Lcd Panels

Table Contents

1: Introduction……………………………………..pp 3-4

2: Background to the decision………………….….pp 4-8

3: The foundation of the joint-venture S-LCD……..pp 9-15

4: The Overall Success…………………………….pp 16-17

5: Recommendations………………………………pp 17-18

References…………………………………………pp 19-20

1: Introduction

We would like to discuss a joint - venture event, which initiated in 2004 undertaking by two hi-tech giants: Sony corp. and Samsung Electronics Co. They collaborated in the production of seventh-generation liquid crystal display (LCD) panels. The companies invested $ 1.8 billion (2.1 trillion won) in a new entity called S-LCD, they described that it would be a win-win joint venture for which the parties will share 50-50 the profits.

The two companies

SONY

Sony is a leading manufacturer of audio, video, communications, and information technology products for the consumer and professional markets. Its music, motion picture, television, computer entertainment, and online businesses make Sony one of the most comprehensive entertainment companies in the world.

However Sony had been in difficult times, struggled to compete with rivals and failed to revive for a period of time. For example Sony had been left behind due to the miss out in the MP3 players’ business, which yielded opportunity for Apple Computer Inc. with its iPod, have won beautifully in MP3 players markets.

Sony had been strived to turnaround its position within the industry, however it was not easy due to tough rivals existed and new players emerged in the markets and they’re all played to win.

SAMSUNG

Samsung is also one of the world’s leading players in the electronics industry, specialized in the productions of such as CDMA cell phones, LCD monitors and memory chips, Samsung’s technology has improved dramatically in recent years. An executive from Samsung had been assigned to be the CEO of the joint venture, Frauenheim (2004) reports that it is a sign of Samsung's growing strength and Korea's arrival as a tech powerhouse.

The joint venture allowed the two companies not only in making profits, but more importantly to combine and enhance strengths of them in order to compete in the marketplace, also a priceless opportunity for them to learn from each others. It is undoubtedly that Sony has got reputation in quality, but unfortunately it failed to follow market trends. On the other hand, Samsung was very successful in keeping its position, Samsung was described as one of the nimblest players in the business because of its exceptional performance, and especially it has been working hard to collaborate with global partners and doing a lot of better jobs in technologies.

2: The Background to the decision

Product Development

Market demand --The ‘Promising’ LCD

In order to concentrate resources and capabilities of each other, the two giants have come together collaborating mainly in LCD technologies, aimed at producing more advanced product lines that could be able to compete with various rivals, pressuring Sony-Samsung in making better LCD products to the market.

The LCD TV market is expected to grow at an annual rate of 19 per cent during the next four years to $93bn in 2010, according to market researcher DisplaySearch.

Moreover, LCD panels were in short supply last year, and prices rose for LCD monitors, the demand of which was expected to soar continuously, Sony-Samsung sought for alliance in order to boost production as it is believed flat panels will become the global mainstream for TV sets in the near future.

LCD televisions used to represent a small fraction of the overall TV market; however the rapid growth in demand stressed manufacturers taking actions to move nimbly into a lucrative business.

Competitive Rivalry

Market share and Industry position

It is very apparent that the huge market potential of LCD panels has been one of the Sony-Samsung’s major motives for going into joint venture. The two companies saw how vast the market would