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| Words: 2065 | Submitted: 31-Jul-2012
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DescriptionDiscussing the joint venture of TCL Multimedia and Thomson SA
TCL was founded in 1982 as an audiotape manufacturer. Unlike foreign multinationals that targeted customers in China’s wealthier provinces, TCL built national coverage. They expanded only into locations where local government policy made it advantageous to do so. The TCL corporate structure was complex. In late 2003, China based TCL Corporation (TCL) and France-based Thomson SA formed a joint venture under the name TCL-Thomson Electronics Corporation (TTE). TTE's core product was television sets which were sold globally. It also produced computers which were sold only in China. The impulse to an international brand was when TCL Group Chairman Li Dongsheng, participated the Shanghai Fortune Forum, an event attended by CEOs from over the world, realized that TCL would only survive the market if becoming a world-class enterprise with a significant role on the international business platform . At this time time, a price competition among domestic TC makers broke out and industry profit margins had been shrinking rapidly. TCL multimedia has a decrease of 16% in net profit in 2000 and 32% in 2001. TCL took He was analyzing the results of 2004 Net Profits were down at 51% despite a 69% annual increase in turnover to HK$26 billion. Already a leading consumer electronics manufacturer within China and begun to internationalize its television production in 1996. The acquisition of TCL through a 67%-33% joint venture, gave TCL access to European and North America markets. The deal also forced to TCL to consider how to strengthen its technical and competitive position. It was agreed that televisions made by TCL-Thompson would be marketed under TCL branch in Asia and the Thompson and RCA brands in Europe and North America. The problem encountered by TCL is how to bring TCL supply-chain efficiency to Thompson. In addition, there is a compensation gap; problems reportedly included linguistic barriers and unexpectedly high costs in European operations. We recommend that TCL should differentiate their products from the competitors to remain competitive, attract customers and finally to secure profitability. They should still rely on an efficient supply chain, fast production-cycles and competitive prices, a reliable after-sales service and strong relationships to retailers.
TCL should formulate a new strategy called “developing the best products, providing the best services and creating the best brand name” and set up a working team for “strengthening international competitiveness (TCL Corp 2006). The main motive of TCL’s going international has been to explore new sales pools in order to develop themselves.
The case discusses the rationale for the formation of this joint venture. It highlights the problems faced by TTE and details the reasons why it failed to achieve ...
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