VIZIO Inc. Harvard Case Solution & Analysis

Proposed Course of Action

  • Strategic relationship with LCD and plasma panel providers

However, the best alternate course of action would be that Wang should himself meet with CEO of panel suppliers and meeting of Wang would put far more effect on the quality and prices of both types of panels. On the other hand, if Wang decided to ask Amtran (ODM) for meeting with panel providers in order to develop strategic relationships it would not work because higher management of panel suppliers, i.e. CEO, would not be willing to meet with lower management and the effect of meeting with lower management of panel suppliers would not effectively improve the quality of panels supplied because lower level management of panel suppliers cannot take the strategic decisions regarding the price and quality of product being provided.

  • High reliance on one original design manufacturers (ODM)

High reliance on one original design manufacturer (ODM) will potentially expose the Vizio to risk of failure to meet production targets within due time and appropriate alternate solution to this problem is that Vizio should distribute its procurement and assembly outsourcing service to more ODMs but in doing so, Vizio should make sure that any individual ODM should be given a significant percentage of total procurement and assemble services because if any of the ODM decides to discontinue provision of outsourcing services then Vizio will not have to be worried about it be majority of its will still be running through other ODMs. However, this is the only alternate that is feasible for Vizio because the other two alternates require significant amount of capital investment whether in the form of construction of factory building purchase of machinery and equipments or in the form of investment in joint venture with the next higher ODM but Vizio do not have access to sufficient funds therefore, these alternates are not feasible for Vizio.

  • Low Brand awareness and rumors

Since Vizio’s brand name is not well renowned and Vizio has not previously invested in marketing of its brand name in order to attract new customers, therefore, the best alternate will be to launch marketing campaign in order to create public awareness about the quality of components used in production of Vizio’s HDTVs. Meanwhile, the marketing campaign will develop the good will of Vizio brand and in this way brand conscious customers will be more attracted to buy Vizio’s HDTVs, meanwhile, Vizio has started investment in advertisement plan in 2007 by $35million but this amount is lower than amount spent by its competitors on advertisement activities, however, due to the budget constraints Vizio can spend the amount on marketing but the advertisement campaign should be focused on creating awareness for the good quality of components used in manufacturing of Vizio’s HDTVs. On the other hand investment in social causes will not help Vizio in creating awareness of good quality components used, therefore, in order to create awareness of good quality components advertisement campaigns should be used as it is the best alternate that is available.

  • Reliance on suppliers for working capital funding

However, in order to finance the working capital requirements Vizio’s reliance on credits received from suppliers can put the business operations to the risk of overtrading and in the long run Vizio will not be able to keep financing its increasing working capital through long credits periods from suppliers against payment of inventory purchased. Therefore, most appropriate alternative solution will be use bank overdraft facility or get bank overdraft facility and this facility will enable Vizio to fund its increasing working capital requirements. In addition, Vizio will have the option to repay the facility used whenever it has surplus funds available.

Implementation Plan

  • Low Brand awareness and rumors

Since the brand name of Vizio is being badly affected by the rumors regarding the quality of panels used in manufacturing of HDTVs, therefore, action must be taken on priority basis to address these rumors through effectively focusing the advertisement programs on quality of panels used. Moreover, Vizio should target the specific locality.......................................

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