Lg Himanshu Tulshyan

7/27/2019 Lg Himanshu Tulshyan

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HIMANSHU

TULSHYAN(11BSUHH010021)

Executive summary

Indian Consumer durables market used to be dominated by few domestic

players like godrej Voltas allwyn and kalvinater. But post liberalization much

foreign company have entered into Indian market dethroning the Indian player

and dominating Indian market the major categories in the market CTV,

REFRIGRATOR, AIR CONDTIONERS AND WASHING MACHINE

India being the second largest growing economy with huge consumer

class has resulted in consumer durables as the fastest growing industries in

India LG, SAMSUNG the two Korean companies has been maintaining the

lead in the industries with LG being leader in almost all the categories.

The rural market is growing faster than the urban market, although the

penetration level is much lower .The CTV segment is expected to the largest

contributing segment to the overall growth the industry. The rising income

levels double-income families and consumer awareness are the main growth

drivers of the industries.

Consumer durables major LG Electronics India Pvt Ltd (LGEIL) will invest

nearly Rs 500 crore in India this year in research and development, brand-

building and other marketing initiatives.

The company, having a turnover of Rs 9,500 crore and market share of 26 per

cent, is investing Rs 360 crore on brand-building and other marketing

initiatives and around Rs 140 crore on research and development, besides

launching new platforms in information technology and related areas,

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LGs innovative 211 campaign to provide quality after-sales service, will also

be expanded from the existing 22 to 40 cities by next month,

The campaign, for which IT infrastructure has been set up, includes the

companys response to customer complaint within two hours. The fixing time

for complaints varies from one hour to a maximum of 24 hours.

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INTRODUCTION

Before the liberalization of the Indian economy, only a few companies

like Kelvinator, Godrej, Allwyn, and Voltas were the major players in the

consumer durables market, accounting for no less than 90% of the market.

Then, after the liberalization, foreign players like LG, Sony, Samsung,

Whirlpool, Daewoo, and Aiwa came into the picture. Today, these players

control the major share of the consumer durables market.

Consumer durables market is expected to grow at 10-15% in 2007-2008.

It is growing very fast because of rise in living standards, easy access to

consumer finance, and wide range of choice, as many foreign players are

entering in the market

With the increase in income levels, easy availability of finance, increase in

consumer awareness, and introduction of new models, the demand forconsumer durables has increased significantly. Products like washing

machines, air conditioners, microwave ovens, color televisions (CTVs) are

no longer considered luxury items. However, there are still very few players

in categories like vacuum cleaners, and dishwashers

Consumer durables sector is characterized by the emergence of MNCs,

exchange offers, discounts, and intense competition. The market share of

MNCs in consumer durables sector is 65%. MNC's major target is the

growing middle class of India. MNCs offer superior technology to the

Consumers whereas the Indian companies compete on the basis of firm

grasp of the local market, their well-acknowledged brands, and hold over

wide distribution network. However, the penetration level of the consumer

durables is still low in India.

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History of company

The company was originally established in 1958 as Gold Star, producing

radios, TVs, refrigerators, washing machines, and air conditioners.

The LG Group was a merger of two Korean companies, Lucky and Gold Star,

from which the abbreviation ofLG was derived. The current "Life's good"

slogan is a backronym. Before the corporateName change to LG, household

products were sold under the Brand name ofLucky, while electronic products

were sold under the brand name of Gold Star. The Gold Star brand is stillperceived as a discount brand.

In 1995, Gold Star was renamed LG Electronics, and acquired Zenith

Electronics of the United States.

ECONOMIC ACTIVITY

LG Electronics is playing an active role in the world market with its assertive

global business policy. As a result, LG Electronics controls 110 local

subsidiaries in the world with around 82,000 executive and employees.

LG Group

1. LG.Philips LCD

2. LG Chemical

3. LG Telecom

4. LG Powercom

5. LG Twins

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6. LG Dacom

PRODUCT DETERMINANTS &STRATEGIES

Mobile communications

(a) CDMA Handsets,

(b)GSM Handsets,

(c) 3G Handsets,

(d)Cellular Phones

Digital appliance

a) Air Conditioners,

b) Refrigerators,

c) Microwave Ovens,

d) Washing Machines,

e) Vacuum Cleaners,

f) Home Net,

g) Compressors for Air Conditioners and Refrigerators

Digital display

a) Plasma TVs,

b) LCD TVs,

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c) Micro Display Panel TVs,

d) Monitors,

e) PDP Modules,

f) OLED Panels,

g) USB Memory,

h) Flat Panel Computer Monitors

Digital media

a) Home TheaterSystems,

b) DVD Recorders,

c) Super Multi DVD Rewriters,

d) CDRW,

e) Notebook PCs,

f) Desktop PCs,

g) PDAs,

h) PDA Phones,

i) MP3 Players,

j) New Karaoke Systems,

k) Car Infotainment

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STRATEGICALLIANCE

LG Electronics is making technical advances and identifying business

opportunities through various associative relationships with some of the

world's leading companies.

LG Electronics is striving to become number one in the world by

mingling in various business and technological fields and making strategic

alliances with world famous companies. "Strategic association between

corporations," in which companies with different infrastructures cooperate in

the fast-developing 21st century business field, is of key significance in terms

of strengthening the existing industry and creating a new one.

LG Electronics will do its best to create new products and services with an

open mind, while developing new technologies and business fields through

various associations with some of the world's most successful companies.

1. 3M

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2. SUN

3. YAHOO

4. PHILLIPS

5. TOYOTA

6. MICROSOFT

7. HP

8. GOOGLE

9. GE

10.INTEL

11.NORTEL

12.HITACHI

13.PRADA

14.RENESAS

15.TOSHIBA

16.BESTBUY

And the number follows many more..

In Feb. 2007 LG Electronics and Yahoo formed a strategic alliance. Yahoo

mobile services will be available from LG mobile. This service is targeting 10

million LG mobile phones in over 70 countries.

In Mar. 2007 LG Electronics and Google formed a strategic alliance.

Both companies will work together to release, market, and offer LG mobile

phones with Google services (search engine, map, email, and blogs.)

MARKETING DETERMINANTS & STRATEGIES

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1. Innovative marketing - LG was the first brand to enter

cricket in a big way, by sponsoring the 1999 World Cup and followed it

up in 2003 as well.

2. Local and efficient manufacturing to reduce cost - To overcome high

import duties, LG manufactures PC monitors and refrigerators in India at

its manufacturing facility at Noida, Delhi.

3. Commissioned contract manufacturing at Mohali, Kolkata and Bhopal

for CTVs.

4. Product localization - Product localization is a key strategy used by LG.

It came out with Hindi and regional language menus on its TV.

5. Regional distribution model - This has resulted in quicker rotation of

stocks and better penetration into the B, C and D class markets.

6. Leveraging Indias IT advantage - LG Electronics has awarded a

contract to develop IT solutions to LG Soft India (LGSI). The project

involves development and support for ERP, SCM, CRM and IT-enabled

services for LG.

Strategies adopted by the organization

LG follows 10 commandments which are as follows.

1. Foster working environment-5S Environment

2. Fast execution is key to success

3. Transparent and fast communication-open communication

4. Update market -knowledge Demographics

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5. Win Win relationship with the trade partners

6. Customer is the king

7. Even Billing Road to ach supplier A

8. Be in touch with the market (70% Market, 30% Office).

9. Plan and Execute annual marketing Calendar-Time to market

10.Display share of 50% -to get 50% consumer share.

GLOBAL SHARE AND REACH

LG Electronics plays an active role in world markets with its assertive global

business policy. As a result, LG Electronics controls 114 local subsidiaries

worldwide, with roughly 82,000 executives and employees.

ASIA & PACIFIC

AustraliaLG Electronics Australia Pty, Ltd.

Marketing

2 Wonderland Drive Eastern Creek NSW2766, Australia

61 2 8805 4000

61 2 8805 4201

IndiaLG Electronics India Pvt. Ltd.

Marketing & Production

Plot No. 51, Udyog Vihar, Surajpur-KasnaRoad, Greater Noida - 201 306 (U.P.)

91 120 2560 900 / 940

91 120 2560 956

IndonesiaP.T. LG Electronics Indonesia

Marketing & Production

(i) Factory 1 (Mail Receipt) : Block -G ,MM2100 Industrial Town, Cikarang Barat,Bekasi 17520 , Jawa Barat - Indonesia

62 21 2930 4000

62 21 5797 3103

Japan LG Electroics Japan co., LTD Hon-Kan9F, Akasaka Twin Tower2-17-22

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Marketing

Akasak,Minato-Ku, Tokyo 107-8512-,Japan

81 3 3588 1911

81 3 3586 3984

KoreaLG Electroics

Headquarters

Twin Tower 128, Yeoui-daero,Yeongdeungpo-gu, Seoul, Korea

82-2-3777-1114

Korea LG Electroics Anyang Institute

77, Heungan-daero 81beon-gil, Dongan-gu, Anyang-si, Gyeonggi-do, Korea

82-31-450-7083

EUROPE

AustriaLG Electronics Austria GmbH

Marketing

Office Campus Gasometer Guglgasse15/4A (Grd Flr, 5th & 6th Flr),A-1110,Vienna, Austria

43 1 74015 4015

43 1 74015 2020

Czech RepublicLG ELECTRONICS CZ, s.r.o.

Marketing

Zlaty Andel, Nadrazni 23/344, 151 34Praha 5, Czech Republic

42 0234 094 600

42 0234 094611

FranceLG Electronics France S.A.S

Marketing

Paris Nord-117 Avenue des Nations BP 59372Villepinte 95942 Roissy CDG Cedex

33 1 4989 8949

33 1 4989 8809

GermanyLG Electronics Deutschland GmbH

Marketing

Berliner Str 93, 40880 Ratingen,Germany

49 210 2700 80

49 210 2700 8777

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GreeceLG Electronics Hellas S.A.

Marketing

1. Ethnarhou Makariou str., Delta PalaioFaliro, PO Box 77331, 175-01, FaleoPaliro, Athens, Greece

30 210 4800 500

30 210 4800 510

HungaryLG Electronics Magyar KFT

Marketing

H-1097, Budapest Konyves Kalman krt3/a Hungary

36 1 455 6060

36 1 455 6066

ItalyLG Electronics Italia S.p.A.

Marketing

Via Dell'Unione Europea, 6 20097 SanDonato Milanese (MI), Italia

39 02 51801 1

39 02 51801 500

NetherlandsLG Electronics Benelux Sales BV

Marketing

Krijgsman 1, 1186 DM Amstelveen , TheNetherlands

31 20 456 3100

31 20 456 3299

Netherlands

LG Electronics European SharedService Center B.V.

Shared Service Center

Krijgsman 1, 1186 DM Amstelveen , TheNetherlands

31 (0) 20 456 3100

31 (0) 20 456 3292

NorwayLG Electronics Norway AS

Marketing

Lilleakerveien 8, 0283 Oslo, Norway

47 67 11 10 90

47 67 11 10 99

PolandLG Electronics Mlawa Sp. z o.o.

Production

ul. LG Electronics 7, 06-500 Mlawa,Poland

23 6547 417

48 23 654 3259

PolandLG Electronics Polska Sp. z o.o.

Marketing

LG Electronics Polska Sp. z o. o.,Mokotow Nova, ul.Woloska 22, 02-675Warsaw, Poland

48 22 481 7100

48 22 481 7888

Poland LG Electronics Wroclaw Sp.z.o.o.

Production

ul LG Electronics 1-2 BiskupicePodgorne, 55-040 Kobierzyce, Poland

48 71 792 9400

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48 71 792 9405

PortugalLG Electronics Portugal S.A.

Marketing

Quinta da Fonte - Edificio D. Amelia RuaVitor Camara, No. 2, Piso 2 2770-229Paco d'Arcos (Oeiras), Portugal

351 21 120 2200

351 21 120 2240

RomaniaLG Electronics Romania S.R.L.

Marketing

17-21 Bucuresti-Ploiesti Baneasa Center,5th Floor, Bucharest, Romania

40 21 233 2491

40 21 233 2478

Spain LG Electronics Espana S.A

Marketing

C/ Chile 1, 28290 Las Rozas - Madrid,Spain

34 91 211 2200

34 91 211 2209

SwedenLG Electronics Nordic AB

Marketing

Esbogatan 18 Akalla P.O.Box 83 SE-16494 KISTA, Sweden

46 8 5664 1500

46 8 5664 1599

The NetherlandsLG Electronics European Holdings B.V.

Holdings

(i) Legal Address : Krijgsman 1, 1186 DM

Amstelveen , The Netherlands

31 (0) 20 456 3100

31 (0) 20 456 3292

Turkey

Arcelik-LG Klima Sanayi ve TicaretA.S.

Production

Gebze Organize Sanayi Blgesi IhsanDede Cad. No :139 41480 Gebze /Kocaeli, Turkey

90 262 678 7703

90 262 678 7879

United KingdomLG Electronics United Kingdom Ltd.

Marketing

LG House, 250~ 252 Bath Road, Slough,Berkshire SL1 4DX, United Kingdom

44 1753 491 500

44 1753 491 500

NORTH AMERICA

Canada LG Electronics Canada, Inc. 20 Norelco Drive, North York, Ontario

M9L 2X6 Canada

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Marketing647-253-6300

647-253-6399

Mexico

LG Electronics Mexicalli S.A.DE C.V.

Production

Calle Orbita #36, Parque IndustrialMexicali ,Mexicali, B.C.C.P. 21600 MEXICO

52 686 561 1339

MexicoLG Electronics Mexico S.A.DE C.V.

Marketing

Sor Juana Ines De La Cruz No. 555 Co.San Lorenzo Tlanepantla Estado DeMexico, C.P. 54033

52 55 5321 1900

52 55 5321 1960

Mexico

LG Electronics Monterrey Mexico S.A.de C.V

Production

Av. Industrias 180, Parque IndustrialPimsa, Apodaca Nuevo Leon

8196 5500

MexicoLG Electronics Reynosa S.A.DE C.V.

Production

CARRETERA A MATAMOROS BRECHA E-99 PARQUE INDUSTRIAL REYNOSA,REYNOSA, TAMAULIPAS, CP 88780

52 899 921 6200

USA

LG Electronics Mobile Research.U.S.A., L.L.C

R&D

10225 Willow Creek Road, San Diego CA92131, U.S.A.

858 635 5300

1 858 805 6668

USA

Zenith Electronics Corporation ofPennsylvania

Production

USAZenith Electronics LLC

R&D

2000 Millbrook Drive, Lincolnshire, IL60069, U.S.A.

1 847 941 8000

1 847 941 8877

United StatesLG Electronics Alabama Inc.

SVC

P.O.Box 240007, 201 James RecordRoad, Huntsville, Alabama 35824, U.S.A.

256-772-8860

256-772-6129

United StatesLG Electronics Mobilecomm U.S.A.,Inc.

Marketing

1000 Sylvan Avenue Englewood Cliffs,New Jersey, U.S.A. 07632, U.S.A.

201 816 2000

201 816 0742

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United StatesLG Electronics U.S.A., Inc.

Marketing

1000 Sylvan Avenue Englewood Cliffs,New Jersey, U.S.A. 07632, U.S.A.

201 816 2000

201 816 0742

LG ELECTRONICS HOLD 22% MARKET SHARE.

PROFITS AND REVENUES

Revenue US$ 48.976 billion (2012)[1]

Net income US$ -423.9 million (2012)[1]

Total assets US$ 28.356 billion (2012)[1]

Total equity US$ 11.195 billion (2012)[1]

Employees 91,045 (2012)[1]

The logistics (Supply Chain Management)

Logistics is the art and science of managing and controlling the flow of goods,

energy, information, and other resources like products, services, and people,

from the source of production to the marketplace. It is difficult to accomplish

any marketing or manufacturing without logistical support. It involves the

integration of information, transportation, inventory, warehousing, material

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handling, and packaging. The operating responsibility of logistics is

the geographical repositioning of raw materials, work in process, and finished

inventories where required at the lowest cost possible.

Logistics Management is that part of the supply chain, which plans,

implements and controls the efficient, effective forward and reverse flow and

storage of goods, services and related information between the point of origin

and the point of consumption in order to meet customers' requirements.

5Rs of Logistic followed by LG:

1. Right Time

2. Right Place

3. Right Condition

4. Right Cost

5. Right Handling

Equipments

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WAREHOUSE WITH THE EQUIPMENT.

WAREHOUSE: REFRIGERATOR AND CTV SECTION

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LG also had a big problem of after saleservice in India.

But LG has taken some solid steps towards improving customers perception

and experience of after sales service. Because it very important in competitivemarket to provide the best service.

L G Electronics has signed a memorandum of understanding with 23 Industrial

Training Institutes to strengthen its after sales service in India.

The company aims to recruit 10,000 people by the end of this year as a part of

its branding strategy to focus on service and move away from discounting.

L G Electronics has identified eight states with high after sales service call

rates to ink the deals with the ITI. Y V Verma, director HR and management

system, LG Electronics said, "The Company was trying to find a solution for

effective after sales service since last two years. There is a huge need of trained

manpower for the after sales service to align with the company's expansion and

focus on the GSM mobiles and the personal computer segments."

1. In the initial phase the company has entered into agreements with ITIs in

the states like Maharashtra, Gujarat, Delhi, Punjab, Assam, and

Karnataka and is in the last leg of signing with Uttar Pradesh.

2. L G Electronics, with 1200 service centers, has already recruited 300

students and plans to beef up the number to 10,000 by the year-end.

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3. "The company has offered a scholarship to the selected

students for the last six months of their training programme,"

4. The company will invest Rs 8 crore (Rs 80 million) in employeedevelopment programme this year with an aim to attain a 8 per cent

attrition rate.

5. The company moved away from the discounting strategy since last year

and is putting thrust on the quality and service in its brand

communication to position LG as a premium consumer electronics

brand.

6. At the top, the Service Division in Korea reports to the Global CMO. (as

mentioned in Dermots public interview in ET on Wednesday). This

shows commitment that Service must be made into a marketing

differentiator, and leveraged thus.

7. LG has the widest service network across the country; some estimates

put it at a significant multiple of service-infrastructure from our nearest

competitor. While the sale size may also be a nice multiple from nearest,

it shows the company is ready to put our money where our mouth is.

8. The company has introduced a 211 service - once you register your

complaint, we will call you back in 2 hours (hence 2), set up an

appointment for the next convenient day for you (hence the first 1), and

show up in the promised 1-hour slot (hence the second 1). If the next

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convenient day for you is the next day, thats great too. Its a

disruptive action in an industry (including LG) having traditionally shied

away from its service responsibilities, and thus not leveraging any

mileage from it.

9. The company is promoting 211 through ATL, probably the first time

after-sales service is being communicated in this fashion by any product

company. You may have seen the TV commercial or heard the radio

advert or seen the newspaper ad or in-shop posters, both of which

revolve around prompt response.

10.The first LG-owned service centre opened in Gurgaon. (Service in India

generally works through authorized service centers, in LGs case they

work exclusively for LG.) A company-owned service centre tries that

much harder, knows things better, and can even contribute as a revenue

center.

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