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LG case Group 5

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Rohan Chakravarty

on 6 October 2012

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Transcript of LG case Group 5

Case Study Overview : Brief on LG
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.

SWOT Analysis

Position in BRIC

Cultural adaptations

Risk taking

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

Developed Markets

USA 14 awards – design & creativity
Global players

Local Players

Korean players
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

Brand consolidation

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

Developed markets
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

Way Forward
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

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