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Let us first examine the advantages and disadvantages of licensing and Greenfield investments and then look at which strategy will be good for Sonny.

LICENSING

Licensing basically is an official permit to do, use, or own something. Sonny could license the Augment Reality (AR) game to some other company to distribute in the United States. By doing so, Sonny will not need to incur the costs of producing, promoting, packaging, or selling the product. All of it would be done by the licensee. They could choose a licensee who already has knowledge of selling to an established market. Plus, Sonny will get the license fees and royalty and will not bear any risk.

On the other hand, once the AR game is licensed, Sonny will lose control over its product. It will have no say in promotion, packaging, and selling. It will only receive a portion of the profits as opposed to full revenue if it had not licensed the game. Plus, if the product does not sell, Sonny will earn no royalties as well.

GREENFIELD (WHOLLY OWNED VENTURE)

Greenfield investment refers to Foreign Direct Investment (FDI) where a company establishes operations in a foreign country. If Sonny were to start operations in US, it will have complete control over all the aspects of the business - operations, quality control, brand image, staffing. Though the cost of investment will be higher than licensing, Sonny will be able to achieve economies of scale over time. It will be advantageous for the economy of the US as Sonny will end up creating jobs.

On the other hand, it is a very high risk investment - it's the riskiest form of FDI. If the game does not sell after all that investment, Sonny will lose a huge amount of money.

Given the advantages and disadvantages of both licensing and Greenfield investment, in my opinion, Sonny should first try licensing and test the market. If it's game proves to be huge success through licensing, the risk was setting up Greenfield project would reduce significantly and that will give Sonny control and entire profits of its venture.

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Companies like Nestle are involved in related diversification strategy as they add complementary goods to their existing products categories and innovate to produce similar product lines and depths.

Biggest advantages of uch strategy is economies of scale, lower cost of production, operating optimisation, maximum efficiency and efficacy in distribution.

However disadvantages like lack of accessibility to untapped product range and customer preferences arises as well as adds on to risks of getting outdated over period of time.

As a recommendation the company must strongly innovate and tap customer preferences and be Agile enougj to prpduce new products which meet customer attributes and needs and also Achieve Cost Leadership to remain sustainable in future.