RAMAIAH 5T h e b r e a k u p o f p r o d u c t i o n i n t h e i n d u s t r y i s s h o w n b e l o w : 1950s Radios -imported & Sold Late 1960s B&W TV Transmission started 1970s Manufacturing of B/W TV started

ted 1982 Colour TV Transmission, Manufacturing of CTV started 1992 Economic Liberalization Process initiated

v a r i o u s

s e g m e n t s

1993-94 Dismantling of controls such as licences,Ban on use of Foreign Brand Names etc. 1994-95 Entry of MNCs Panasonic, Sony, LG, Samsung etc.Lowering of Import duties.Cable TV Started. 1995 Till Date Entry of Many MNCs & Rapid Growth,Continuous Lowering of Import Duties 2001 Non tariff Barriers on Imports removed. 2004 Free Trade Agreement (FTA) with Thailand implemented,Resultingin reduction of import duties to 0% on Colour Television sets,Colour Picture Tubes, Refrigerators and Air Conditioners, thusmore competition. 2005 DTH Services Started 2007 Entry of Organised Retail 2008 FTAs with other countries & FDI in retail likely.

RAMAIAH 6 2. C URRENT SCENARIO The consumer durables market in India is valued at US $ 4.5 billions currently. In2008, microwave ovens and air conditioners registered a growth of about 25%. Frost-free refrigerators have registered significant growth as many urban families arereplacing their old refrigerators. . Washing machines, which have always seen poor growth, have seen reasonable growth in 2006. More and more Indians are now buying electrical appliances due to change in electricity scenario. The penetrationlevel of color televisions (CTVs) is expected to increase 3 times by 2008.On the brick of rapid economic growth, India has witnessed the dynamic change incountry's consumer electronics industry.In last few years the industry has beenwitnessing significant changes in retail boom, growing disposable income andavailability of easy finance schemes. One electronic gadget that has brought newrevolution in Indian Electronic Industry is Television Set. Today, India is fastemerging as the key driver in the global television market both as a manufacturer andconsumer. In recent years, the market for televisions in India has changed rapidlyfrom the conventional CRT technology to Flat Panel Display Televisions (FPTV).Currently, the split between CRT and FPTV is around 97% and 3% respectively. Inaddition to this, one of the most striking changes sweeping across the colour television market in Indian market is the exponential growth of the flat paneltelevision (FPTV) market, in common parlance called the liquid crystal display(LCD) and plasma televisions. Moreover, as per recent research data available, theglobal market for FPTV is expected to grow from 51 million units in 2006 to 127million by 2009.

RAMAIAH 7Looking at the present scenario, over the last couple of years, the LCD prices haveeven dropped by around 30 per cent annually. Some of the important factors that boasted this growth also include the increasing awareness of the advantages of LCDtelevisions, the growing availability of the product across dealer counters and theFinance

schemes in the market. Besides this, as a manufacturing hub, the televisionindustry is improving more and more. There are many domestic and MNC companiesthat have increased their production bases in the country. Easy availability of low-cost skilled labor and the emergence of SEZs, which are tax-free zones are some of the key factors that have resulted in growth of these manufacturing units. In fact,encouraged by tax-breaks, new manufacturing units are coming up in less-developedregions now.Today, India is one of the few emerging countries to have an excellent componentsupply base in terms of manufacturing facilities for glass andcolor picture tubes, so ithelps it a good choice for all those companies who are looking to take benefit of thisemerging market.In present scenario top player for colour television are LG VIDEOCON SAMSUNG SONY ONIDA PHILLIPS SANSUI BPL

RAMAIAH 8 3. INDUSTRY ANALYSIS- 5 FORCES MODEL Michael Porters Five Forces Model provides a robust and time-tested framework for analysing any industry, reflected in the strength of the five forces (industrycompetitors, potential entrants, threat of substitutes, power of buyers and power of suppliers). The collective strength of the five forces determines the ultimate profit potential in

an industry,Where profit is measured in terms of long-term returns on capital invested. Theelements of each of the above forces and the extent and /or effect of each element inthe context of the television industry have been analysed and enumerated below.The Porters Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand boththe strength of your current competitive position, and the strength of a position yourelooking to move into. With a clear understanding of where power lies, you can takefair advantage of a situation of strength, improve a situatio

, several other factors-industry growth, concentration and balance, corporate stakes, fixed cost, and productdifferences need to be analysed to determine the extent of rivalry between theexisting Players. 3.2The threat of potential new entrants (low) High capital required entering into television industry, which needed large investmenton technology, distribution, service outlets and plant. Difficulty for customers inswitching cost, when they are satisfied with their current product as well as difficultlyfor new entrants to have product differentiation because customers had alreadyfamiliar with those established consumer electronics companies, therefore newentrants have to spend a lot on branding and customer knowledge. It is difficult toobtain a license; successful applicant has to undergo through a form of competitiveevaluation, such as a comparative evaluation process.Threat of entry is determined by the entry barriers, which act to prevent new firmsfrom entering the industry. A lower entry barrier makes it difficult for the existing producers to remain profitable for long. When profits increase, additional firms willenter the market to take advantage of the high profit levels and over time drive down profits of all firms in the industry. When profits decrease, some firms will exit themarket, thus restoring the market equilibrium. Barriers to entry arise from severalsources: 3.2.1 Access to Distribution Channels A strong distribution network is absolutely essential to compete in this industry. Notonly does it guarantee a country wide reach for a companys products but is alsonecessary for providing good after sales service.Videocon has implemented ERP system, which helps in integrating themanufacturing, marketing, procurement and distribution services with the corporateoffice

RAMAIAH 13LG Electronics sells in 1800 towns and cities with a population of 1,00,000 andabove.Samsung also has a widespread service network, which includes 123 exclusiveservice centres and 200 distributors in any town with more than 1 lakh population.All BPL dealers are linked via VSAT nodes, ensuring online availability of information on inventory status and sales movement.Distribution hence is difficult and costly as established firms dominate distribution.Large incentives are required to gain entry into the distribution channels and further gain recommendation to retailers from the dealers. 3.2.2 Brand Salience With little product differentiation and parity products, it is imperative that distinctimages are created in the minds of consumers through positioning and brand building.MNCs have been able to compress the cost of brand building by amortising the costof sponsoring international events across a larger footprint straddling multiplecountries. 3.2.3 Capital Investment and Economies of Scale Television industry is capital intensive and players have made huge investmentsin putting up state of the art manufacturing facilities. Videocon has sevenmanufacturing site in India Sony India had a production capacity of 300,000 CTVsets with capacity utilisation of 66%. Samsung is investing $4 mn to expand its CTVmanufacturing capacity at Noida to 800,000 units per year. The existing capacity of the plant is around 600,000 units. Other players like Mirc Electronics, LG have alsoset up manufacturing facilities in India. The market players need sales volume toachieve economies of scale, which is difficult because of large number of competitors. Apart from investments in manufacturing the industry requires hugeworking capital to manage inventories.

RAMAIAH 14Supply chain mgmt. and inventory management thus becoming crucial toDetermining profitability. With regard to sourcing funds, MNCs are better placed Than their Indian counterparts as they manage to get funds from their parent Companies at lowrates of interest. Huge capital requirement thus can act as barrierto entry. 3.3 Threat of Substitutes goods (low) In Porters model, substitute products refer to products in other industries.there is fewsubstitutes from other industry if any. Most of them seem to be obsolete or have onefoot out of door. Internet though emerging as an infotainment medium is very low in penetration. Moreover the industry has responded to the future threat by introducing aTV that can provide functions of the Internet along with regular features, e.g., BPLdigital that includes Internet and cellular facilities. 3.4 bargaining power of Buyer (high) The power of buyers is the impact that consumers can have on a producing industry.Buyer power influences the prices that a firm can charge. Buyer power is influenced by various factors as follows: 3.4.1 Buyer Concentration The industry is akin to consumer durables whose end users are fragmented. Hence buyers do not have any specific influence on producers. 3.4.2 Buyer Switching Cost The cost incurred by consumer in switching from one television brand to another is practically zero. Brand loyalty is low. Hence the companies cannot rest on their laurels and have to be on their tenterhooks to retain the customers. 3.4.3 Price Sensitivity Market is highly price conscious and promotion driven. With the onslaught of V IDEOCON s major price cuts and promotional schemes, this market has now becomea promotion driven one. To successfully compete in this industry, even premium players like Sony, LG have had to come up with schemes. LG and Philips have

RAMAIAH 15Been the most aggressive amongst industry leaders as far as pricing isConcerned and hence their realisation shave been lower than industry average.Industry leaders like LG focus on low- medium priced CTV, while Samsung hasMoved gradually towards higher priced CTVs. The domestic high-endCTV prices will follow the global price trend of declining prices. However, thePrices of domestic products would be higher than those of global products dueTo negligible demand in the domestic market and hence most likely to be metThrough imports. market is highly price sensitive as theDemand has increased with fall in prices. 3.5 Bargaining power of supplier (low)

In television industry, there is low bargaing power of Suppliers because big globalsupply chain management.there is direct negotation with supplier in order to encourgereliable supply, faster delivery and lower price. Bargaining power influences the costand quality of input material. Higher supplier power raises the input cost, therebyreducing the industry profitability. The most critical component in manufacturingtelevision is the picture tube. It constitutes around 50% of the cost of television.While Black and White picture tubes are made in India, many manufacturers stillneed to import colour picture tubes.The other important components include electronic circuit boards, tuners, high-tension transformers and moulded plastic casings. The demandFor colour picture tubes (CPT) has been rising steadily. But at the same time owingTo customs and import liberalisation, they had to face competition from importsDuring1993-1997. A sharp reduction in import duty from 85% to 40% between1994-96 and further down to 20% by 2004 was announced to gear the manufacturersof picture tubes to face competition from foreign players. As a result of s