LG Electronics: The Blue Ocean Strategy

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It was pursuing "Fast growth Strategy" by exploiting its brand image of premium products. The global business strategies of LGE bore rich dividends; the international markets pivoted its business structure and brought in bigger share of sales.35 LGE's overseas sales of white appliances which included refrigerator, air conditioner and washing machine outpaced its domestic sales. The sales in Japan and European markets for televisions and color picture tubes for its fully flat products began to increase considerably. In the newly emerging markets of India, China and Indonesia, LGE began focusing on establishing fully localized business processes.36 In 2006, LGE announced the launch of 'Blue Ocean Management' Campaign with an aim to be in league with the top 3 companies of the world in the field of electronics, information and telecommunications

Blue Ocean Strategy

"Blue Ocean Management" is a creative new style of management which opens new markets and invents new methods and systems that will maximize the efficiency of management. In other words, this is a management strategy for a whole new paradigm in which we will compete in the areas that we have to, while developing a blue ocean area which does not have any competition thus creating more profit. To this end, this year, we will focus on customer oriented management, strong technological competitiveness, and operational excellence."³⁷

LGE, wanted to implement Blue Ocean Management to make competition irrelevant. The strategy was to redefine industry boundaries by focusing more on high end products and entering new segments of emerging markets like China, India and Middle East and Africa and thereby create uncontested market space.

Focusing on high end products

The LGE shifted its focus from volume to value through high-end product innovation in all of its four product divisions: Mobile Communications, Digital Appliance, Digital Display and Digital Media. Each domain company planned established high end value added products.

Table –I LGE Position and% Market Share in different Product Segments
Segment	Products	Rank	Market share of LGE (%)	Competition
Mobile Communication	CDMA and GSM handsets	4	6.8% (As per July 2006)	Nokia 32.8%, Motorola 20.1%, Samsung 12.7%
Digital Display	Plasma TV	2	17.8% ( Q2 of '06)	Matsushita, the maker of Panasonic brand - 28.3%.
	LCD TV	5	8.4% (Q2 of '06)	Sharp - 14.5%, Samsung 14.2%, Sony - 13.8%, Phillips - 12.4%.
Digital Appliances	Air conditioner	1	19.6%

Source: Compiled by the Author

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35] "Story of LG", http://ca.lge.com/en/experience/story/story_secondinnovation.jsp
36]Ibid
37] "Management Info to shareholders", http://www.lge.com/ir/Shareholders.jsp