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Clarence Li

on 27 November 2011

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Transcript of Vizio

Double click anywhere & add an idea Vizio Kan Cao
Alex Lee
Clarence Li
Lin Ma
Ming Qiu

Industry Analysis-Clarence, Kan
Firm Analysis-Lin
Evaluation of Vizio’s strategy-Ming
Challenges and Recommendations-
Agenda Entry Barrier New technology developed

High price in the market

Distribution Channel Substitute Internet streaming


Smart phone Buyer Power High power

Many options

Price Sensitive Supplier Power Vertical integrated

Part of company

Low power Rivalry Giants like Sony, LG

Using low price strategy

Same strategy used by rivalries Porter's Five Forces Analysis Industry Outlook Future Shopping Trend #1 :
- Consumers Still Care Very Much about Pricing
Future Shopping Trend #2 :
- Consumers Willing to Pay When Price Is Right

Market Trend #2:
- Expanding Market
Market Trend #1:
- Shrinking Margin
Market Trend #3:
- Global Growth for HDTV Fueled by Transition from Analog to Digital Broadcast
Firm Analysis History
Founded in 2002 by William Wang, with $600,000 in capital

Produce high quality flat panel televisions at affordable prices

Grown to roughly 120 employees and $2 billion in revenue

Became one of the top three HDTV brands sold in North America
Strategy Distribution Channel Strategy
----Wholesale clubs and discount retailers
----Low inventory level

Value Creating Strategy
----Brand awareness
----Customer Service
Pricing Strategy
----Contract manufacturing model
----Low price

Supply Strategy
----Relationship building
----Supply chain management Evaluation of Vizio’s Strategy Low Price Strategy: Timing
--Analog to digital broadcasting signal change
--Users will have to either buy a new TV
or buy a digital box:
Many opted to buy a new TV

Early 2000s: Vizio: $3000 . Competitors: $8000

5-10% margin Vizio vs 80% margin competitors

Production: Overhead costs at a minimal
--128 employees, outsourced production
--Vizio: 2% of sales vs 10-20% competitors

Weakness: Easy for competitors to copy Retail distributors
--Costco, Sam’s Club, Wal-mart
--Had increase in sales despite the recession
--Full color, descriptive TV boxes
--As these companies expand internationally, they want to
stock Vizio products

William Wang, CEO
--Many contacts from working at Tatung
--Sold products through Gateway before convincing
Costco, Wal-mart, etc to carry its products Vizio’s strategy for the future Can not depend on low price strategy
--Competitors lowering prices on HDTVs
E.g. Sony Bravia
--Sony, Samsung reclaiming lost market share

Retailers want Vizio to expand globally
--Advantage: Retailers will carry products, logistics
--Disadvantage: More localized competition,
(e.g. China has Haier, Hiscense)
building brand equity

Quarterly Market Share Data: N.A. Challenges Lack of Research and Development

Heavy reliance on sole supplier

New cheap product lines released by industry incumbents

Bearish market

Diseconomies of scale
Diseconomies of Scale Recommandation Further expansion in the US market

Initial expansion into Asian market

Gradual transition to other suppliers

Developing sources in OLED industry Q&A Morderate Morderate High Low High Evaluation of Vizio’s Strategy Implication:
- A Promising Market with an Ever-Intensifying Competition
Full transcript