Vizio and the Market for Flat panel TVs
They begin as glass panels that are manufactured in high tech fabrication centers in South Korea, Taiwan, and Japan. Operating sophisticated tooling in environments that must be kept absolutely clean, these factories produce sheets of glass twice as large as king size beds to exacting specifications. From there, the glass panels travel to the Mexican plant located alongside the U.S border. There they are cut to size, combined with electronic components shipped in from Asia and the United States, assembled into finished TVs, and located onto trucks bound for retail stores in United States. It’s a huge business. U.S consumers spend over $35 billion a year on flat panel TVs.
The underlying technology for flat panel displays was invented in the United States in the late 1960s by RCA. But after RCA and rivals Westinghouse and Xerox opted not to pursue the technology, the ...view middle of the document...
U.S consumers, who have benefitted from the falling prices of Flat panel TVs and are snapping them up. Efficient manufacturers have taken advantage of globally dispersed supply chains to make and sell low-cost, high-quality flat panel TVs. Foremost among these has been the California-based company, Vizio. Founded by a Taiwanese immigrant, in just six years sales of Vizio flat panel TVs ballooned from nothing to over $2 billion in 2008, and in early 2009, the company was the largest provider to the United States market with 21.7% share. Vizio, however, has less than 100 employees. They focus on final product design, sales, and customer service. Vizio outsources most of the engineering works, all of its manufacturing and much of its logistics. For each of its models, Vizio assembles a team of supplier partners across the globe. Its 4-Inch flat panel TV, for example, contains a panel from South Korea, electronic components from China, and processors from United States, and it is assembled in Mexico. Vizio’s managers search the globe continually for the cheapest manufacturers of flat panel displays and electronic components. They sell most of their TVs to large discount retailers such as Costco and Sam’s Club. Good order visibility from retailers, coupled with tight management of global logistics, allows Vizio to turnover its inventory every three weeks, twice as fast as many of its competitors, which is major source of cost saving in a business where prices are falling continually.
On the other hand, the shift to flat panel TVs has caused pain in certain sectors of the economy, such as those firms that makes traditional cathode ray TVs in high cost locations. In 2006, for example, Japanese electronics manufacturers Sanyo terminated 300 employees at its U.S factory and Hitachi closed its TV manufacturing plant in South Carolina, throwing off 200 employees. Both Sony and Hitachi, of course still make TVs, but they are flat panel TVs assembled in Mexico from components manufactured in Asia.
(Adopted from “International Business-Competing in the Global Marketplace”, 8th Edition, Hill, 2011)