Transcript lg-enterprise

Nova SBE
International Management
LG Electronics:
Global Strategy in Emerging
Markets
ENTERPRISE
Group 5
Gabriele Liepinyte 1586
Mariana Proença 11089
Olivier Mollerus 1417
Patrícia Milhinhos 11424
Angus Sullivan 1403
Chiara de Benedetto
SOUTH KOREA
ELECT RON ICS IN DU ST RY
High quality, innovative
electronics products
Market value of LG
Electronics grew 22%
World’s first dualsystem DVD player
Samsung’s twice market
capitalization as Sony’s
(Japan)
History
History
Koreans’ prioritize the development of the Electronics Industry
The government encouraged foreign direct investment in
technology and creation joint ventures.
70% Exports Korea’s electronics were exported by the
foreign countries with joint venture
History
1980’s Indust r y Shift
Firms were
encouraged to
invest in local R&D
Vocational schools
attracted students
for technical
education
Research
infrastructures to help
the firms were created
Education
Universities developed
experts in science and
technology
History
Export s
LG started to export to developed markets
Product weren’t well received
Enter markets with
long-term potential
Strategy
Move to emerging
markets
BRAZIL
Hard planning
Faced adverse economical factors
LG decided to stay and expand their presence
• Agreements with local
distribution chains
• Maximize the benefits from
the government
• Advertise their brand through
soccer sponsorship
• Customized products
• Premium positioning strategy
TRUST
INDIA
1993 LG enters the market
Joint-Venture with
local firm Bestavision
IMPORTS
LAW
Launch LGIL, a fully
owned subsidiary in
India
It took one year to build the first
factory near New Delhi
INDIA
M A RKET IN G M IX
Product’s were
customized to
fulfill local needs
PRODUCT
Local R&D teams
Adjusting the product
instead of lowering prices
$
PRICE
$
Development different
features and using more cost
efficient materials
INDIA
M A RKET IN G M IX
Indian leading
film stars in
advertisement
Van fleets for quick
repairs covering remote
areas
Service
Branding
Customer Care Centers
Sports
Sponsorships
INDIA
SOCIA L AW A REN ESS
Provides education by
building and supporting
schools and, offering
books
India suffers
of a bad
health and
education
system
Built clinics to provide
health care to
employees, their families
and the community
INDIA
Organizat ion
Top management
positions in India
taken by local
employees
High Levels of
Autonomy
Motivation
Localizat ion
Philosophy
Only major investment
decisions and annual
targets had to be
approved by head
office in South Korea
INDIA
COM PET IT ION
2006 LG leads a variety of markets.
LG’s position is
threaten with the
entrance of fierce
competitors in the
market
RUSSIA
1990 Establishment of diplomatic relations
1998 LG was one of the first Korean companies in Russia
• First products were
imported
• Local plants opened
RUSSIA
M A RKET IN G M IX
• The opening of LG branded
stores
• Dedicated retail channels
• The hosting of festivals and
cooking events
• Sponsorship
• Local offices and R&D
center
• Sourcing local talent to
fill company roles
• Opening local
manufacturing plants
RUSSIA
ECON OM Y
1998 Russia faced with severe
economic crisis
Competitors scaled back
and retracted from Russia
LG invested heavily in their
Russian operations
Local product
customization
Event sponsorship
Distribution
channels
RUSSIA
N A RODN AYA M A RKA
• Seal of approval for “national
brands”
• LG allowed by the Russian
government to display on
products
A sign of LGs effective localisation
strategy
✓
China
Good geographic proximity to Korea
1988 Scouting mission Hong Kong
1991 LG enters China, through
a joint venture Huizhiou
16 corporations now
China
PROBLEM S
Unique
nature of
government
regulations
Geographica
l proximity
Diseases
(SARS crisis)
China
ST RAT EGIES
Same as when they entered
Brazil and India, with some
variations in the overall strategy
They tried to get local
consumption instead of export
Build strong
manufacturing presence
China
ST RAT EGIES
I love China
campaign (free
sanitary masks
against SARS)
Branding
Local event
sponsoring
R&D facility in Beijing
Hiring local employees (98% of employees
Human Resources
local Chinese)
Challenges
New
market
entrants
?
What to do
next?
Competition
Dominant powers within
electronics
Emerging or,
Developed markets?
Local rivals
Thank you for your
attention!