strategy analysis of lg

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Strategic Analysis of

Presented By:Sarthak Omer (PGSF1443)

Shruti Jain (PGSF1445)Shubhanshi Rathore (PGSF1446)

Shweta Singh (PGSF1447)

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Introduction

The company was originally established in 1958 as Goldstar, producing radios, TVs, refrigerators, washing machines, and air conditioners.

The L.G group was a merger of two Korean companies Lucky and Goldstar.

It is the second largest producer of television and third largest producer of mobile phones.

It has a workforce of 83,000 people working in 119 locations around the world.

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Vision LG’s Vision is to become a worldwide leader in digital that ensures

customer satisfaction through innovative products and superior services.

Mission– To create value for customers.– To respect human dignity.– To become best in its field.

Vision and Mission

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Corporate Social Responsibility

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Product line

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• Political analysis: In LG electronics political analysis includes: High import duty, digitalization in India, government intends to promote local manufacturing, plants in tax incentive and export promotion schemes of the Indian Government.

• Economic analysis: In LG electronics economic analysis includes: increase in per capita income, growing GDP high disposable income and increase in spending, constant turbulence in the value of rupee, availability of easy finance option.

PEST analysis

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• Social analysis: enhance purchasing power, population growth rate, age distribution, employment pattern.

 • Technological analysis: LG electronics focuses on acquiring

advanced technologies to drive forward. The improvement in technology they made the electronic products. LG electronics goal is to lead global electronics and information technology worldwide. It increasing its focus on ‘smart technology’.

PEST analysis

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• STRENGTH

Wide range of products to serve all categories and a strong focus on technology and quality

Effective localization of product offerings for growth markets Brand offers sound rational appeal – good product features and

good value for money Good after sales service and wide distribution network Sponsorship of sports and entertainment events enhances

visibility

SWOT Analysis

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• WEAKNESS

Brand lacks influence in the segment of early adopters especially in the social media environment

Brand has limited market share compared to market leaders

SWOT Analysis

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• OPPORTUNITY

Fast growth of home appliances, electronics goods market in emerging economies

Convert improved brand image and awareness in to market share

Increase the already Wide product portfolio

SWOT Analysis

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• THREATS

Price war with close Korean competitors like Samsung can disrupt growth in price sensitive markets

Highly competitive industry dynamics

SWOT Analysis

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Bargaining power of supplier (Low): • low product differentiation• switching cost is low• supplier concentration to firm concentration is highBargaining power of buyer (High):• Bulk purchase• Price sensitivity• Likely backward integrationThreats of substitute (High):• Possibility of a technology substitute• Relative price performance is high

FIVE Force Model

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Threat of competition (High):• The enduring conflict with Sony and Samsung for the purpose of

gaining customer share is too high. The competition is more intense as these firms pursue strategies that give competitive advantage over the strategies pursued by its rivals.

Threats of new entry (Low):• Potential entry of new competitors is an important factor to intensify

competition in the industry. Larger the band of new entrants, more intense will be the competition. Considering the trait of product differentiation,

• Large capital requirement• High economies of scale

FIVE Force Model

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Ansoff Matrix

Plasma TV

LED TV

Smart TV

CRT TV

LCD TV

Home Theatre

s

MP3 Players

& Speake

rs

Market Penetration Product Development

Market Development Diversification

New

M

arke

tsEx

istin

g M

arke

tsExisting Products New Products

Smart TV

LED TV

BCG Matrix- LG Electronics

STAR

LG’s Television

QUESTION MARK

LG’s Computers

CASH COW

LG’s WhiteGoods

DOGS

LG’s Mobiles

BCG Matrix

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Competitors

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i) Regional channel strategy and wide distribution network: • LG has adopted the regional distribution model in India. All the

distributors work directly with the company.• This has resulted in quicker rotation of stocks and better penetration

into B, C and D class markets.• LG also follows the strategy of stock rotation, rather than dumping

stock on channel partners.• LG has over 46 branch offices and other 110 areas offices across the

country.

CSF Analysis

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ii) Innovative marketing strategies: • To make itself a known brand in the consumer electronics sector, LG

has taken innovative marketing and promotional initiatives:• Launch of new technologies in consumer electronics and home

appliances.• LG was the first brand to in cricket in a big way, by sponsoring the

1999 World cup and followed it up in 2003• LG brought in four captains of the Indian cricket team to endorse its

products. LG invested more than US$8 million on advertising and marketing in the sport.

CSF Analysis

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iii) Local and efficient manufacturing to reduce cost• To overcome high import duties, LG manufactures PC monitors and

refrigerators in India at its manufacturing facility at Noida, Delhi• LGEIL had already commissioned contract manufacturing at Mohali,

Kolkata and Bhopal for CTVs. This helped to reduce LGEI cost• LGEIL is implementing a ‘digital manufacturing system’ as a cost

cutting innovation.• This system is a follow up to the Six Sigma exercise LGEIL had

initiated earlier.

CSF Analysis

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iv) R&D potential • LG has set up research and development facilities in India at

Bangalore and is in the process of setting up another at Pune.• Both the units carry out R&D work for the domestic market as well

as for the parent company. It also does customized R&D for specific countries to which it exports products.

v) Corporate Social Responsibility • Global take-back policy• Guidance on the Disposal of the End-of-life products• Recycled the plastic applications

CSF Analysis

21.6

24.623.69.6

5.34.4

1.42.3

6.2

LG

SAMSUNG

SONY

PHILLIPS

SANSUI

VEDIOCON

BPL

IGO

ONIDA

HOME ENTERTAINMENTMARKET SHARE IN ELECTRONICS

Market Analysis

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• LG should improve it’s after sale service because its hits badly LGs market share in  region.

• More detailed customaries service is to be provided.• The training to in shop demonstration should be given at frequent time interval and

feed back should be considered positively.• The company should look into the matter of person hiring for in shop

demonstration. A big LG showroom should have at least 2 such kind of person.• LG should try new dealer who have the potential. So they can target more market.• As there is a bottle neck competition between Samsung and LG, it is necessary to

take measure steps to overcome the area of downfall in LG with respect to Samsung.

• The marketing managers should make better relations with dealers and reputation of the company.

• Customer considers quality as their first preference, so the company should give more stress on this.

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