1. Consumer Durable Industry

2. Consumer Durables- Overview Mass market heavy goods such as washing machines, refrigerator etc. intended to last 3 or more years. Also called hard goods

3. Consumer Durable Industry White/Brown

4. Characteristics - Consumer Durable Industry Rapid Innovation Dynamic market place Highly competitive industry Significant ‘time to market’ pressure Significant cost pressure Rapid rate of market penetration Rapid transition of technology

5. Consumer Durable Sales (USA) Source: Consumer Electronics Association

7. MP3 players continue to drive the audio market worldwide.

8. Wi-Fi networking is expected to become a key enabler for the delivery and redistribution of content in homes, particularly for retail consumer electronics hardware.

9. Mobile camera phone market has emerged as the single largest market for image sensors, surpassing the entire consumer electronics segment, including digital still cameras worldwide.

10. The strongest growth in consumer electronics segment is expected to come from China by 2012, as the demand for consumer electronics is rising with the rapid pace of economic development and low cost consumer electronics manufacturing.

12. Indian Consumer Durables- Overview Pre liberalization , only a few companies like Kelvinator, Godrej, Allwyn, and Voltas were the major players in the consumer durables market, accounting for no less than 90% of the market. Post liberalization, foreign players like -LG, Sony, Samsung, Whirlpool, Daewoo, Aiwa came into the picture. Today, these players control the major share of the consumer durables market 43%

13. Indian Durable Industry- PESTAnalysis Political Factors: Anti-dumping duty on imported color picture tubes. FDI (100%), High Tax Incidence Resolution to reduce emission of carbon footprints in the atmosphere

14. Effect of GST & DTC Reduction in overall tax incidence (14-16% from 20- 25%) More disposable income Efficient SCM Prices of goods to reduce in the medium term

15. Indian Durable Industry- PESTAnalysis Economic Factors: Growth of retail sector – expected to reach 16% by 2011-12 from 4% in FY07 Easy fin schemes to consumer Economic reforms by the government –higher purchasing power Emergence of organized retail market with large players like Croma, next, reliance digital etc – leading to lower prices and higher varieties Indian incomes are likely to grow three-fold over the next two decades

17. Indian Durable Industry- PESTAnalysis Social Factors : Disposable Income roughly doubled since 1985 Changing perception of luxury to necessity Rural market – constraints Demand of the consumer durables is seasonal Decrease in average household size Source- CRISIL, NKP Research

18. Indian Durable Industry- PESTAnalysis Technological Power efficient Higher quality products Technological advancements

19. Indian Durable industry - SWOT

20. Indian Durable Industry- Porter’s 5 forces Supplier Power Indigenous supply base limited - most raw materials are imported Threat of New Entrants • Most current players are global players • New entrants will need to invest in Brand, Technology and Distribution Competitive Rivalry • Number of well established players, with new players entering • Good technological capability • Many untapped potential markets Customer Power Multitude of brands across price points - wide variety of choice for customers Threat of Substitutes Technological Enhancement

21. Indian Durable Market The Indian durables market, with a market size of US$ 27.38 billion in 2008–09, has grown by 7.1 per cent over the previous year. The compounded annual growth rate (CAGR) for the industry has been recorded at 20.3 per cent between 2004 and 2009.

22. Consumer Electronics Production in the consumer electronics industry is US$ 6.7 billion in 2009–2010. The segment registered a growth of 18 per cent in 2009–2010 from US$ 5.5 billion in the previous year. The consumer electronics segment contributes about 27 per cent to the total hardware production in the country. Source: Department of Information Technology, Minister of Communication & IT, Government of India., & http://www.mit.gov.in/dbid/eproduction.asp#2

23. Consumer Electronics Sources: “Consumer durables: Durable enough for tough times,” The Economic Times, December 13, 2009; Department of Information Technology, Minister of Communication & IT, Government of India.

24. Consumer Appliances The consumer appliances market is estimated at US$4.34 billion, with imports valued at US$ 1.22 billion in 2009–2010. Most imports are in the finished goods categories such as watches, electric coffee makers, food grinders, electric heaters, etc. Rs.bn Source- www.ibef.org/download/consumer_durable

25. Key Players

26. Key Players

27. Product Mix Of Key Players By volume

28. Electronic Goods EX-IM Every year India imports electronics and appliances in huge quantity. More that 70 per cent of Indian electronics market depends on import of both finished goods and components. India imported worth US$ 18.5 billion and exported worth US$ 3.69 billion of electronics goods between April 2008 and February 2009 *excluding computer in physical form Source: Ministry of Commerce and Industry, Government of India, Annual Report 2008–09.

29. Sales Trend- Consumer Electronics Source- CRICIL

30. Consumer Durable- Growth Drivers Appreciation of Indian Rupee

31. Consumer Durable- Growth Drivers Availability of financing Source- CRISIL, NKP Research

32. Consumer Durable- Growth Drivers Income Growth

33. Refrigerator Market Share Source- CRICIL

34. Television Market Share Source- CRICIL

35. Washing Machine Market Share Source- CRICIL

36. Mobile Phone Market Share Source- CRICIL

37. DTH TV Market Share Source- CRICIL

39. Multiple players

40. High competition

41. Benchmarking and TQM

42. Production Demand mismatch

43. Ever Increasing Targets

45. Demand Planning

46. Inventory Optimization

47. Order Management

48. Tracking

49. High Inventory for High Demand Periods

51. Increased revenues from improved availability of high fast moving inventory

52. Working capital reduction due to improved inventory management and reduced order cycle times

54. Consumer Durable Supply Chain COMPANYSHOWROOM E Retail

55. Planning and Forecasting Annual Forecasts based on previous year sales and current trends. These sales are disaggregated into monthly sale plans Catering for the seasonal variations in demand Interaction between production and marketing departments for better quality of forecasts and demand utilization.

56. Consumer Durable Value Chain

58. LG, SAMSUNG the two Korean companies has been maintaining the lead in the industries with LG being leader in almost all the categories. Nokia India LG Electronics India Ltd Samsung India Electronics Sony India Philips India Whirlpool Appliances Titan Industries Siemens Videocon Industries Blue star Source: http://www.naukrihub.com/india/consumer-durables/companies-list/top-players

59. LG Electronics

60. LG Global Presence

61. LG Leading Player In Many

62. LG Electronics India Ltd The parent company was originally established in1958 as Goldstar producing Radio, TV, Refrigerator & AC LG group was the merger of two companies Lucky and Goldstar A wholly owned subsidiary of LG Electronics, South Korea Established in India in January, 1997 State-of-the art manufacturing facility at New Delhi / Pune Vision was to become a 'Health Partner' for its consumers •The CTV range offered by LG has 'Golden Eye' technology •Entire range of LG air-conditioners have 'Health Air System' •Microwave ovens have the 'Health Wave System’ •Refrigerators have the 'PN System’ •Washing machines have 'Fabricare System'

63. Vision- “Global Top 3 by 2012” "Life's Good“ Represents LG's determination to provide delightfully smart products that will make your life good

64. LG- Product Portfolio gdfhdhdnhgngfngfnnnfgfbgggggggggggggggggggggggggggggggggggggggggggggggggggggggggg

66. Refrigerators

67. Microwave Ovens

69. DVD Recorder

70. Notebook PCs

71. Desktop PCs

73. LCD TVs

74. Micro Display Panel TVs

75. MonitorsSource: Corporate Website : http://www.lg.com

76. LG Technology Collaboration

77. LG Global Financials 209% http://www.lg.com/global/ir/financial-information.jsp

78. The challenges faced by LG when entered in Indian market Low brand awareness about LG in India. One of the last MNCs entered in India (Samsung, Panasonic entered in1995 in India). High import duty Competition from local market players and other MNCs in consumer durable segment. Price sensitiveness of the Indian consumer LGEI over came these challenges to emerge as the Market Leader!

79. LG Electronics India Ltd Source- www.lg.com Source- www.lg.com

81. Demand fluctuation handling capacity

83. Growing rural market in India

84. New technology

86. Korean rivals in Indian market

87. Raw material import duties

89. LG Logistic Organization Structure

90. The Situations of Supply Chain LGE Transportation with its annual expense exceeding $40 million, was recognized as one of the critical areas within the companies operations that would deliver significant value to both the top and bottom line. Transportation Cost account for approximately 51% of total logistic cost and was recognized as a primary target for reduction. In order to extend the value of Oracle ERP and EXEWMS systems deeper into the distribution network ,LGE needed to integrate a best of breed transportation management into its existing enterprise management systems.

92. To effectively manage this, LGE set out to establish integrated best practice workflows across the entire transportation and distribution organization.

94. LG brought in four captains of the Indian cricket team to endorse its products. LG invested more then US$ 8 million on advertising and marketing in this sport.

95. Launch new technologies in consumer electronic and home appliances.

96. LG has differentiated its product using technology and health benefits. CTV has “Golden eye technology” Air conditioner has “Health air system” and microwave ovens have the “Health wave system”.

97. LG has adopted the regional distribution channel in India.

99. LG- Future Outlook Although uncertainties exist, market demand is expected to increase along with the IT industry recovery Plan to focus on premium products for the monitor business and expand buyers for commercial display business while entering new markets to secure profitability Focus on profitability by launching premium smart phones and differentiated tablet PC products along with recovering cost competitiveness for feature phones Maintain market dominance in refrigerators and washing machines while securing competitiveness for future businesses