Flat Panel Tv and the Global Economy

Q2. Flat Panel Televisions and the Global Economy Vizio is a U. S. come with 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 particular number of staff. Now, thither argon over 160 employees and it remains the eldest Ameri bottomland brand in over a decade to depart in U. S. LCD HDTV sales. This passage has mentioned two main issues, which argon link to what I corroborate learnt in the lecture.They atomic number 18 globalization of turnout and the reasons for ancestryes to become international. 1) Globalization of doing Vizio has achieved globalization of production. Globalization of production promoter sourcing of effectuals and services from locations around the world to take advantage of national differences in the cost and bore of factors of production, for example, land, labor, capital, and energy. Vi zio sources the components of televisions around the world. It source panel, electronic components, and processors from South Korea, chinaw atomic number 18, and join States respectively.Assembly of TV is in Mexico, while final product design, sales, and guest service be in California. The final products are sold in retailers, such as Circuit City or Wal-Mart. Globalization of production makes companies more matched by improving their quality or volume, and big(a) their costs. According to William Wang, Vizio CEO, he goat undercut his competition be take a crap his overhead is low. The club has about(predicate) 85 employees and they are mainly responsible for technical take hold or engineering. It outsources manufacturing to Asia because there are low-cost, for-hire factories. 1 Because of cut downd cost and steep quality TV, it allows Vizio to compete with it rivals, e. g. Sony, Samsung, and Panasonic more effectively. 2) Reason to become international proactive & un inactive There are some initiatives for Vizio to become international. The proactive reason why Vizio become international because it green goddess generate greater profits by reducing costs of acquiring resources. By souring the television components planetary and lower cost in labor and factories in Mexico, Vizio gain advantages to reduce its total cost.From Vizios perspective, greatly reduced production cost cause it able to offer lower selling price of TV sets to customers. This becomes Vizios competitive advantage and allows it to beat its competitors- Sony, Samsung, and Panasonic. From customers perspective, they are benefited from falling price and improve living standard because they can enjoy high quality flat-panel TV. The reactive reason is because of the competitive pressure in domestic securities industry. There are more competitors in the United States, for example, Sony, Samsung, and Panasonic.In order to survive, Vizio has to Vizio has to enhance its competitiv e advantage. Therefore, it source suppliers of the components around the globe, which can offer low cost and high quality products. This makes Vizios 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 split flat panel TV than Sony, Samsung and Panasonic.Also, competitions force Vizio to create more sophisticated products so as to attract more customers to buy its products. Customers are then 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 d own, causing unemployment. Q3biiAs there is a trend towards globalization, many firms are involved in cross-broader betray and investiture. Managing international descent becomes non as at large(p) as managing a purely domestic firm. Managers are now facing more difficulties related to globalization. The issues that managers have to grapple with are as follows. 1) Difference in ending The firms are doing business with many other firms or investing in other countries around the world. Since the countries are not the same, there are differences in refinements, political systems, economic systems, legal systems, and levels of economic development.Because of these differences, international businesses expect to go its practices country by country. read General Electric as example, GE invest in China on alkali. Since China is a communistic society, many businesses are still operated by the organization although it has opened its grocery store to outsiders to invest in China . Therefore, government is a large customer in China and GE films to work closely with the bureaucrats. It is difficult for the outsiders, who are not familiar with Chinese culture, to gain cultural sensitivity.Even if they are exposed to Chinese purlieu, they still need time to learn Chinese Culture. For example, eastern and western nation are different in expressing their anger. occidental gives unhappy face when they are angry while eastern gives glad face even they are angry. 2Therefore, when GE do business with Chinese people, businessmen have to be careful with their conversation with bureaucrats because they whitethorn not know bureaucrats get angry or unhappy with them. Since eastern people may not adapt to this cultural difference or may not get used to it, they cannot do business successful with the Chinese.Besides, about punctuality, western are punctual while it is common for eastern to stupefy a little earlier or late. When GE do business with the bureaucrats, it is better to come a little earlier. So the government bureaucrats need not wait for too long. Moreover, about confronting a conundrum, western faces the problem and think about prompt action to deal with the problems while eastern tends to avoid the problems. If eastern managers work in China to manage his subordinates, it is easy for them to have conflicts or argues because of different methods in handling the problems.Eastern managers may force its Chinese subordinates to give prompt action but the subordinates may not get used to it and may feel unhappy or pressure. Therefore, different culture leads to changing management skills and skills doing business. Country managers are oftentimes local internationals as they have deep understanding of local language. 2) Which contradictory market to enter and which to avoid? It is suitable for the firm to choose economically and politically stable market to invest or cooperate with. Take General Electric as example.It chooses to inv est in China because China is a emerging country. Since it is a developing country, it has high demand for infrastructure investments, such as airport and rail ways to facilitate trade. Without these infrastructures, products imported or exported to and from China become difficult. Globalization is then difficult to take place. Also, China is economically stable. It is the worlds third-largest economy in 2007 and contributes more than 5. 5% of the worlds GDP. 3 Besides, China is politically stable because there are no wars and riots rarely happen.It is not suitable for company to invest in politically unstable market, such as Iran and Iraq, because wars are usually happen. Otherwise, firms leave alone suffer from political risk resulting in expropriation, confiscation, emphasis and conflict. Since China is politically stable, there is low possibility for GE pain from political risk 3) Adaptation for global market When companies do business with countries around the world, it is i mportant for them to beware of the difference in culture. Differences in culture require companies products to adapt to local environment for business success.There are some factors encouraging adaptation, for a example, differing use conditions, differing buyer behavior signifiers, government regulatory influences. In the case of GE, GE Health Care makes magnetic resonance imaging scanners that cost $1. 5 million, while Chinese research center is conception MRI scanners that only priced $500,000. If GE sold scanners that cost $1. 5 million in China, the sales may not be very good because China may not afford this expensive scanner. Even if Chinese companies can afford $1. 5 million, Chinese citizens, who are not productive enough, cannot afford the fee for using MRI scanners.Therefore, GE should seek ways to lower the cost of MRI scanners to better suit the needs of Chinese. GE Chinese research center can serve this purpose because it can easily gain more information about the consumption pattern of the Chinese and design a equipment that is more likely to gain sales. 4) temper of entry When a company wants to enter a foreign market, managers need to decide which mode of entry is the best. Exporting, Turkey projects, licensing, franchising, joint venture, and wholly owned foreign direct investment are the sextette mode of entry.The six entry modes have their pros and cons. Besides, the higher the profit potential, the higher is the amount of firms pecuniary commitment, risk and marketing control. Thus, firms have to seriously consider which global market entry strategy to use. GE use foreign direct investment strategy (FDI) to enter Europe, Latin America, and Asia. The pros of FDI are that GE can have total control over its foreign business. When there are untouchable interdependencies in the midst of headquarters and local operations, total coordination achieved through ownership will guarantee acceptable performance.On the other hand, the current international environment mat be hostile to full ownership by GE. It has to permit all the risk. Reference 1 Kessler K,Vizios unexpected flat-panel kin, USA Today 2007. 2 Yang L, Differences between Eastern and Western culture, homepage on the Internet, 2008 cited 2011 Feb 7, Available from http//mountainrunner. us/2008/01/differences_between_eastern_an. html 3 Xin H. Hey, hey appear how Chinas growing, homepage on the Internet. 2007 cited 2011 Feb 10. Available from http//www. atimes. com/atimes/China_Business/II20Cb01. html