LED I LCD I PLASMA I SMART I HOME ENTERTAINMENT I

SPEAKERS I MP3 PLAYERS

PEST INDUSTRY ANALYSIS

P
S

i.
ii.
iii.

I.
II.

III.

Increase in import duty charges

Digitization in India
Government intend to promote
local manufacturing

Enhanced purchasing power

SEC shift (triangle to diamond
shape)
Emergence of masstige segment

E
T

I.
II.
III.

I.
II.
III.

ConstantTurbulence in the value of rupe

Increase in per capita income by 5-6%
annually
Availability of easy finance options

India becoming a manufacturing hub

Incorporation of top end technology
across product range
Expected 32 billion USD foreign
investment

LG SWOT ANALYSIS

S
W
I.
II.

III.
IV.

O
T

Strong presence in LED segment (24.2%)

Strong Distribution network (20,000 retail
points)
Price Advantage over rivals
High Advertising Budget (550-600 Cr.)

I.
II.
III.
IV.

Low EPS (366 KRW)

Low profit margins within the
category
Late entrant into audio market
(17.3% MS)
R&D challenges from Korean
counterparts

I.
II.
III.
IV.

I.

II.
III.
IV.

Growing FPT market in India (21.7%

Increasing HNI households (3X time
Growing rural market (39.8%)
Upgrade shift (from CRT-LED; LED-L

Emerging domestic players in the

market
Declining LCD Market in India (46.2%CAGR)
Substitutes (Laptops & Mobiles)
Increasing labor costs

ANSOFF MATRIX

Existing
Markets

Existing Products

New Products

LE
D
TV
Plas
ma
TV

MP3
Player
s&
Speak
ers

Home
Theatr
es

New
Markets

Market Penetration

Product Development

Market
Development
LC
D
TV

Sma
rt TV

Diversification
CRT
TV

PORTERS FIVE FORCES

SAMSUNG SWOT ANALYSIS

S
W
i.

ii.
iii.

Market leader in FPD TV segment

(26.2%)
Widest range of products
Strong global presence renowned
as leader in innovation

i.
ii.
iii.

Recent cases of patent

infringements
Low profit margins within the
category
Competition from Sony in
premium segments

O
T

i.
ii.
iii.

i.
ii.
iii.

No new innovation from LG in

recent times
Growing TV market in rural India
Upgrade shift (from CRT-LED; LEDLCD)

Emergence of Chinese counterparts

Increasing Labor costs
Environmental Concerns

FUTURE THREATS & OPPORTUNITIES

i.
ii.
iii.

i.
ii.
iii.

Emerging markets like Brazil &

South Africa
Technological advancements
Patents & Related documents

Increasing dual family income

Changing urban lifestyle
Untapped rural market

i.
ii.
iii.

i.
ii.
iii.

Chinese manufacturers
Global economic slowdown
Stiff category competition

Emerging domestic players

Increased transportation costs
Increasing media spends

DAY II

Theres a lot changing for us

DRIVERS OF CHANGE

VARIOUS ENVIRONMENTAL FACTORS

STRATEGIC CHANGES
Localization of goods

Process innovation

Decrease in import duty charges

Faster delivery of intermediary
products
Increase in domestic employment

Green manufacturing
Use of renewable sources of
energy
Implementation of just in
time(JIT), LEAN manufacturing
strategy

R&D control

Control on R&D costs

Unfavorable time for new
launches

Dealer-retailer relationship

Initiatives to enhance relationships

Differential profit margins on
extraordinary sales

Media Spends

Reduction in marketing
budget
Innovative marketing
budget
Use of Digital media

PORTERS FIVE FORCES

Threat Of New Entrants

Yes

Is government regulation high?

-1

Do you have proprietary techniques or patents?

-1

Does your business have high asset requirements for start up?

-1

No

Do you have high profit margins that are widely known?

-1

Is your industry growing rapidly?

-1

Supplier Power
TOTAL for Threat of New Entrants

Yes
-3

Would switching suppliers be extremely difficult?

+1

Are you a small buyer compared to other buyers?

Is your supplier the exclusive seller of a critical component you
buy?
Do you have an active & beneficial relationship with suppliers?
Is your supplier flexible on delivery and payment?

No
-5

-1
-1
-1
+1

PORTERS FIVE FORCES (CONTD.)

Buyer Power

Yes

Do you have fewer customers?

Do your buyers have considerable influence in the price you
charge?

+1

Do you sell to a distributor instead of the end user?

+1

No

+1

Are you the only supplier for your buyer

Do you have a good relationship with your buyers or their
representatives?

+1
-1

TOTAL for Buyer Power

+1

+3

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

ANSOFF MATRIX

Existing
Markets

Existing Products

New Products

LE
D
TV
Plas
ma
TV

MP3
Player
s&
Speak
ers

Home
Theatr
es

New
Markets

Market Penetration

Product Development

Market
Development
LC
D
TV

Sma
rt TV

Diversification
CRT
TV

DISTRIBUTION ISSUES & TACTICS

Complexity of business

Aim to reduce complexity

Create different dealers for different
price range

The selection should include

important components such as
capital, infrastructure,
warehousing, transportation and
required organizational structure

Distributors fail to stock the

entire product range

Selection criteria

Components of a successful
distribution partners

DISTRIBUTION ISSUES & TACTICS

Cost to serve

Reaching large numbers of rural

territories can be a difficult and
costly business

Lowering profit margins

With increasing costs of

production margins are
likely to lower down

Foot soldiers
Creating partner or third
party distribution channels

New models of distribution such as

factory owned outlets
Multi-brand stores like Chroma,
Reliance etc.
E-tailing

DAY III

Theres a lot changing for us

CHANGING TRENDS IN INDIA

Increasing women employment rate

Largest working population in the world

Increasing exponentially at 24%

Changing lifestyle
Women playing an
important role in purchase
decisions

Rapid urbanization

Migration from rural to urban areas

53% increase in urban units in the last decade

Increasing rental costs

Strengthening of modern
retail
Increasing malls and outlets

Entry of new brands

Steady growth of modern ret
Increased competition

Foreign Direct Investment

51% investment in multi brand retail

Influx of foreign retailers

CHANGING TRENDS IN INDIA

Smarter consumer

40% of urban consumers look for

premium products
50% of consumers actively seek for
deals
67% read reviews before making a
purchase

Higher rejection of
products
1n 2012, only 10% of
total 10,000 innovations
were accepted
Consumer centric goods

Growing Rural Markets

Consumer durable market growing

at 25%
Account for 56% of Indias income
64% of Indias expenditure

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

Emergence of satellite
towns

Suburban shift
Currently 35 satellite towns
in India
Expected to be 150 by 2015

Internal job migration

Internal migration accounts for 30%

of the total population
Creates newer market opportunities

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

Reverse brain drain

Trend became noticeable

after recession
Better growth
opportunities, family
reasons, cultural ties,
and immigration issues
key drivers

OVERALL STRATEGIC PLANNING

LGs
Overall Industry growth rate 12%
LGs growth rate 15%
Revenue in 2012 $4.37 billion
Expected revenue by 2015 - $9 billion
Expected 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 capacity
2) New manufacturing set up

SOCIO-ECONOMIC TRENDS
Household Income

Indias 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

Up gradation Shift
CRT-LCD; LCDLED
201
3

Increase in sales
of LEDs over
LCDs
201
3

Increase in
overall TV sales
201
3

Increase in sales
of LED & Smart
TVs
2014

Increase in sales
of Smart TV &
OLED TVs

Increase in sales
of Smart TV
2015

Elimination of
LCDs from urban
market

2014

2015

Market
penetration of
LED TVs

Upgradation
shifts to smart
TVs

2014

2015

SOCIO-ECONOMIC TRENDS
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

From value to
premium
Aspiration to buy
purchase
premium products
transition
201
3

2014

Increase in sales of
premium products
2015

Evolution of social E-tailing as an

Increasing sales media, tablet and alternate to
smartphone
traditional retail
of low value
retailing
goods
201
2014
2015
3

CRITICAL THREATS

Emerging domestic players in the market

The Porters 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

ANSOFF MATRIX

Existing
Markets

Existing Products
Sma
rt TV

Home
Theatr
es

LED
TV

New
Markets

Market Penetration
Market
Development
LC
Plas
ma
TV

D
TV
MP3
Player
s&
Speak
ers

New Products

Product Development
Diversification

CRT
TV

PRODUCT/MARKET INTERFACE

CORPORATE WARFARE