LED I LCD I PLASMA I SMART I HOME ENTERTAINMENT I SPEAKERS I MP3 PLAYERS

P ES T

i. Increase in import duty chargesii. Digitization in Indiaiii. Government intend to promote local

manufacturing

I. Constant Turbulence in the value of rupee II. Increase in per capita income by 5-6% annuallyIII. Availability of easy finance options

I. India becoming a manufacturing hubII. Incorporation of top end technology across

product rangeIII. Expected 32 billion USD foreign investment

I. Enhanced purchasing powerII. SEC shift (triangle to diamond shape)III. Emergence of masstige segment

PEST INDUSTRY ANALYSIS

SW

OT

I. Strong presence in LED segment (24.2%)II. Strong Distribution network (20,000 retail points)III. Price Advantage over rivalsIV. High Advertising Budget (550-600 Cr.)

I. Low EPS (366 KRW)II. Low profit margins within the categoryIII. Late entrant into audio market (17.3% MS)IV. R&D challenges from Korean counterparts

I. Growing FPT market in India (21.7%)II. Increasing HNI households (3X times)III. Growing rural market (39.8%)IV. Upgrade shift (from CRT-LED; LED-LCD)

I. Emerging domestic players in the market II. Declining LCD Market in India (-

46.2%CAGR)III. Substitutes (Laptops & Mobiles)IV. Increasing labor costs

LG SWOT ANALYSIS

Plasma TV

LED TV

Smart TV

CRT TV

LCD TV

Home Theatres

MP3 Players

& Speakers

Market Penetration Product Development

Market Development Diversification

New

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Existing Products New Products

ANSOFF MATRIX

PORTER’S FIVE FORCES

SW

OT

i. Market leader in FPD TV segment (26.2%)ii. Widest range of products iii. Strong global presence renowned as leader

in innovation

i. Recent cases of patent infringementsii. Low profit margins within the categoryiii. Competition from Sony in premium

segments

SAMSUNG SWOT ANALYSIS

i. No new innovation from LG in recent timesii. Growing TV market in rural Indiaiii. Upgrade shift (from CRT-LED; LED-LCD)

i. Emergence of Chinese counterpartsii. Increasing Labor costsiii. Environmental Concerns

TT

i. Chinese manufacturersii. Global economic slowdowniii. Stiff category competition

i. Emerging domestic playersii. Increased transportation costsiii. Increasing media spends

i. Increasing dual family incomeii. Changing urban lifestyleiii. Untapped rural market

i. Emerging markets like Brazil & South Africaii. Technological advancementsiii. Patents & Related documents

FUTURE THREATS & OPPORTUNITIES

DAY II

There’s a lot changing for us…

DRIVERS OF CHANGE

VARIOUS ENVIRONMENTAL FACTORS

STRATEGIC CHANGES

Localization of goods

Decrease in import duty charges Faster delivery of intermediary products Increase in domestic employment

R&D control

Control on R&D costs Unfavorable time for new launches

Process innovation

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

LEAN manufacturing strategy

Media Spends

Reduction in marketing budget Innovative marketing budget Use of Digital media

Dealer-retailer relationship

Initiatives to enhance relationships Differential profit margins on extraordinary

sales

PORTER’S FIVE FORCES

Threat Of New Entrants Yes No

Is government regulation high? -1Do you have proprietary techniques or patents? -1Does your business have high asset requirements for start up? -1Do you have high profit margins that are widely known? -1Is your industry growing rapidly? -1

TOTAL for Threat of New Entrants -3 -5

Supplier Power Yes No

Would switching suppliers be extremely difficult? +1Are you a small buyer compared to other buyers? -1Is your supplier the exclusive seller of a critical component you buy? -1Do you have an active & beneficial relationship with suppliers? -1Is your supplier flexible on delivery and payment? +1

TOTAL for Supplier Power -3 -1

Buyer Power Yes No

Do you have fewer customers? +1Do your buyers have considerable influence in the price you charge? +1Do you sell to a distributor instead of the end user? +1Are you the only supplier for your buyer +1Do you have a good relationship with your buyers or their representatives? -1

TOTAL for Buyer Power +1 +3

PORTER’S FIVE FORCES (CONTD.)

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

Plasma TV

LED TV

Smart TV

CRT TV

LCD TV

Home Theatres

MP3 Players

& Speakers

Market Penetration Product Development

Market Development Diversification

New

M

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Existing Products New Products

ANSOFF MATRIX

DISTRIBUTION ISSUES & TACTICS

Complexity of business

Distributors fail to stock the entire product range

Aim to reduce complexity Create different dealers for different price

range

Selection criteria

Components of a successful distribution partners

The selection should include important components such as capital, infrastructure, warehousing, transportation and required organizational structure

DISTRIBUTION ISSUES & TACTICS

Cost to serve

Reaching large numbers of rural territories can be a difficult and costly business

Foot soldiers Creating partner or third party

distribution channels

Lowering profit margins

With increasing costs of production margins are likely to lower down

New models of distribution such as factory owned outlets

Multi-brand stores like Chroma, Reliance etc.

E-tailing

DAY III

There’s a lot changing for us…

CHANGING TRENDS IN INDIA

Increasing women employment rate

Largest working population in the world Increasing exponentially at 24%

Rapid urbanization

Migration from rural to urban areas 53% increase in urban units in the last decade

Foreign Direct Investment

51% investment in multi brand retail Influx of foreign retailers

Increasing rental costs Strengthening of modern retail Increasing malls and outlets

Entry of new brands Steady growth of modern retail Increased competition

Changing lifestyle Women playing an important

role in purchase decisions

Smarter consumer

40% of urban consumers look for premium products

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

Growing Rural Markets

Consumer durable market growing at 25% Account for 56% of India’s income 64% of India’s expenditure

CHANGING TRENDS IN INDIA

Higher rejection of products 1n 2012, only 10% of total

10,000 innovations were accepted

Consumer centric goods

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

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

Emergence of satellite towns

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

Reverse brain drain

Trend became noticeable after recession

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

Internal job migration

Internal migration accounts for 30% of the total population

Creates newer market opportunities

OVERALL STRATEGIC PLANNING

LG’s

Overall Industry growth rate – 12%LG’s growth rate – 15%Revenue in 2012 – $4.37 billionExpected revenue by 2015 - $9 billionExpected 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 capacity2) New manufacturing set up

SOCIO-ECONOMIC TRENDS

Household Income

India’s 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 entertainment

Families Increasing at 67%

2013 2014 2015

Up gradation ShiftCRT-LCD; LCD-LED

Increase in sales of LED & Smart TV’s

Increase in sales of Smart TV

2013 2014 2015

Increase in sales of LED’s over LCD’s

Increase in sales of Smart TV & OLED TV’s

Elimination of LCD’’s from urban market

2013 2014 2015

Increase in overall TV sales

Upgradation shifts to smart TV’s

Market penetration of LED TV’s

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

2013 2014 2015

SOCIO-ECONOMIC TRENDS

2013 2014 2015

Increase in sales of premium products

Aspiration to buy premium products

From value to premium purchase

transition

Increasing sales of low value goods

Evolution of social media, tablet and smartphone retailing

E-tailing as an alternate to traditional retail

CRITICAL THREATS

Emerging domestic players in the market

The Porter’s 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

Plasma TV

LED TV

Smart TV

CRT TVLCD TV

Home Theatres

MP3 Players

& Speakers

Market Penetration Product Development

Market Development Diversification

New

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istin

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Existing Products New Products

ANSOFF MATRIX

PRODUCT/MARKET INTERFACE

CORPORATE WARFARE