Strategy analysis of lg

1. Strategic Analysis of
Presented By:
Sarthak Omer (PGSF1443)
Shruti Jain (PGSF1445)
Shubhanshi Rathore (PGSF1446)
Shweta Singh (PGSF1447)1

2. 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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3.  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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4. Corporate Social Responsibility
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5. Product line
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6. 6

7. • 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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8. • 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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9. • 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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10. • 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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11. • 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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12. • 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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13. Bargaining power of supplier (Low):
• low product differentiation
• switching cost is low
• supplier concentration to firm concentration is high
Bargaining power of buyer (High):
• Bulk purchase
• Price sensitivity
• Likely backward integration
Threats of substitute (High):
• Possibility of a technology substitute
• Relative price performance is high
FIVE Force Model
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14. 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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15. Ansoff Matrix
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Plasm
a TV
LED
TV
Smar
t TV
CRT
TV
LCD
TV
Home
Theatre
s
MP3
Players
&
Speake
rs
Market Penetration Product Development
Market Development Diversification
New
Markets
Existing
Markets
Existing Products New Products
Smart
TV
LED
TV

16. BCG Matrix- LG Electronics
STAR
LG’s Television
QUESTION MARK
LG’s
Computers
CASH COW
LG’s White
Goods
DOGS
LG’s Mobiles
BCG Matrix

17. Competitors
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18. 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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19. 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.
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CSF Analysis

20. 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.
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CSF Analysis

21. 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
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CSF Analysis

22. 21.6
24.623.6
9.6
5.3
4.4
1.4
2.3
6.2
LG
SAMSUNG
SONY
PHILLIPS
SANSUI
VEDIOCON
BPL
IGO
ONIDA
HOME ENTERTAINMENT
MARKET SHARE IN
ELECTRONICS
Market Analysis

23. • 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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