use characters that are fluent in local language. This will be critical in ensuring that people are attracted by the products and services that the company is introducing in the market.

Recommendations

Sony should acquire an existing firm in the Indian market. This will give the company a local outlook. Furthermore, this strategy will enable the business to acquire local subordinates who understands the dynamics in the local market.

The company should use social media to market and conduct research. Social media platforms provide a cheap platform to reach the customers. Furthermore, through this channel, the business will be able to get feedbacks that will make it possible for it to improve its operations in the market.

The company should conduct an in-depth research before entering the new market. This will be significant in understanding the main cultural values and beliefs of the local people which might affect their perceptions regarding the firm’s products and services.

Conclusion

The success of Sony Corporation in the Indian market depends on the entry strategy the firm will use in order to penetrate the market. Unlike other Asian market, Indian market is unique and has specific aspects that must be taken into consideration when the business is aiming at segmenting the market. As a result, intensive research on the consumption behavior of the target market should be conducted in order to understand the main factors that determine the consumption behavior of the Indian customers. Therefore, the company would be well positioned to introduce the necessary changes that will play a critical role in attracting the loyalty of the customers towards the products and services that are being offered in the market.