The manufacturing of flat panel TVs is being outsourced globally by companies like Vizio, as shown in the case example. Outsourcing is such a serious issue to some because it is something which is increasing in the international marketplace. “We are seeing increased demands for solutions that leverage application outsourcing, business process outsourcing and offshore delivery to achieve significant cost reductions and business improvement” (Devraj, 2003). The argument for and against outsourcing is basically a reflection of bigger argument about theoretical issues of protectionism and free trade.
The beneficiaries of the globalization of this industry include the consumer and the subcontractor, as well as the company. The losers, however, could also be the subcontractors, depending on their relationships with Vizio and other companies that operate on a similar business model in the globalization of flat panel display industry. Another possible loser could be the consumer, because the consumer is the one who benefits from increased competition. If the main company Vizio is working on a global subcontracting model that requires economies of scale, such as high end retail television screens, the consumer could be seen to lose, depending on where the product is offered and how, due to lack of competition.
If the U.S. government required that flat panel displays sold in US had to also be made in US, this would be a sign of economic protectionism. On balance, protectionism may be good in the short term, but there are often serious long term drawbacks. The business value of outsourcing supply chain and systems operations to external companies in the current external environment is that the firms can save money and create value by not having to staff and maintain systems, or work on computer updates internally. The company can therefore save both time and money by outsourcing operations and maintaining few employees.
The example of Vizio can show the reader of the case a lot about the future of production in an increasingly integrated global economy, because outsourced solutions are more and more likely to be used. Relative to strategies in competitive markets, effective leadership is as important as ever. Those who are proponents of regulation would add that in certain situations, protection is necessary for the growth of industrial and technological capacity, if it is threatened by entrenched extra-national competition in a budding national field of production. Vizio also faces possible future risks: “Clients, most of them large American companies and financial institutions, felt newly vulnerable: given global tensions–and the prospect of war–did it make sense to have mission-critical applications humming away on computers in India, China, Russia, and other far-off lands?” (McCartney, 2003).
USA Flat panel market, ranking by market share—
#1Westinghouse, #2 Samsung, #3 Sony (US, 2009)
Due to the communicative style of his leadership, the founder was able to make Vizio a well integrated company that was still relatively small in terms of staffing. Therefore, the past contributed to present success.
Vizio TVs are currently selling at Target and other major retailers, with a 32” model averaging $449-$499.
The vast expansion in popularity of flat-panel monitors and televisions coincided with the US government’s end of regular analog network signals. At the time, millions of consumers upgraded to digital televisions. Vizio along with its competitors was able to reap this whirlwind.
Personally, I have negative feelings towards the Vizio brand. I was given a small Vizio LCD TV for my birthday last year, and it was defective. I was planning on using it as an external monitor for my computer, since I already had a large 40” Samsung flat-screen television. But when I opened up the Vizio to attach it to my computer, I was shocked to find out that there was no AC power cord. Therefore, it was useless. I didn’t want to offend the person who gave me the gift, either, so I just left it out by the curb for someone to pick up.
Boeing, Halterm, Lockheed-Martin
Devraj, Ranjit. (2003) Economy- Job Outsourcing Thrives Despite Criticism in U.S.
Global Information Network, p. 1.
McCartney, L (2003). A shore thing? Risk and reward have always been major factors in
offshore outsourcing. CFO Magazine.
US flat panel market (2009).