Liquid Crystal Display

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 be if they dominate the LCD markets. Meanwhile Sony-Samsung's competitor LG-Philips, which was another alliance undertaken by LG and Philips, other aggressive rival such as Sharp, was investing US$839 million in 2004 to triple LCD production capacity at a new factory and moreover IPS Alpha Technology Ltd., a joint venture that the Hitachi, Matsushita and Toshiba, was also preparing to launch LCD production in respond to competition and market demands.

The Sony-Samsung joint venture allowed the two leading hi-tech companies in paving the way to become leadership in a rapidly-growing market, and certainly they strive for a long-term position. It is especially true for Sony as it fell behind rivals in LCDs, the joint venture was a way for it to ensure a stable panel supply for its newer TV models.

Collaboration of Resources and Capabilities

Sony had been struggled to compete in various areas as it neglected to develop such as MP3 and LCD flat-panel technologies. The joint venture with Samsung was Sony's strategic movement to get back a place in the television market, which is an important area that Sony used to control in the industry for decades during the analog age , according to businessweek.com.

The combined experience & knowledge

Sony was inspired to cooperate with Samsung as it understood its weakness in LCD technologies and saw Samsung's strength in such area. It was a great opportunity for the two companies to work together in expanding their capabilities, and invariably they've got to be relied on each other's strengths. Analyst said that this venture should put Sony in a position to leverage Samsung's technology and meet the current demand for LCD monitors.

Needless to introduce more about Sony's status in the electronics & entertainment industry, despite struggling in