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

Lack of Brand Identity in

Developed market

Cultural adaptations
Positioning & Differentiation
Risk taking
Long term perspective
CSR
R&D
Local market capture
Cost efficient production
Developing/Emerging Markets Global players
Developed Markets

Local Players

USA 14 awards design &

Korean players

LG - in India
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 airconditioners & washing machines
and small screen televisions

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

LG - in China
Building Manufacturing Base
Low labour cost in mfg
Building an export hub for global
market

Local Employment
Allowing local employees to take
decisions and respecting all such
decisions with the view of
building a national image

Building a strong presence across

the country

Local Chinese managers to run

the business
Investment in R&D

Investment in R&D
Training local employees

Becoming "National Pride"

"I Love China"
campaign during the SARS crisis
free masks distribution.

Design localization to fit the

existing demands

Establishing itself locally through

event sponsorships like launching
schools, offering scholarships,
founding hospitals, etc

LG - Brazil
Setting up facilities in under
Benefits over costs
developed areas and gain free tax Easier re-gaining of the market
Understanding market support of
Retaining and expanding its
football teams Sao Paolo
existence despite lowering
Service differentiation
exchange rates
Local Team implementation
Customization of products to suit
local needs
Offering three years warranty and
service
Local distributors and retailer
building

and 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 Cs of the culture
Knowledge
Behaviour
Values & attitudes
Preferences
Adaptation