LG Electronics: Global Strategy In Emerging Markets

Prepared By-

Anupam kumar

Case based Presentation

LG Electronics is Korean based company was primarily known for its low- cost appliances had more than 72000 employees working in about 77subsidiaries and marketing unit across the world.

LG embraced the philosophy of “great company, great people” and followed two growth strategies which involved “fast innovation and fast growth” to secure global competitiveness

LG Products-

Introduction

a

The evolution of LG Group's Portfolio of business

Founded as a Cosmetics Product maker

Plastic Caps

Combs, Toothbrushes Soaps boxes

Electronics Fan Blades Telephone casings

Electronics Equipments and Telecom

Oil Refining

Insurance

Shipping

1) The impact of location-specific advantage and the role of government policy in helping firms compete, and

(2) Leveraging home-grown competitive advantages in evolving into full-fledged MNEs

Basic theme of the case

It has high quality, innovative consumer based product

More focus on R & D

LG, SAMSUNG , Chips & media etc..are the major players

In 2007, LG showcased first dual-system DVD player

Last two decades the market value of LG compounded at the rate of 22% and Samsung, and others also grown the same

Success of Korean industry bcz a product of foresight, careful strategic thinking and leveraging in Govt. policies

The Korean Electronic industry

Brazil (1990)– Challenges faced by LG Very high import tariffs Significant competition Low brand awareness Increasing the level of uncertainty in exchange rate Strategies used by LG LG decided to stay in brazil and targeted local as well as US and south

American market They utilized the govt. policies and benefits Starts branding campaign on sports events sponsorship Focused on quality and after sales services Signed agreements with local distribution chains to gain quick excess to

the market.

BRIC: Challenges faced and strategies used for overcome on it by LG

Russia (1990)– challenges Market risk given the communist heritage and challenging

economic environment State – sponsored business Russians consumers yet not familiar with the brand 1998, Russian economic crisis Strategies used Introduced LG brand organized events to promotes the brand Heavily invested in market and focused local customization

of its product range Used local talent for its Global R & D mission

Cont ……..

India (1993)– challenges faced Govt. policies Geographical diversity and inadequacy of infrastructure Local players were dominating the market Low brand awareness Strategies used Entered with joint venture and then utilized the govt. policies

negotiations Established their self own subsidiaries and focused on new

technology and design Through sports sponsorship they created familiar brand image

Cont ………

China (1991)- challenges faced Geographical diversity Unique nature of govt. regulations SARS crisis in china Strategies used Local consumption vs. export Build strong manufacturing presence with 12 production

subsidiaries Focused on to hire local employees and workers LG set up modern R & D facilities in Beijing Initiated an “ I love china campaign” and local event

sponsor ship

Cont…..

LG’s experience within its domestic market (South Korea) influenced how it expanded into the BRIC emerging economies

The domestic Korean market was highly competitive,

The Korean Government placed strong emphasis on R&D with LG’s in home economy, which had a double-effect on it

It built on its experience of working with governments, which it then displayed most effectively in Brazil

The Korean Government encouraged foreign direct investment which saw LG partner with Hitachi of Japan,

The questions should be discuss by this case

Compare and contrast how LG developed its presence in the Brazilian and Indian markets

In both countries LG appears to be combining a ‘taking brands from local to global’ strategy, by ‘turning local engineering excellence into innovation on a global scale

It utilized the incentives governments offered and government policy

Sports sponsorships Localization of product and services provides a cornerstone

of LG’s strategies in both India and Brazil

Cont….

Looking to the future, explain the challenges ahead LG faces

The emerging economies, where it had worked hard to establish itself, competition is increasing rapidly from both new entrants and existing players

Second major challenge that LG needs to address is its position in the developed economies

Cont…

LG Utilized the opportunities to established their brand in emerging BRIC market, but due to increase in competition in this market , the company facing the problems to maintain their position in the market. The needs and wants of the customers are continuously changing in this industry so company has need to change their strategy according to the situations.

Conclusion

Be a 1st mover with latest technology

More focus should be R&D

There are still large areas of Africa, the Middle East and Latin America that remain to be fully exploited by the LG machine

The experience and expertise LG has developed in the BRIC countries may find a more ‘natural’ outlet in these emerging, or yet-to-emerge economies.

Suggestion

Thank You