William Wang, CEO of VIZIO, Inc., was proud of his company’s success in providing affordable flat screen TVs. Since its founding in 2002, VIZIO had grown to over $2 billion in revenue and was one of the top three flat panel TV brands, along with Samsung and Sony. Faced with intensifying price pressure from the industry leaders and an unprecedented economic recession, Wang wondered how VIZIO could best sustain its growth and finance its business.
Read and answer the following 4 questions:
Why was Vizio able to build such a large business in such a short period of time? What are the key strategic choices made by Wang and his team in driving this success?
How profitable was Vizio at the time of the case?
What are the potential threats to Vizio’s ability to sustain its success going foward? How concerned should Wang be about these threats?
Should Vizio expand globally? If so, where and how?
Calculate ROE for 2019 and 2020 by decomposing ROE into three components Profit Margin, Asset Turnover and Financial Leverage a) ROE = Profit Margin X Asset Turnover X Financial Leverage b) Profit Margin= Net Income/Sales c) Asset Turnover = Sales/Total Assets d) Financial Leverage = Total Assets/ Total Stockholders’ Equity
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