Flat Panel Tv and the Global Economy

Topics: China, Chinese people, Flat panel display Pages: 5 (1638 words) Published: November 27, 2011
Q2.“ Flat Panel Televisions and the Global Economy”
Vizio is a U.S. company founded in 2002 by William Wang, Vizio CEO, with the idea that everyone deserves to own the latest technology. It is a producer of consumer electronics, primarily produces television sets. It grows fast despite a limited number of staff. Now, there are over 160 employees and it remains the first American brand in over a decade to lead in U.S. LCD HDTV sales.

This passage has mentioned two main issues, which are related to what I have learnt in the lecture. They are globalization of production and the reasons for businesses to become international.

1) Globalization of production
Vizio has achieved globalization of production. Globalization of production means sourcing of goods and services from locations around the world to take advantage of national differences in the cost and quality of factors of production, for example, land, labor, capital, and energy. Vizio sources the components of televisions around the world. It source panel, electronic components, and processors from South Korea, China, and United States respectively. Assembly of TV is in Mexico, while final product design, sales, and customer service are in California. The final products are sold in retailers, such as Circuit City or Wal-Mart.

Globalization of production makes companies more competitive by improving their quality or volume, and lowering their costs. According to William Wang, Vizio CEO, he can undercut his competition because his overhead is low. The company has about 85 employees and they are mainly responsible for technical support or engineering. It outsources manufacturing to Asia because there are low-cost, for-hire factories. [1] Because of reduced cost and high quality TV, it allows Vizio to compete with it rivals, e.g. Sony, Samsung, and Panasonic more effectively.

2) Reason to become international – proactive & reactive
There are some initiatives for Vizio to become international. The proactive reason why Vizio become international because it can generate greater profits by reducing costs of acquiring resources. By souring the television components worldwide and lower cost in labor and factories in Mexico, Vizio gain advantages to reduce its total cost. From Vizio’s perspective, greatly reduced production cost cause it able to offer lower selling price of TV sets to customers. This becomes Vizio’s competitive advantage and allows it to beat its competitors- Sony, Samsung, and Panasonic. From customers’ perspective, they are benefited from falling price and improved living standard because they can enjoy high quality flat-panel TV. The reactive reason is because of the competitive pressure in domestic market. There are many competitors in the United States, for example, Sony, Samsung, and Panasonic. In order to survive, Vizio has to Vizio has to enhance its competitive advantage. Therefore, it source suppliers of the components around the globe, which can offer low cost and high quality products. This makes Vizio’s TV become competitive and attract many customers to buy its products. Globalization also has its pros and cons. One of the advantage globalization is that competitions can increase the quality of products. Since Vizio now have to compete with rivals from worldwide, it has to provide customers with better flat panel TV than Sony, Samsung and Panasonic. Also, competitions force Vizio to create more innovative products so as to attract more customers to buy its products. Customers are thus benefited under globalization.

On the other hand, globalization causes companies to lay off employees in home country. Since many manufacturing work are outsourced to China or Mexico, which can provide low cost labor and factories, employees in home countries are laid off because of their high labor cost or the factories in home country are closed down, causing unemployment.


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