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LG case Group 5
Rohan Chakravartyon 6 October 2012
Transcript of LG case Group 5
23 billion USD company with USD 500 million as Gross margin
Well established in BRIC.
USA 2006 – 14 consumer design award
New dimension to claim stake in developed market
Africa, Middle East - untapped markets
Decline in revenue and profit posted a challenge
Revenue model of the countries?
Questions? What would LG have to do in order to breach established market such as US & Western Europe where global players are active.
Would the lessons learnt in the BRIC countries be helpful in making the transition from emerging to developed markets.
What were the implication for its global strategic positioning.
Position in BRIC
Long term perspective
Local market capture
Cost efficient production
Lack of Brand Identity in Developed market
Positioning & Differentiation
Strengths Weaknesses Oppourtunities Threats Developing/Emerging Markets
USA 14 awards – design & creativity
LG - in India Customer Satisfaction Mobile van in place to reach remote areas on short notice
Walk in-after-sales service concept according to which repairing crew could reach inaccessible remote areas quickly
Brand promotion LG tried to create brand awareness in the local market by playing to the sentiments
Becoming key sponsor of Cricket World Cup, bringing in Indian celebrities to endorse the brand
Local Recruitment Apart from a few top Korean officials, most of the employees were locals
Decision making power was vested in the local managers unless a invest & annual target that were sent across to the head-office for approval
CSR Emphasized compassion and social welfare in all its initiatives
Medical clinics for employees; setting up village schools for children and providing books
Product Customization Product variations and the unique demands of the local Indian market
Television sets with Golden Eye technology and inbuilt videogames and air-conditioners with dust filtering mechanism
Product Innovation Recognized that there was big potential to be tapped at the lower levels of the pyramid
Instead of lowering prices, LG decided on introducing a whole new range of products
Rural market suited air-conditioners & washing machines and small screen televisions
Distribution Lack of infrastructure were major roadblocks in the path of increasing the distribution network
Adopted a 3-tier approach wherein the Regional Distributor overlooked tier 2 & 3 cities
Bricks-and-mortar strategy along with online channel formed a cohesive network
LG - in China Building Manufacturing Base Low labour cost in mfg
Building an export hub for global market
Building a strong presence across the country
Local Employment Allowing local employees to take decisions and respecting all such decisions with the view of building a national image
Local Chinese managers to run the business
Investment in R&D Training local employees
Design localization to fit the existing demands
Becoming "National Pride" "I Love China"
campaign during the SARS crisis free masks distribution.
Establishing itself locally through event sponsorships like launching schools, offering scholarships, founding hospitals, etc
LG - Brazil and Russia Setting up facilities in under developed areas and gain free tax Retaining and expanding its existence despite lowering exchange rates Customization of products to suit local needs Offering three years warranty and service Local distributors and retailer building Benefits over costs Easier re-gaining of the market Understanding market support of football teams Sao Paolo Service differentiation Local Team implementation Brazil Russia Import products from outside Russia Suitable products hot and cold air-conditioning, R&D set up New Product Line and investment of Global Players Setting up new facility near capital moscow due to local restraints Local Sports brand awareness Understanding Markets NM logo approved by the Govt Political Support Challenges for the Developed Market
Competition between big players to gain maximum market share
Already established players in the market
Intensified market competition
Improvement in competitiveness
European design favoured in white goods
Shift of advantage to software
Strategy Emerging Market
Market study for finding the reason behind success of its existing competitors
Continue with the current approach
Building trust in the local market by employing local talent
Local R & D investment
Nation wide distribution channel
Focus on customer support and after-sales service
Brand awareness by associating itself with popular activities like Sports and national importance days.
CSR activities to be continued with similar approach
Market expansion with tier price system in rural areas for more penetration
Managing JV in emerging markets is very critical
Launched a sizeable branding campaign
Done away with commodity-related name of Goldstar in USA
Range of high-end TVs introduced
Won 14 awards for excellence in design and creativity in CES, 2006
LG CDMA phones outsold all other competitors for successive 2 years
Redefining industry boundaries
Focus more on high-end products
Unchallenged market space the only feasible option
Innovation in terms of portable electronics
Developing in terms of green products
Emerging market strategy in Russia & China
Brand positioning in USA
Market entry strategy in Europe
Capture the market in Middle east & Africa
Repositioning the existing EMERGING markets to strengthen the position
Continue with CSR activity
M & A –Plan if required
Through engineering marvel and high level R&D product to be built.
Creating a Global brand
Keep pace with KOREAN & Global players
Leverage 5 C’s of the culture
Values & attitudes