Vizio Inc Case Solution

1. Why was Vizio able to build such a large business in such a short period? What are the key strategic choices made by Wang and his team in driving this success? (The student describes clearly Vizio's strategy, its business model, and its partner's ecosystem. The student clearly explains the market opportunity and how the company was able to build a low-cost position (provides 4 examples linking to suppliers, partners, inventory, reputation, and logistics)

Wang saw a gap in the market: companies were charging too much for a flat-screen TV. With Vizio, he envisioned more value for money as his projected retail price was around $5000 lesser than the prevailing prices. He used his past relationships to secure the supplies of critical components. Periodic and frequent formal and informal meetings were held to discuss tactics and strategies to ensure that the end product was of high quality and reached the retail outlets on time. Wang was very well-acquainted with the owner of Amtran, and Vizio contributed to around 80% of Vizio's business. This bonding also helped Vizio in getting financial support as Hon Hai and Amtran possessed 31% ownership in the company, and with these funds, Vizio could hire more employees, increase its product lines and expand its retail footprint. Vizio placed its products in discount centres like Costco and Walmart BJ's, which were happy with a gross margin of up to 10%, another reason for its competitiveness. 

These centres were huge warehouses that allowed Vizio to place its boxes on the floor containing crucial marketing information. Third-party logistics companies held Vizio's inventory, so there was no burden on Vizio regarding the carrying and return costs. It was also able to secure credit insurance and working capital from its partners because of its high credit rating, concrete customer base and high inventory turnover. Vizio operated on low gross profit margins and few overheads, including limited employees and inventory. Low inventory resulted in big price savings because the panels' prices decreased monthly. Vizio's customer-friendly policies, including call centres and return policies, were crucial in forming a reliable brand image. In-house warranty was another feature that helped customers save money because they didn't have to pay to bring it to the service centre if it needed repairs. 

2. How profitable was Vizio at the time of the case? (The student analyses the business model in financial terms. The student is able to identify the financial information to calculate ROE and operating profit to explain the business profitability.)