Monday, February 06, 2006

Sharp has rapidly carved out a niche for itself in the LCD TV market

Sharp Inc. has taken larger electronics companies by surprise by carving out a 23 percent share of the LCD market and becoming a market leader in a very competitive market.

Its latest product to build on its lead in the sector is a 65-inch Aquos LCD TV. Under Katsuhiko Machida’s tenure, Sharp has raised its profit margin to 5.9 percent, the highest among Japanese electronics producers for the fiscal year ending March 2005.

With sales of $2.5bn, the company enjoyed profits of $715 million. Machida. Sharp’s fourth president says he has benefited from the advice of his original predecessor, Tokuji Hayakawa, who counseled: “Create products that others will strive to imitate”.

When Machida took over a Sharp, he scaled back its semi-conductor business and took an enormous risk by investing 75% of the company’s annual capital outlay into a state-of-the-art LCD production facility, the only such plant to produce and assemble LCDs from beginning to end. Machida did this to avoid the worldwide practice of manufacturers to outsource, because he sought maximum quality control assurance. He later decided to expand the screen width from 40 inches to 45 inches.

Between World Cup Soccer Tournament in 2006 and the upcoming 2008 Olympics in Beijing the LCD sector is expected to see double-digit growth.

It flies in the face of conventional business practices to manufacture start to finish in a developed country but Machida believes he can maximize profits by managing tighter control over the entire process. If you can take an unconventional strategy and make it work, you’ll build a stronger business.

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