Slide 1

AgendaCurrent State Assessment

Business Problem/Key Issues

Information Required

Recommended Strategies

2I. Current State Assessment3Major share from Mobile phones product segmentDisplay unit is a major component of the mobile manufacturing cost : 35-40% Delta, a top global manufacturer of LCD/LED display unit for mobile phones, has been a key supplier for 20 years Contract Manufacturer works on assembling Deltas LCD/LED display units and other parts, and sends the assembled Display Panel to Vizo for further application.About Vizo & its Value Chain Includes manufacturing, distribution and sale of communications and entertainment devices such as LED/LCD TVs, mobile phones, laptops, cameras, etc Complex manufacturing value chain owing to a multi-tiered structure spread across several regions Short Product life cycles High concentration of suppliers Multiple supplier partners ; Access to best in class technology for each componentGlobal Consumer Electronics Industry OverviewHome-grown high-tech, low-cost mobile phone manufacturers have increased their market share significantly in India. Indian Mobile Phone MarketVizo is a US based global manufacturer and distributor of consumer electronics, which is currently facing shrinking market share in India3II. Business Problem/Key IssuesBelow are some of the key issues faced by Vizo in the Indian Market resulting in loss of overall Market Share Overall surge in the number of local low cost /low-priced Smartphone manufacturers Recent innovations in Mobile Device supply chain has enabled rival products to come to market more quicklyCurrently product costs are higher than industry standards Display units alone make up for 35-40% of the total product costRising production and labor costs in China are additional concernIndian government introduced tariffs for electronic goods imported -with a 7% tax on handsets priced above US$33 (2,000 rupees), compared to locally manufactured products which are taxed just 1% Current supply chain includes inefficient way of transportation of equipment amongst DELTA, VIZO and Contract ManufacturerIn this supply chain setup, a high degree of coordination is required which increases the time to marketMuch of the supply chain remains uncontrolled by the firm due to highly dispersed activities in the value chain. This can lead to low responsiveness to changes in demand or disruptions in Supply ChainMaintaining quality control is difficult in such a supply chain modelKey IssuesCauses1234Increased CompetitionHigh Product CostsHigh Import Tariffs High lead time &Transportation CostsLoss of Control of supply chain54For further detailed analysis, we would require the following set of information5DataBrief DescriptionLevel/GranularityImport Tariff Cost of importing unit from China to IndiaPer Unit CostOther components of product costsBesides display unit what are the other costs involved in producing a mobile phonePer unit Cost structureOperating System costsIncludes licensing costs. Also some OS like Android can run on cheaper chip setsPer unit CostFirm Strategy /Supply Chain StrategyOverall company strategy differentiation or cost leadership ? Supply chain strategy ? Mobile Manufacturing Unit Supply chain Design, Coordination and ExecutionFurther information on procurement, logistics and transportationMobile Manufacturing Unit

III. Information RequiredIncreases responsiveness and time to MarketLower labour costs in India as compared to ChinaLower transportation costs and high co-ordination of value chain activitiesNo import tariffs

A. Manufacture and Assemble Locally in IndiaIncreased economies of scale in procurement

Production forecasts require less safety stock when certain purchase orders can be pooled together

Helps negotiate/bargain prices with suppliersC. Standardize components across product linesFacilitate agreements such that Contract Manufacturers can procure components directly from Suppliers Savings in transportation costs yet retain full control of qualityHelps in reducing inventory

B. Procurement of display unit directly by Contract Manufacturer IV. Recommended Strategies6Opportunity to reach out and market your brands to students from global B-schools D. Explore opportunity of outsourcing design to ODMs6