LG Electronics: The Blue Ocean Strategy

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Digital Display Company The Digital Display Company was the leading producer of digital TVs in LCD and Plasma modules. In the increasingly competitive digital TV market, LG Electronics had cutting-edge products through innovations. Digital Display division was formed in joint venture with Philips to produce LCD TV and plasma TV in 2001. The digital display division had earned $ 2.77 billion which constituted 28% of their global sales in the year 2005.50(Exhibit XI) With the business goal of becoming the dominant leader in digital TV and plasma TV, the division had undergone breakthrough innovations and products under the blue ocean strategy. Plasma TVs "We will cement our second place in the plasma TV market this year to challenge the No. 1 in 2007," mentioned Yoon Sang Han, LG's executive vice-president in charge of the TV, monitor, and plasma panel module businesses.51

As a leader in the plasma TV industry, the Digital Display Company had set the standard by continuously developing the 60", 71" and 102" full HD plasma TV which was awarded as 2006 Best of Innovations at the Consumer Electronics Association (CEA).⁵² LG planned to enhance the global production process of its flat panel displays at its four major plants in Mexico, Poland, China and Korea, focusing on region-specific R&D and marketing efforts.

Global sales of plasma televisions amounted to 2.2 million units with a growth of 95 % in the April-June quarter of 2006 from 2005, which was 20% of the global TV revenues⁵³. Matsushita, the maker of Panasonic brand, with a share of 28.3% paved its way to become No. 1 position in the Plasma TV while LGE with the sales of 877,000 in 2005, stood at No. 2 position in plasma TV market with a 17.8% global share, with the monthly capacity to produce 310,000 units in 2005. While Samsung the home rival had a market share of 13.6% and Dutch Philips Electronics with 10.3%⁵⁴. (Exhibit XII)

Plasma TVs

LG Electronics attracted global attention with the development of the world’s first 55-inch LCD TV, which was awarded a Design Award at the iF Design Awards and Innovation Awards. Global sales of LCD TVs jumped 135% in the three months to June from a year earlier, to 9.4 million units, accounting for 22% of the world's TV market.⁵⁵The company, ranked 5th in LCD TV segment, after Sony, Samsung, Sharp, and Philips Electronics. (Exhibit XIII) The company expected sales of 4 million LCD TVs in 2006, up from 1.5 million in 2005.⁵⁶

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50] LG electronics, www.lge.com/download/ir/archive/-850967273LGE(CLSA2005).pdf, 10/09/2005.
51]Moon Ihalwan , "Korea set to dual in digital TV", 30 May, 2006, www.businessweek.com/technology/content/may2006/tc20060530_512280.htm
52]Ibid
53]Moon Ihalwan Kenji Hall , "LCD Fights Plasma for Giant TV Market," 25 August, 2006, www.businessweek.com/globalbiz/content/aug2006/gb20060825_743315.htm?chan=search
54]Moon Ihalwan, "Korea set to dual in digital TV", www.businessweek.com/technology/content/may2006/tc20060530_512280.htm,30 May, 2006
55]Ibid
56]Op cit., "Korea set to dual in digital TV"