Vizio and Business Strategy in the Lcd Television Industry

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1. Analysis of the Competitive Forces of the US LCD TV Industry Threat of entry can hold down profitability. Within the LCD television industry in the United States, there exists high barrier to new entrants, largely due to the efforts of established Korean and Japanese consumer-electronics makers who have spent substantial amounts of money “developing and marketing their own technology,” or in other words, contributing to supply-side economies of scale, which puts smaller startups at a huge disadvantage. Also, as we can see, capital requirements have the potential to hinder the growth of startups like Vizio, which has sought a new round of funding to build inventories. According to its competitors, Vizio stands at a disadvantage due to its lack of in-house and manufacturing development resources that many incumbents enjoy independent of their size. It also has little brand recognition, but, as shown, many Costco patrons and others care little about this when shopping for a television. The greater the power of suppliers, the greater their ability to pass on cost increases in their own prices. Here, the supplier group is fragmented and the products offered are not distinct in any meaningful way, implying weak power. The power of buyers can pressure price reductions. Here, the products of the LCD TV industry are nearly equal and largely undifferentiated, and buyers face no significant switching costs in changing vendors. Also, since a television is almost considered a necessity, a large contingent of price-sensitive customers will seek out quality products within their price range. The threat of substitutes can affect profitably. Here, there are several substitutes for what the group provides, both within the industry (other makes and models) and out (computers, laptops, tablets, and other electronics that are more versatile than LCD TVs). Many consumers have

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