Lg Blue Ocean Strategy

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LG – The Emerging Global Brand



LG’s Growth Strategies Creation of a GLOBAL BRAND

 LG’s

Blue Ocean Strategy
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WHY HOW The Extent of adoption of the Strategy

 Sustainability
  

Gains Constraints Can LG sustain its competitive edge

• Founded in 1958 as Goldstar, LG led the way in bringing advanced digital products and applied technologies to its customers. • World's second-largest manufacturer of Television sets and third-largest producer of mobile phones. • It is the flagship company of LG Group, one of the world's largest electronic conglomerates. LG Market Expansion - South Korea as the major hub for CE. - Tap Brazil, Russia, India & China (BRIC) - LG emerged as market leader in most of these markets & was setting the trend for competition - Developed Markets such as US & Western Europe cannot be ignored Goldstar co. (now LG Electronics) established Acquisition of insurance co and security firm

LG E Roadmap

1960s 1958 1970s

1980s

Joint Ventures; investment in R&D in Korea Dedicated internationalizatio n: exports to developing countries & capturing markets in developed countries

Brazilian operations
India 1990s operations Russia Operations

Cutting across industries incl. oil refining, cables, manufacturing, energy

China Operations

LG’s GROWTH STRATEGY
Took advantage of local dynamics(govt policy, economic crisis) Invested in Expansion while competition was risk aversive

Ensured local team composition

Invested in brand awareness to build local popularity

Emerging Market

Customized array of products meeting varied value perception

Increased investment in local R&D base Strong after-sales support

Tie up with Local/Regional/Nati onal distributors to mitigate location specific challenges

CSR as part of the value system helped gain local popularity

• Gained confidence and goodwill of the government by sustaining operations & investments during any economic crisis • Gained from the risk of expansion while competition exited the scene in a crisis scenario • Invested in local R&D>creation of jobs> customization of products to suit various segments • Gained trust of employees/locals by fulfilling CSR’s • Creating jobs onshore – maximum personnel local • Gained quick popularity through branding

CREATION OF A GLOBAL BRAND


Adoptation of localisation



Understanding of in-depth consumer needs at a micro level

Leading to  CREATION OF UNCONTESTED MARKET SPACE and


MAKING COMPETITON IRRELEVANT

WHY


To create un tapped market space and higher profit growth
To be among top three CE players by 2010 Consolidate its market leadership in fast growing segement of consumer eletronics







To redefine industry boundaries by focusing more on high end products and entering new segments of emerging markets

HOW DOES IT HELP


Create uncontested market space
Make comeptition irrelevant Create and capture new demand Break the value-cost trade off Align the organization in pursuit of differentiation and low cost









Extent of Adoption of The Strategy
Brazil (mid 1990s)

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India (1993)
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LG entered a market with high import tariff, competition from gray goods market, low brand awareness Captalized on : subsidized land rate, preferential land access, lower tax rates for locating in underdeveloped areas Plants to manufacture A-V products+ cellular phones+monitors Sony & Philips already present Instability in local currency led to : low cost advantage for LG>exporting advantage for LG With exit of global playes during the crisis situation, LG rose in ranks to become the preferred partner in national growth Invested in brand awareness: Soccer; sponsored football club After sales Support: 3 Yr warranty for most products+ product failure or breakdown service (fleet service) Address challenges in distribution:Agreement with local distributors...
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