QUESTION
You have been asked by the World Electronics Industry Association to provide an Overview Report of the Flat Screen TV industry in theNetherlands, US, India and China (see group allocation table – for which country you are individually responsible for).
This Report should identify the most important current trends in the industry in your allocated country, including:
- What have been and what will be the consequences of continuing globalization on the industry in the particular country?
- What are the major economic trends and forecasts and what impact are they having now on the industry in the country and how will that change in the future?
- What are the major ecological and environmental challenges the industry faces in this country and how will these evolve and change in the future?
- What political, government and legal factors are important to this industry in this country and are these likely to change or evolve in the foreseeable future?
- How are technological advances influencing the development of this industry in this country and how do you expect this to change in the future?
- Do the key elements of the culture and society in the country have a significant impact or influence on the industry currently and is this changing?
SOLUTION
A Business Overview Report on
Flat Screen TV Industry of Netherlands
Flat Screen TV Industry Worldwide
The Flat Screen TV Industry is facing a bleak scenario almost world-wide with the global recession and euro-debt crisis taking a toll on consumer spending. According to DisplaySearch, the growth in TV market in 2011 was 4% year-on-year as compared to 32% year-on-year in 2010 (McGlaun, 2011). US flat-panel TV shipments are projected to dip for the first time in years to 37.1 million units, down by 5% (DrawBaugh, 2012). Even with newer technologies like internet and 3D coming up, there has been a lukewarm response by consumers especially because the TV market is nearing saturation. Most of the consumers of the developed countries like US, Canada, Japan and Europe have already replaced their CRT televisions with flat-panel televisions. Encouraging these consumers to trade their flat-screen TVs for hi-tech flat-panel TVs is a difficult task indeed (Grobart, 2011). 2010 was a good year for the flat-screen TVs. The new technologies like plasma and LCD came in at the point when digital broadcasting and high-definition shows became popular, thereby resulting in tremendous sales of these TVs.
Some of the major players in the flat-screen TV industry are Sony, Philips, Samsung and Sharp. Sony and Samsung are the leaders, while Philips and Sharp entered late into this market. This industry has all the characteristics of a global industry, with the companies operating in this industry mostly MNCs. While Sony is from Japan and Samsung from Korea, Philips is Dutch-based Company. All of these companies have their manufacturing units spread across the globe.
Flat Screen TV Industry Trends in Netherlands
Netherlands is a small and developed economy. The flat-screen TV industry in Netherlands follows the global trend, especially the trend in developed countries, with some peculiarities brought about by the socio-economic and political scenario as well as cultural factors. The industry has been examined with respect to these factors in the following paragraphs.
Impact of Globalization
Netherlands is one of the most open countries in the world. Although a late industrialiser, it has evolved into a diversified economy. As Netherlands is a small economy, it is proficient in certain niche industry sectors and not all. Moreover the limited home market has resulted in exports-orientation behavior. Globalization has affected the economy in a positive way, with large number of incoming and outgoing FDIs (Hogenbirk and Narula, 1999). Globalization opened up new markets for exports for Netherlands. Its proficiency in industries like manufacturing has resulted in high trade volumes over the years.
In the TV industry, Philips is the Dutch-based electronics giant, although Globalization has opened up the Dutch television market to outside MNCs like Sony and Samsung. Globalization has also enabled Philips entry into other emerging markets.
While discussing about the impact of Globalization on flat-screen TV industry, the major impact is on the export side with very little impact on the domestic market.Although the global recession and euro-debt crisis have dampened the spirits of US and Europe, the emerging economies like India, Asian and African economies present a desirable market for flat-screen TV industry. Newer technologies as well as the normal LED and LCD and plasma TVs have lower penetration in these markets; and hence opportunities for greater sales in these countries exist. However, the saturated Dutch TV market is not going to be affected in this bleak economic period. In future, provided sturdy economic conditions arise, newer technologies may stir the demand for the new-age flat-screen televisions.
Economic Scenario and its Impact
Netherlands has fallen into recession according to the recent press releases and news updates. Netherlands’ economy shrunk by 0.7% in the fourth quarter of 2011 (BBC). According to a recent press release by the CentraalPlanbureau(CPB) , the outlook for the Dutch economy depends on how the European debt crisis progresses and how it is handled. With the assumption that the debt crisis persists, the CPB has given a forecast that the Dutch Economy will shrink by 0.5% point and unemployment will rise by 90,000 persons. Household consumption declined 1.8 percent in the fourth quarter of 2011 from the previous year.
The bleak economic scenario is going to have a negative impact on consumer spending, especially on luxury spending. The Dutch, traditionally known to be frugal, will be cautious with their spending in these turbulent times. Even if the prices of the TVs are slashed down, there is very less probability of volume of sales picking up. Moreover the flat-TV market is saturated in Netherlands; thereby the future of flat-panel TVs looks bleak in the country.
Social and Cultural Factors
The Dutch have some unique socio-cultural behaviors. They are reserved, and artistic people who like to indulge in music and arts. Dutch are inherently frugal. It is acceptable to save money; while extravagant spending is frowned upon (Countries and Their Cultures). At the times of economic crisis, the Dutch people prefer to live a laid-back life, having long breakfasts, catching up with family and friends, going on walks etc.
The above discussion on Dutch culture gives a fair prediction of the trend of flat-screen television industry in this time of economic crisis. Global economic recession of 2008-09 and euro-debt crisis have resulted in Netherlands falling into recession. At this time of crisis, when the Dutch people cut back on even necessary goods, it is highly improbable that they will buy flat-screen TVs. The sales of flat-screen TVs are bound to dwindle in this period, with hopes of recovery in case the economic situation improves.
Political Factors
Dutch Government has always been very encouraging in matters of international trade. Due to the open attitude, Holland is one of the few economies with the largest incoming and outgoing FDIs. The political scenario in Netherlands has been quite stable, with a bit of unrest in the recent times due to economic crises. Public confidence in the Government has been dwindling due to the inability to handle economic crisis situations (Bovens, 2008). The political unrest may result in re-elections, and few uprisings and strikes. However, the political scenario will have little or no impact on the flat-screen TV industry in Netherlands.
Environmental Factors
4000 tons of nitrogen triflouride is used each year in the production of flat screen TVs (Alter, 2008). Nitrogen triflouride is 17,000 times dangerous than carbon dioxide. Research shows that flat screen TVs are adding to growing concern of global warming. Nitrogen triflouride is also called ‘missing greenhouse gas’ because it is not covered under the Kyoto Protocol (Udell, 2008).
Dutch People are very environment-friendly. Their inherent nature lies in protecting the environment. Netherlands is one of the few countries whose number of bicycles out-numbers cars. Dutch peopleprefer walking and cycling to using cars. Windmills have been a part of Holland since early days.
As the problems of global warming persist, it is very likely that Nitrogen triflouride will be very soon included in the list of greenhouse gases; and awareness about the disadvantages of flat-screen TVs will be created. Then there is very high probability that the Dutch will be very quick to disown the flat-screen TVs and stop buying newer flat-screen televisions. California Government has already put a ban on flat-screen TVs (Quinn, 2009). Environmental factors are bound to play a detrimental role in the growth of this industry in the future.
Technological Advancements
The flat-screen TVs took the world of television by surprise and were tremendously popular. Now, the flat-screen TVs bought 5 years ago seems to be outdated in front of the gamut of technologically advanced flat-screen TVs. There has been continuous innovation in this field with the most recent being 3D televisions. 3D televisions have not stirred up the market interest they could have due to poor economic conditions. LED TVs have been another addition to the world of LCDs and Plasma. The big manufacturing companies are now talking of making TVs which will be one-stop solution for entertainment. These TVs will have internet-accessibility in them. The Flat TVs come in different sizes, with home-theatre experiences.
Considering the impact of Technological Advancement on TV industry in Netherlands is not simple. Although tech-savvy newer generations may go and buy the technologically advanced TV sets, the majority of the Dutch population, given their reserved and frugal nature, may stick to their original flat-screen TVs. Philips, the Dutch electronics giant, is closing down its production of flat screen TVs, and the production will be shifted to a joint venture with TPV Technology (Larsen, 2011). This is basically because of dismal sales and profits in this business.
Conclusion
The future of flat-screen TV industry in Netherlands does not look very promising. With the country in recession, it will be at least 5 years before the condition returns to the earlier affluence. These 5 years or so will see conservative consumer spending. The culture of the Dutch people is more in favor of Art, Music and Nature. Flat screen TVs may find a lukewarm market to grow in. With tabs on greenhouse gases on the rise, flat screen TVs also pose the threat of being banned in this environmental friendly country.
References:
Alter, L. 2008, ‘Flat screen TVs worse for climate than a big coal plant’, treehugger, Accessed on 27 April 2012, Available at http://www.treehugger.com/clean-technology/flat-screen-tvs-worse-for-climate-than-a-big-coal-plant.html
BBC, 2012, ‘Europe Economy: Recession hits Italy and Netherlands’, BBC News Business, published 15 Feb 2012, Accessed on 27 April 2012, Available at http://www.bbc.co.uk/news/business-17037747
Bovens, M. 2008, ‘Deciphering the Dutch drop: ten explanations for decreasing political trust in the Netherlands’, International Review of Administrative Sciences, Accessed on 27 April 2012, Available at http://ras.sagepub.com/content/74/2/283.abstract
Countries and Their Cultures, The Netherlands, Available at http://www.everyculture.com/Ma-Ni/The-Netherlands.html#b
CPB, 2011, ‘Estimate December 2011: economic outlook in 2012’, CentraalPlanBureau, Accessed on 27 April 2012, Available at http://www.cpb.nl/publicatie/decemberraming-2011-economische-vooruitzichten-2012
Drawbaugh, B. 2012, ‘Flat-panel TV shipments to fall for the first time ever in 2012?’, in Engadget of TechCrunch, Accessed on 27 April 2012, Available at http://www.engadget.com/2012/03/28/flat-panel-tv-shipments-to-fall-for-the-first-time-ever-in-2012/
Grobart, S. 2011, ‘A Bonanza in TV Sales Fades Away’, The New York Times, published 5 Jan 2011, Available on http://www.nytimes.com/2011/01/06/technology/06sets.html
Hogenbirk, A. and Narula, R. 1999, ‘Globalization and the Small Economy: The Case of the Netherlands’, in Globalization and the Small Economy, Edgar Elgar, 1999, Available at http://www.merit.unu.edu/publications/rmpdf/1999/rm1999-002.pdf
Larsen, R. 2011, ‘Philips to stop own production of flat panel TVs’, FlatPanelsHD, Accessed on 27 April 2012, Available at http://www.flatpanelshd.com/news.php?subaction=showfull&id=1303112824
McGlaun, S. 2011, ‘2011 Flat Panel TV Growth to Plummet 50%’, DailyTech, Accessed on 27 April 2012, Available on http://www.dailytech.com/article.aspx?newsid=21516
Quinn, R. 2009, ‘California Plans Ban on Power-Guzzling TVs’, newswer, posted 29 Oct 2009, Accessed on 28 April 2012, Available at http://www.newser.com/story/72804/california-plans-ban-on-power-guzzling-tvs.html
Udell, E. 2008, ‘Your Flat Screen has (Greenhouse) Gas’, These Times, Accessed on 27 April 2012, Available at http://www.alternet.org/environment/95111/your_flat_screen_has_(greenhouse)_gas/
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