Strategic Outsourcing? The Philips Case in the LCD TV Market

Luiz Carlos Di Serio; Robson Dantas Bento; Guilherme Martins; André Luis de Moura Castro Duarte

doi:10.4067/S0718-27242011000200015

Authors

Luiz Carlos Di Serio
Robson Dantas Bento
Guilherme Martins Fundação Getulio Vargas (EAESP-FGV)
André Luis de Moura Castro Duarte Professor at INSPER – Education and Research Institute

DOI:

https://doi.org/10.4067/S0718-27242011000200015

Abstract

This work seeks to assess the outsourcing process adopted by Philips for producing LCD televisions. The authors used the Resource-based Theory and the Transaction Cost Theory for analyzing the case. Based on industry data and interviews with ten of the company’s senior executives, this study sought to understand how the decision making process was carried out and how it affected the company's activities in the field of LCD televisions. Philips has lost its competitiveness in the Brazilian market – it went from being the leader in 2006 to fourth place in 2009, both as far as regards its sales volume and value. The executives pointed out that the LCD panel is an important resource and that its supply by third parties represented a high transaction cost. The results illustrate the complementarity that exists between the RBT and TCT theories in a competitive environment that has few players.

Keywords:

Outsourcing
Resource-based Theory
Transaction Cost Theory
Case study.

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Author Biographies

Luiz Carlos Di Serio

Professor at São Paulo Business Administration School of Fundação Getulio Vargas (FGV-EAESP), Department of Production and Industrial Operations Administration.

Guilherme Martins, Fundação Getulio Vargas (EAESP-FGV)

PhD. Candidate at São Paulo Business Administration School of Fundação Getulio Vargas (FGV-EAESP), Department of Production and Industrial Operations Administration.

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