Vizio Inc Case
“FACt.” Case: Vizio, Inc
Frame:
VIZIO is founded in 2002 by William Wang, with a startup capital of $600,000. The company produces high-quality flat-panel televisions at affordable prices. From 2002 to 2007, it realizes continuous growth and expansion. VIZIOR earns razor-thin margins, at a time when other famous brands such as Sony and Samsung still focus on high-end customers and charge a very high price for flat-panel television. By the end of 2007, VIZIO reached $1.9 billion in revenue and shipped approximately 2800000 television sets. Its business model is based largely on the volume sales with discount retailers and the extremely low cost of operating expenses.
However, things have been changed and VIZIO is facing challenges now. First, in 2007, Sony and Samsung introduced low-end and entry-level TV lines to compete directly against VIZIO’s products. At the same time, the whole industry has experienced price cutting and intense competition. Some of the companies were forced to exit from this market, such as Syntax-Brillian and Phillips, with a looming market expectation for 2008 after the financial crisis. Secondly, VIZIO’s market share of shipment for some models fell dramatically in the second quarter of 2008. It needs more finance if VIZIO wants to compete with giant brands in this industry at this time, in order to get sustainable profits.
Analyzing:
For sustainable growth, VIZIO needs to maintain its existing competitive advantage: keeping operation cost at a minimum level, while at the same time, carefully managing supply chain relationship, expanding product lines, building positive brand recognition, and keeping marching into selected international markets.
Manage supply chain relationship with Amtran, while seeking other possible partnership, to decrease its dependent on Amtran. VIZIO uses a contract manufacturing model to produce flat-panel televisions. Amtran provided about 80% of VIZIO’s procurement and assembly work, and other
Frame:
VIZIO is founded in 2002 by William Wang, with a startup capital of $600,000. The company produces high-quality flat-panel televisions at affordable prices. From 2002 to 2007, it realizes continuous growth and expansion. VIZIOR earns razor-thin margins, at a time when other famous brands such as Sony and Samsung still focus on high-end customers and charge a very high price for flat-panel television. By the end of 2007, VIZIO reached $1.9 billion in revenue and shipped approximately 2800000 television sets. Its business model is based largely on the volume sales with discount retailers and the extremely low cost of operating expenses.
However, things have been changed and VIZIO is facing challenges now. First, in 2007, Sony and Samsung introduced low-end and entry-level TV lines to compete directly against VIZIO’s products. At the same time, the whole industry has experienced price cutting and intense competition. Some of the companies were forced to exit from this market, such as Syntax-Brillian and Phillips, with a looming market expectation for 2008 after the financial crisis. Secondly, VIZIO’s market share of shipment for some models fell dramatically in the second quarter of 2008. It needs more finance if VIZIO wants to compete with giant brands in this industry at this time, in order to get sustainable profits.
Analyzing:
For sustainable growth, VIZIO needs to maintain its existing competitive advantage: keeping operation cost at a minimum level, while at the same time, carefully managing supply chain relationship, expanding product lines, building positive brand recognition, and keeping marching into selected international markets.
Manage supply chain relationship with Amtran, while seeking other possible partnership, to decrease its dependent on Amtran. VIZIO uses a contract manufacturing model to produce flat-panel televisions. Amtran provided about 80% of VIZIO’s procurement and assembly work, and other