Nova SBE International Management LG Electronics: Global Strategy in Emerging Markets ENTERPRISE Group 5 Gabriele Liepinyte 1586 Mariana Proença 11089 Olivier Mollerus 1417 Patrícia Milhinhos 11424 Angus Sullivan 1403 Chiara de Benedetto SOUTH KOREA ELECTRONICS INDUSTRY High quality, innovative electronics products Market value of LG Electronics grew 22% World’s first dualsystem DVD player Samsung’s twice market capitalization as Sony’s (Japan) History History Koreans’ prioritize the development of the Electronics Industry The government encouraged foreign direct investment in technology and creation joint ventures. 70% Exports Korea’s electronics were exported by the foreign countries with joint venture History 1980’s Industry Shift Firms were encouraged to invest in local R&D Vocational schools attracted students for technical education Research infrastructures to help the firms were created Education Universities developed experts in science and technology History Exports LG started to export to developed markets Product weren’t well received Enter markets with long-term potential Strategy Move to emerging markets BRAZIL Hard planning Faced adverse economical factors LG decided to stay and expand their presence • Agreements with local distribution chains • Maximize the benefits from the government • Advertise their brand through soccer sponsorship • Customized products • Premium positioning strategy TRUST INDIA 1993 LG enters the market Joint-Venture with local ﬁrm Bestavision IMPORTS LAW Launch LGIL, a fully owned subsidiary in India It took one year to build the ﬁrst factory near New Delhi INDIA MARKETING MIX Product’s were customized to fulﬁll local needs PRODUCT Local R&D teams Adjusting the product instead of lowering prices $ PRICE $ Development different features and using more cost efﬁcient materials INDIA MARKETING MIX Indian leading ﬁlm stars in advertisement Van ﬂeets for quick repairs covering remote areas Service Branding Customer Care Centers Sports Sponsorships INDIA SOCIAL AWARENESS Provides education by building and supporting schools and, offering books India suffers of a bad health and education system Built clinics to provide health care to employees, their families and the community INDIA Organization Top management positions in India taken by local employees High Levels of Autonomy Motivation Localization Philosophy Only major investment decisions and annual targets had to be approved by head ofﬁce in South Korea INDIA COMPETITION 2006 LG leads a variety of markets. LG’s position is threaten with the entrance of ﬁerce competitors in the market RUSSIA 1990 Establishment of diplomatic relations 1998 LG was one of the first Korean companies in Russia • First products were imported • Local plants opened RUSSIA MARKETING MIX • The opening of LG branded stores • Dedicated retail channels • The hosting of festivals and cooking events • Sponsorship • Local offices and R&D center • Sourcing local talent to fill company roles • Opening local manufacturing plants RUSSIA ECONOMY 1998 Russia faced with severe economic crisis Competitors scaled back and retracted from Russia LG invested heavily in their Russian operations Local product customization Event sponsorship Distribution channels RUSSIA NARODNAYA MARKA • Seal of approval for “national brands” • LG allowed by the Russian government to display on products A sign of LGs effective localisation strategy ✓ China Good geographic proximity to Korea 1988 Scouting mission Hong Kong 1991 LG enters China, through a joint venture Huizhiou 16 corporations now China PROBLEMS Unique nature of government regulations Geographica l proximity Diseases (SARS crisis) China STRATEGIES Same as when they entered Brazil and India, with some variations in the overall strategy They tried to get local consumption instead of export Build strong manufacturing presence China STRATEGIES I love China campaign (free sanitary masks against SARS) Branding Local event sponsoring R&D facility in Beijing Hiring local employees (98% of employees Human Resources local Chinese) Challenges New market entrants ? What to do next? Competition Dominant powers within electronics Emerging or, Developed markets? Local rivals Thank you for your attention!