LG's Growth Strategies in India

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Case Details:

Case Code : MKTG115
Case Length : 19 Pages
Period : 1998 - 2005
Pub Date : 2006
Teaching Note :Not Available
Organization : LG
Industry : Consumer Electronics
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Big Plans for India Contd...

By 2001, LG became India's fastest growing electronics, home appliances and computer peripherals company. By the end of 2003, LG emerged as the market leader in consumer electronics and home appliances. Innovative and customer friendly products, along with competitive pricing and vast distribution network enabled LG to become market leader in its business.

To meet the growing demand for its products, LG started its second manufacturing plant in Pune in October 2004 (Refer Table II for LG's market share as of 2004).

By the end of 2004, LG had more than 50 million customers and its turnover was more than Rs. 65 billion. LG started manufacturing GSM⁶ mobile phones in early 2005 in its Pune plant. In December 2005, LG announced that it would also start producing CDMA⁷ mobile phones.

The company planned to invest Rs. 1.3 billion into R&D in India by 2010. LG aimed to increase its revenues from US$ 2 billion (approximately) in 2004 to US$ 10 billion by 2010.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

According to Francis Xavier, Managing Director, Francis Kanoi Marketing Planning Services⁸, "LG has taken a share from everyone to be the number one in virtually all the consumer electronics and appliances fields." ⁹

Background Note

LG's history dates back to 1947 when Lucky Chemical Industrial Company (LCIC), the first chemical company in South Korea, was established. In 1958, LCIC started Goldstar Company to manufacture consumer durables. Within a year of its inception, Goldstar manufactured Korea's first radio called A 501.

In the 1960s, it started exporting radios to the US and Hong Kong and manufactured Korea's first telephone, refrigerator and black & white television. With the consumer durables business picking-up, LCIC changed its name to Lucky Goldstar.

Since South Korea was a small market, Lucky Goldstar expanded its operations to foreign countries and established its first overseas branch in New York in 1968. In the same year, it manufactured Korea's first air conditioner. By the 1970s, Lucky Goldstar became the first Korean consumer electronics company to get listed on the Korean stock exchange and in 1977 its sales reached 100 billion Won.¹⁰...

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6] Global System for Mobile Communications (GSM) uses Time Division Multiple Access (TDMA) technology that allows eight simultaneous calls on a single radio frequency. It is the most popular mobile phone technology in Europe and Asia.

7] Code Division Multiple Access (CDMA) is a spectrum spread technology which allows many users to occupy the same time and frequency allocations in a given band/space. It assigns unique codes to each user to differentiate from others in the same spectrum. It is most popular in North America.

8] Francis Kanoi Marketing Planning Services (P) Limited is a Chennai-based market research and analysis company.

9] Neha Kaushik, "The Korean Juggernaut," www.thehindubusinessline.com, September 22, 2005.

10] As of December 16, 2005, 1 US$ = 1,025.43 South Korean Won.