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LED I LCD I PLASMA I SMART I HOME ENTERTAINMENT I SPEAKERS I MP3 PLAYERS
P ES T
i. Increase in import duty chargesii. Digitization in Indiaiii. Government intend to promote local
manufacturing
I. Constant Turbulence in the value of rupee II. Increase in per capita income by 5-6% annuallyIII. Availability of easy finance options
I. India becoming a manufacturing hubII. Incorporation of top end technology across
product rangeIII. Expected 32 billion USD foreign investment
I. Enhanced purchasing powerII. SEC shift (triangle to diamond shape)III. Emergence of masstige segment
PEST INDUSTRY ANALYSIS
SW
OT
I. Strong presence in LED segment (24.2%)II. Strong Distribution network (20,000 retail points)III. Price Advantage over rivalsIV. High Advertising Budget (550-600 Cr.)
I. Low EPS (366 KRW)II. Low profit margins within the categoryIII. Late entrant into audio market (17.3% MS)IV. R&D challenges from Korean counterparts
I. Growing FPT market in India (21.7%)II. Increasing HNI households (3X times)III. Growing rural market (39.8%)IV. Upgrade shift (from CRT-LED; LED-LCD)
I. Emerging domestic players in the market II. Declining LCD Market in India (-
46.2%CAGR)III. Substitutes (Laptops & Mobiles)IV. Increasing labor costs
LG SWOT ANALYSIS
Plasma TV
LED TV
Smart TV
CRT TV
LCD TV
Home Theatres
MP3 Players
& Speakers
Market Penetration Product Development
Market Development Diversification
New
M
arke
tsEx
istin
g M
arke
ts
Existing Products New Products
ANSOFF MATRIX
PORTER’S FIVE FORCES
SW
OT
i. Market leader in FPD TV segment (26.2%)ii. Widest range of products iii. Strong global presence renowned as leader
in innovation
i. Recent cases of patent infringementsii. Low profit margins within the categoryiii. Competition from Sony in premium
segments
SAMSUNG SWOT ANALYSIS
i. No new innovation from LG in recent timesii. Growing TV market in rural Indiaiii. Upgrade shift (from CRT-LED; LED-LCD)
i. Emergence of Chinese counterpartsii. Increasing Labor costsiii. Environmental Concerns
TT
i. Chinese manufacturersii. Global economic slowdowniii. Stiff category competition
i. Emerging domestic playersii. Increased transportation costsiii. Increasing media spends
i. Increasing dual family incomeii. Changing urban lifestyleiii. Untapped rural market
i. Emerging markets like Brazil & South Africaii. Technological advancementsiii. Patents & Related documents
FUTURE THREATS & OPPORTUNITIES
DAY II
There’s a lot changing for us…
DRIVERS OF CHANGE
VARIOUS ENVIRONMENTAL FACTORS
STRATEGIC CHANGES
Localization of goods
Decrease in import duty charges Faster delivery of intermediary products Increase in domestic employment
R&D control
Control on R&D costs Unfavorable time for new launches
Process innovation
Green manufacturing Use of renewable sources of energy Implementation of just in time(JIT),
LEAN manufacturing strategy
Media Spends
Reduction in marketing budget Innovative marketing budget Use of Digital media
Dealer-retailer relationship
Initiatives to enhance relationships Differential profit margins on extraordinary
sales
PORTER’S FIVE FORCES
Threat Of New Entrants Yes No
Is government regulation high? -1Do you have proprietary techniques or patents? -1Does your business have high asset requirements for start up? -1Do you have high profit margins that are widely known? -1Is your industry growing rapidly? -1
TOTAL for Threat of New Entrants -3 -5
Supplier Power Yes No
Would switching suppliers be extremely difficult? +1Are you a small buyer compared to other buyers? -1Is your supplier the exclusive seller of a critical component you buy? -1Do you have an active & beneficial relationship with suppliers? -1Is your supplier flexible on delivery and payment? +1
TOTAL for Supplier Power -3 -1
Buyer Power Yes No
Do you have fewer customers? +1Do your buyers have considerable influence in the price you charge? +1Do you sell to a distributor instead of the end user? +1Are you the only supplier for your buyer +1Do you have a good relationship with your buyers or their representatives? -1
TOTAL for Buyer Power +1 +3
PORTER’S FIVE FORCES (CONTD.)
KEY DRIVER TO CHANGE
Due to global recession, the new age consumer is likely to experience
Low levels of disposable income Essential goods would take up an increasing proportion of consumer spending Lower spending on leisure Skyrocketing commodity prices Slow wage growth Increase in immigration rate
This would result in the following :
Well planned & researched purchases Delay in upgradation shifts Inclination towards reliable and trusted brands Consumers would act as brand evangelists Converging consumer needs
Plasma TV
LED TV
Smart TV
CRT TV
LCD TV
Home Theatres
MP3 Players
& Speakers
Market Penetration Product Development
Market Development Diversification
New
M
arke
tsEx
istin
g M
arke
ts
Existing Products New Products
ANSOFF MATRIX
DISTRIBUTION ISSUES & TACTICS
Complexity of business
Distributors fail to stock the entire product range
Aim to reduce complexity Create different dealers for different price
range
Selection criteria
Components of a successful distribution partners
The selection should include important components such as capital, infrastructure, warehousing, transportation and required organizational structure
DISTRIBUTION ISSUES & TACTICS
Cost to serve
Reaching large numbers of rural territories can be a difficult and costly business
Foot soldiers Creating partner or third party
distribution channels
Lowering profit margins
With increasing costs of production margins are likely to lower down
New models of distribution such as factory owned outlets
Multi-brand stores like Chroma, Reliance etc.
E-tailing
DAY III
There’s a lot changing for us…
CHANGING TRENDS IN INDIA
Increasing women employment rate
Largest working population in the world Increasing exponentially at 24%
Rapid urbanization
Migration from rural to urban areas 53% increase in urban units in the last decade
Foreign Direct Investment
51% investment in multi brand retail Influx of foreign retailers
Increasing rental costs Strengthening of modern retail Increasing malls and outlets
Entry of new brands Steady growth of modern retail Increased competition
Changing lifestyle Women playing an important
role in purchase decisions
Smarter consumer
40% of urban consumers look for premium products
50% of consumers actively seek for deals 67% read reviews before making a purchase
Growing Rural Markets
Consumer durable market growing at 25% Account for 56% of India’s income 64% of India’s expenditure
CHANGING TRENDS IN INDIA
Higher rejection of products 1n 2012, only 10% of total
10,000 innovations were accepted
Consumer centric goods
New launches specific to rural markets
Increase in rural retail outlets
POPULATION SHIFTS
Blooming Gen I
Face of new India, constituting 35% of Indian population
Willing to rely on credit Avails greater choices than prior
generations
Rural-Urban migration
Migration from rural to urban towns in search of living
Last decade witnessed increase in urban town from 5,161 to 7,935
Expected 10,000 towns by 2015
Emergence of satellite towns
Suburban shift Currently 35 satellite towns in India Expected to be 150 by 2015
Reverse brain drain
Trend became noticeable after recession
Better growth opportunities, family reasons, cultural ties, and immigration issues key drivers
Internal job migration
Internal migration accounts for 30% of the total population
Creates newer market opportunities
OVERALL STRATEGIC PLANNING
LG’s
Overall Industry growth rate – 12%LG’s growth rate – 15%Revenue in 2012 – $4.37 billionExpected revenue by 2015 - $9 billionExpected export growth rate – 12-15%
Analyzing various factors suggest a requirement to scale up the current unit capacity which can be achieved by two ways :-
1) Scaling up the current capacity2) New manufacturing set up
SOCIO-ECONOMIC TRENDS
Household Income
India’s income pyramid slowly becoming a diamond
8.5% increase in disposable income
Growing concern for environmental sustainability
Indians are increasingly getting conscious about the environment
Looking for greener alternates
Increasing nuclear families
Households are becoming less traditional and spending more per capita on entertainment
Families Increasing at 67%
2013 2014 2015
Up gradation ShiftCRT-LCD; LCD-LED
Increase in sales of LED & Smart TV’s
Increase in sales of Smart TV
2013 2014 2015
Increase in sales of LED’s over LCD’s
Increase in sales of Smart TV & OLED TV’s
Elimination of LCD’’s from urban market
2013 2014 2015
Increase in overall TV sales
Upgradation shifts to smart TV’s
Market penetration of LED TV’s
Shift from Strugglers to Affluent
Affluent constituting 6% of the population will increase up to 11% by 2015
The professional affluent will dominate the consumption with 26% share
E-tailing
0.6% of total sales Key driver has been the
increasing no of online shoppers in India
2013 2014 2015
SOCIO-ECONOMIC TRENDS
2013 2014 2015
Increase in sales of premium products
Aspiration to buy premium products
From value to premium purchase
transition
Increasing sales of low value goods
Evolution of social media, tablet and smartphone retailing
E-tailing as an alternate to traditional retail
CRITICAL THREATS
Emerging domestic players in the market
The Porter’s model indicates a high threat of new entrants Entertainment market is growing steadily at 21.7% CAGR
Untapped rural market is growing at 25% 37% of consumers prefer value for money alternates
Substitutes (Laptops & Mobiles)
Changing media habits of the Indian consumer Growing 23.01 million internet subscribers in India All age group tends to spend 78-86 minutes on the internet Other substitutes fulfill the basic need of entertainment
category products at a lower price
Plasma TV
LED TV
Smart TV
CRT TVLCD TV
Home Theatres
MP3 Players
& Speakers
Market Penetration Product Development
Market Development Diversification
New
M
arke
tsEx
istin
g M
arke
ts
Existing Products New Products
ANSOFF MATRIX
PRODUCT/MARKET INTERFACE
CORPORATE WARFARE