LG Electronics: The Blue Ocean Strategy

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Mobile Communications The Mobile Communications Division was responsible for selling CDMA and GSM38 handsets. LG Electronics launched its CDMA handset operations in 1996 and in GSM operations in 2002. With a total range of wired and wireless solutions, the company was rapidly establishing a global presence and growing its international market share in 3G39 handsets. The company had global sales of $ 9.9 billion with sales of 55 million units and was ranked 4th in global mobile handset sales, after Nokia, Motorola, Samsung and Siemens.40 LG's 'Chocolate' became best selling product through intensifying research capabilities and high-end design which was the mid term strategies for the company (Exhibit X)41.

LG Chocolate

"LG Chocolate and the Black Label series are LG's Blue Ocean operational strategy in action, which are expected to generate around 30 per cent of sales and 50 per cent of profits by 2010"⁴²

LG Gulf, Mr.C.H.Lee.

"We have been building up muscles for growth, Now chocolate phone will give us a chance of make another leap forward"⁴³

LG Executive, Vice-president Jae Bae

In November 2005, LG Electronics released a mobile phone, KG 800 attractively named as Chocolate Phone in South Korea.⁴⁴ It was the first version of Black Label Series, featuring a super-slim slide at 16.5 mm thick and weighs 88 grams, with 1.3 mega-pixel camera with a MP3 music player. The Chocolate Phone won the iF Design Award 2006⁴⁵. LG invested more than US$ 73 million in its design operations in 2005 and has won 41 world design awards so far this year.⁴⁶

The Chocolate was globally launched in other regions in May 2006 and about 1.4 millions phones were soon sold in Europe, Asia and Latin America. Another 500,000 were sold in South Korea which helped LG to secure a 7% share of the domestic handset market.⁴⁷ Chocolate was also ranked the best-selling mobile phone by Carphone Warehouse, Europe's biggest mobile phone retail chain.⁴⁸ LG aimed to be number 3 by 2008 or 2009 in handset category with the global market share of 6.8% against its nearest rival Samsung, which held 12.7%. Industry leader Nokia had 32.8% while second-ranked Motorola had 20.1%.⁴⁹

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38] The Global System for Mobile Communications (GSM) is the most popular standard for mobile phones in the world. It was also considered a second generation (2G) mobile phone system.
39]3G was short for third-generation technology. It is used in the context of mobile phone standards. The services associated with 3G provide the ability to transfer simultaneously both voice data (a telephone call) and non-voice data (such as downloading information,exchanging email, and instant messaging).
40]"www.lge.com/mobile communication"
41]Ibid
42]"LG introduced new black label series", 29 May, 2006, www.strategiy.com/feature.asp?id=20060529053005,
43]Moon Ihlawan with Jack Ewing , "LG's Chocolate:Will This Cell Phone Hit the Sweet Spot?", 19 July 2006, www.businessweek.com/globalbiz/content/jul2006/gb20060719_467824.htm?chan=search,
44]Ibid
45]iF Design Award - International Forum Design had inaugurated in 1953, which had existed as an enduring, prestigious trademark for outstanding design.
46]Ibid
47]Moon Ihlawan with Jack Ewing ,"LG's Chocolate:Will This Cell Phone Hit the Sweet Spot?", 19th July 2006, www.businessweek.com/globalbiz/content/jul2006/gb20060719_467824.htm?chan=search
48]Ibid
49] Op cit., "LG's Chocolate:Will This Cell Phone Hit the Sweet Spot?"