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THE BLUE OCEAN STRATEGY: L.G ELECTRONICS LTD.

Critically evaluate the Blue Ocean Strategy in reference to L.G


Electronics Ltd.
1.0 Introduction
2.0 Company Background
As stated by Shah (2006), the company was founded in 1947 as Lucky Chemical Industrial
Corporation (LCIC), which manufactured cosmetic cream known as Lucky Cream. Later in the
year 1952, it diversified into plastic industry and manufactured cosmetics container lids. In
1958, it further diversified into electronics industry under the name Goldstar, which it first
manufactured Radio and sold in the Korean Market. Thus it acquired the name LG, which is
Lucky Goldstar (Hoesel, 2013).
The LG Company which actually started its journey producing radios and then electric fans,
slowly diversified into other segments such as refrigerators, air-conditioners, black-and-white
televisions and washing machines in 1960s (Michell, 2011). The companys grew at a
tremendous pace and thus in the year 1997, the company stood at third position among the
Korean chaebol ( Cyn , 2009). The company is primarily known as the manufacturer of the
low-cost appliances boasts of having 77,000 employees around the globe. At present, the
companys main business units are Mobile Communications, Digital Displays, Digital
Appliances and Digital Media.
In order to gain global prominence and to sustainable competitive advantage , the company
embraced the philosophies of Great company , Great People and also pursued growth
strategies such as fast innovation and fast growth to keep up with the competition (Shah ,
2006). Thus , in the same way , to gain global market share it started to concentrate on
contemporary strategic decisions which made the company to launch the Blue Ocean
Management Campaign in the year 2006 . Therefore, the following sections of this
assignment discusses the blue ocean strategy followed by the company in its aim to be in top 3
electronics firms in the world .

3.0 Global Consumer Electronics


The consumer electronics industry was very dynamic and ever changing impacting every
aspect
of modern life. The demands of the consumers were ever-increasing and the companies were
using state-of-the-art technologies to stay in competition. The electronics sector held great
potential not only for the new-entrants, but also for the existing industry giants. To stay ahead
of
competitors, companies constantly moved into new markets emerging around the world. To
succeed in these global markets, consumer electronics companies ensured that their products
were
compatible with local infrastructure. User interfaces and embedded software were being
localized, providing documentation and support systems to the needs, language, and culture of
local users at the same time controlling costs and accelerating time-to-market.15
The consumer electronics market generated total revenues of $49.7 billion in 2005 with the
growth of 11.9% representing a Compound annual growth rate (CAGR) of 10% for the fiveyear
period spanning 2001- 200516. Sales from products like plasma and LCD television and other
video segment had generated total revenues of $39.6 billion, equivalent to 79.7% of the
markets
overall value17. (Exhibit II) The increasing popularity of the digital music format like MP3
players, the sale of audio equipment also contributed significant revenues, with total sales of
$6.2
billion in 2005, equating to 12.4% of the markets aggregate revenues.18 The Asia-Pacific
region
constituted 31.7% of the in global consumer electronics industry as global revenues with rising
income levels in China and India stimulating consumer spending there.19 In the Asian region
South Korea represented with 9.8% of market share which was small but held an important
share
in wireless, Internet services and applications and in the digital market20. (Exhibit III)

4.0 Blue Ocean Strategies


4.1 High-End products
4.1.1 Mobile communications
4.1.2 Digital displays
4.1.3 Digital Appliances

4.2 New Markets


4.2.1 China
4.2.2 India
4.2.3 Middle East

5.0 Conclusion

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