LG Electronics: The Blue Ocean Strategy

Details

Themes: Strategy
Pub Date : 2006
Countries : South Korea
Industry : Home Appliances and Personal Care Products

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Case Code : BOS0010A
Case Length : 31 Pages
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SAMSUNG ELECTRONICS

Vision: "Leading the Digital Convergence Revolution"

Mission: to carry out this vision through "Digital-ε Company"

Overview:
           1.Corporate Name: Samsung Electronics
           2.Established in January 1969 and in December it acquired Sanyo
              electronics.
           3.Chairman: Jong-Yong Yun,
           4.First Product: Black and white TV.

Major Business and products:
           1.Digital Media Business: Plasma TV, LCD TV, LCD Monitor, Digital
              Camcoder,Laptop, DVD Player, Laser Printer.
           2.Telecommunication Network Business: CDMA and GSM mobile
              handset,
           3.Digital Appliance Business: Refrigerator, Air-conditioner, Air-purifier,
              Drum washer, Microwave oven, Vacuum Cleaner,
           4.Semiconductor Business:
           5.LCD Business: Notebook PCs, Desktop PCs, TVs, Large Area TVs.

The Road Ahead

"The growth associated with the 'Blue Ocean' initiative will not be accomplished in just one or two years – but is a multi-pronged effort that will firmly reinforce our position among the top three in the electronics industry."⁸⁹

LGE which was known for low-cost products faced competition not only from the home based Samsung but also from Japanese manufacturers., The CEO of the company had admitted that a lot of work had been left to make the company's image as a premium brands in every part of the world.

Along with diversified operations the company had also been suffering low profitability. In the handset division it generated 3.1 US cents of operating profit in 2005 for every dollar of revenue compared with 5.7 US cents in 2004, while Samsung had increased its operating margins with 20% and Nokia averaged of 23% in 2005⁹⁰. LGE also faced a challenge to perform well in the key markets like in North America, where the company had grew only 0.4%. LGE's revenues from Asian market decreased, by 13% in 2005⁹¹.

With a tough road ahead would LGE be able to achieve its target by 2010? Would it be able to make its competition irrelevant, especially Samsung the home rival?

86]"LG Electronics: US$1.4 Billion Sales in Middle East & Africa" , August 2006, http://displayblog.wordpress.com/2006/08/06/lgelectronics-us14-billion-sales-in-middle-east-africa-markets/
87]Elizabeth Esfahani , "Thinking Locally, Succeeding Globally" December 1 2005 http://money.cnn.com/magazines/business2/business2_archive/2005/12/01/8364622/index.htm,
88]Qiblah Phone which came with complete embedded compass, direction indication and prayer time alarm used in 500 cities worldwide
89]"First half LG sales turnover in Mid-East and Africa", August 06, 2006, www.ae.lge.com/ir/html/ABboards.do?action=list&group_code=AB&list_code=PRE_MENU&page=2&target...-
90]"LG eyes bigger GSM market share", 10 May 2005 http://english.peopledaily.com.cn/200405/10/eng20040510_142855.html
91]"LG Electronics", http/dbic.datamonitor.com/companies/company/?pid=E81333A5-8192-426E-BB11-ED6D09B879EF