This assignment consists of three parts.
1. Read the case on Flat Screen TV's. Prepare a response to the following questions:
-Which parties experience advantages from the globalization of the flat-panel industry?
-Which parties experience disadvantages from the globalization of the flat-panel industry?
-What would happen, if the U.S. required that all flat-panel displays sold in the U.S. would also have to be manufactured in the U.S.?
-What does this case tell us about the future of production in an increasingly global economy?
2. Research another industry that has experienced globalization or may be a good candidate for globalization in the future and share your example with the class and explain why you selected the industry.
3. Choose two countries (other than the U.S.) within the same region of the world. Assess the political risks, economic risks, and legal risks of each country. If you had to invest a large sum of money into one of these two countries, which one would it be? Why?
Vizio and the Market for Flat-Panel TVs
Operating sophisticated tooling in environments that must be kept absolutely clean, fabrication centers in South Korea, Taiwan, and Japan produce sheets of glass twice as large as king-size beds to exacting specifications. From there, the glass panels travel to Mexican plants 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 flat-panel TVs, and loaded onto trucks bound for retail stores in the United States, where consumers spend more than $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 Japanese company Sharp made aggressive investments in flat-panel displays. By the early 1990s, Sharp was selling the first flat-panel screens, but as the Japanese economy plunged into a decade-long recession, investment leadership shifted to South Korean companies such as Samsung. Then the 1997 Asian crisis hit Korea hard, and Taiwanese companies seized leadership. Today, Chinese companies are elbowing their way into the flat-panel display manufacturing business.
Vizio's flat-panel TVs are assembled in Mexico from components produced in many different countries.
As production for flat-panel displays migrates its way around the globe to low-cost locations, there are clear winners and losers. U.S. consumers have benefited 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 10 years, sales of Vizio flat-panel TVs ballooned from nothing to around $3 billion by 2012. The privately held company is the largest provider to the U.S. market with an 18 to 19 percent share. Vizio, however, has reportedly fewer than 500 employees. Their focus is on final product design, sales, and customer service. Vizio outsources most of its engineering work, all of its manufacturing, and much of its logistics. For each of its models, Vizio assembles a team of supplier partners strung across the globe. Its 42-inch flat-panel TV, for example, contains a panel from South Korea, electronic components from China, and processors from the United States, and it is assembled in Mexico. Vizio's managers scour 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 turn over its inventory every three weeks, twice as fast as many of its competitors, which allows major cost savings in a business where prices are falling continually.
Sources: D. J. Lynch, "Flat Panel TVs Display Effects of Globalization," USA Today, May 8, 2007, pp. 1B, 2B; P. Engardio and E. Woyke, "Flat Panels, Thin Margins," BusinessWeek, February 26, 2007, p. 50; B. Womack, "Flat TV Seller Vizio Hits $600 Million in Sales, Growing," Orange County Business Journal, September 4, 2007, pp. 1, 64; E. Taub, "Vizio's Flat Panel Display Sales Are Anything but Flat," The New York Times Online, May 12, 2009; and Greg Tarr, "HIS: Samsung Dusts Vizio in Q4 LCD TV Share in the U.S.," This Week in Consumer Electronics, April 12, 2012, p. 12.