Ateneo de Zamboanga University

School of Management and Accountancy

A WRITTEN ANALYSIS OF THE

CASE

LG ELECTRONICS: GLOBAL STRATEGY IN EMERGING

MARKETS

Presented to:
MR. FRANCIS H. ARROYO

In fulfillment of the Requirements in

Management 220
(Business Policy and Strategy)

Bangcong, Brenz Andee

Barcelona, Clarise
Garcia, Ionee
Mendoza, Inno Paolo
Recinto, Kurt Jesher

March 1, 2017
 SW
T E
RA
EK
I. STATEMENT OF THE NN PROBLEM
LG Electronics has been a GE success in emerging economies. It
T S
had entered countries such as HS Brazil, Russia, India and China in
its early evolution, and those SE investments were providing
S
healthy returns. LG Electronics emerged as the market leader in
these markets and its global strategy in the developing world
has been highly successful. LG has developed multiple strategies such

as turning local engineering excellence into innovation on a
L
global scale and utilizing the incentives governments offered

and the changes in government policy to maximize the benefits.
CS
This strategy along with others made LG successful in developing
countries. However, it had to demonstrate success in developed
M
markets to rightfully claim its position among the leading global
consumer electronics and appliance manufacturers. LG
needs to address its position in the developed economies, where
established Japanese,
European O and U.S. companies have
consolidated their positions and P where these giants are active.
PT
Having conquered the O H emerging markets, how will LG
enter established and highly R R competitive markets in the United
TE
States? UA
NT
IT S
II. Objectives IE
To be able to decide on an S effective strategy to penetrate he
developed-country markets
To be able to indirectly handle the challenges arising in
the local markets.

III. AREAS OF CONSIDERATION R

C
IV. ALTERNATIVE COURSES OF R ACTION

S

S
R

S
 1. Apply the same business strategy to the developed countries.

Advantages:
a. Given that it is already proven to be successful, costs and potential
problems are already known and easily managed.
b. It is a flexible strategy, so adjustments depending on local situations
can be made.

Disadvantages:

a. There is no assurance that it will work in markets with active global

giants.
b. The strategy may cost more because of the advanced demand of the
locals.

2. Invest first to Research and Development and then come up with a

business model that fits with the already developed markets based on
its research findings.

Advantages:
a. They could avoid the risk of their current business strategy failing since
it hasnt been tested in the developed countries which have different
levels of competition
b. The costs will be regulated since funds will be appropriated depending
on what the market needs.

Disadvantages:

a. This will take time and will result to LG being left behind in establishing
a brand name in the market

V. RECOMMENDATION

The growth and development of any company involves dealing with a

lot of risks. It will need a lot of planning and sticking to its strategy of making
sure never to lie low or exit the market whenever times get economically
rough. The only way to enter the developed markets where global giants are
active is to also can treat, study and deal with it much like how LG did not
passively treat the smaller markets.
We recommend that LG should scout for local partnerships especially
for home appliance distributors. Sears is one of the largest and most
powerful home appliances distributor in North America. Along with LG's
options can include national appliance retailers like Lowe's, Best Buy and
Home Depot.

WHY PARTNER WITH HOME APPLIANCE DISTRIBUTORS FIRST?

The only way to enter the market is not to aggressively attempt to
bring all of LG's products in America. The first step to creating a positive
impact to brand awareness is gradually entering the market until such time
where its brand is conducive for multiple products. For home appliance
distributors like Sears, it could begin with attempting to have them as
distributors for LG's smaller appliances like air conditioners, dehumidifiers,
gas stoves, and vacuum cleaners.
Beginning with appliances that require less innovative design but more
on quality and material could easily gain a good retailer relationship with the
distributors. Once it can get exclusive distribution rights, then it can be high
time for LG to attempt with bigger appliances like refrigerators. In doing so, it
is not enough that it brings its model of refrigerators from Korea, it needs to
properly study the market trends in America and partner with teams that
specialize in design and product development to be compatible with market
preferences. Considering that the North American market is very keen with a
'fit, feel and finish' kind of refrigerator, it will need to achieve this.
With proper study and analysis of factors that could affect refrigerator
design, such as average house sizes, food trends, family preferences, etc., it
can successfully enter the market. Only when LG can make itself worthy of
its Life's Good tagline will it be able to expand to its other product types like
televisions and cellular phones.

EVENTUAL STRATEGIES WHEN SUCCESSFULLY ABLE TO ENTER THE

MARKET

1. ON PURSUING INNOVATION
 One of LG's strengths is making sure that it makes itself known by
filling the gaps within rural and far-flung communities who also wish to have
access to technology and convenience like everyone did. More than investing
in ready to go vehicles that could assist and repair customer concerns, one of
its strengths include innovating specific to the needs of certain communities,
such as how it dealt with India.
Considering the diversity and disparity of states in the US, the same
strategy could work since communities in the country side and from the
more industrialized ones are going to patronize innovation targeted to their
needs.

2. ON SPONSORSHIPS
When it had major sponsorships for sporting events, it was clear that
knowing what people are enthusiastic about and taking advantage of it could
definitely help. When one of its biggest sales included the built-in games in
the TVs that they sell, this was testament to LG's role in catching the market
and building its reputation based on known and recognized activities.

If it plans to enter developed markets with major global giants, making

itself known would be more difficult but would definitely need to be as
aggressive as it was when it comes to investing on what people love. In
countries like US or Western Europe, it needs to test the waters and check
which trends make the communities come together and maybe LG could
easily make itself known.

3. ON RESEARCH AND DEVELOPMENT

When LG emerged in Korea, its encouragement for heavy research and
development has paid off especially since this is crucial in the expansion and
the direction that LG needs to take. Now that it plans to enter a market with
more established global giants, they definitely need to invest more on this
since this is key to not just being competitive, but also may make production
and innovation more efficient by also reducing costs from alternatives
discovered in research.

4. ON LOCAL COMPETITION
Dealing with local competitors comes as a natural result of entering a
market. The only way it could do well in this is if it makes sure that it can be
internally stable on its own and thus resulting to competitiveness that
transcends its local competitors. If it is able fill in gaps and make innovation
that few of these giants dare to enter, then it could make itself known known
once again if it comes to a point that it's recognized as a national partner
brand.

VI. ACTION PLAN

The action plan consists of the following steps for LG Electronics to
enter developed markets.

1. Researching and gathering of information is one of LGs most

important strategies in entering developed markets. By identifying trends
and customer needs, LG is able to pinpoint which type of products to market
and where to strategically place its facilities.

2. Customization of products and providing access to far-flung areas has

been a successful strategy for LG. By developing products that are specific to
that market and by providing access for these places, LG is able to extend its
markets and the customers will patronize these products that are specific to
their needs.

3. Opening LG brand shops and retail channels will allow the LG brand to
spread through the country and to help in brand recognition.

4. LGs strategy for localization has been a powerful tool in creating trust.
Through trust, workers will reciprocate by working efficiently and continue to
patronize the LG brand.

5. Event sponsorships, especially in sports have been a major avenue for

LG to establish its brand awareness. By continuing to sponsor major sports
events, LG is able to promote its brand to its customers, and considering how
successful this strategy has become, it will also be successful in developed
countries since events are bigger and covers a wider scope of audience.

6. Monitoring results and evaluating them will help change strategies that
are not beneficial and to help future decision-making.

VII. Potential Problem Analysis