Case Study LG- blue ocean strategy

Zaman University

Business Strategy

MIS 411 Section 1

Instructor: Timothy John Costelloe

Case Study: LG Company

Sovanna Suos

11/11/2015

Case study Sovanna suos

Case Study: LG Compamy

I. List down all the parameters that you would be considering, if you were to start a business enterprise (manufacturing, distribution and selling) in any country?

If I were to start a business enterprise in any country, parameters that I would be considering are:

1. Product (Internal Factor) What is my product? Manufacturing product or service? What is my product and company’s strength and weaknesses?

2. Value Proposition (Internal Factors) What is my value preposition and the uniqueness of my product? Differentiations?

3. Customer and Channel (External Factor) Who are my target customers? Why do they need and want my product? Why they would choose my brand over the others? What are the channels to get to them? What are their lifestyle and literacy degree?

4. Partnership (External Factor) With whom I have to make partnerships in order to sell my product effectively?

5. Market and competitors (External Factor) Is it a new or existing market? Who else are in the market? How are they performing in the market? What are their strengths and weaknesses? What is the overall market condition? And the market condition of my industry? What are the available resources? Infrastructures? Where most of the market locate in? The location of my company/ business?

6. Country and the development (External Factor) What is the political situation of this country? Political stability? What are the foreign trade regulations? Technology and the development level? Are there technological people

7. Legal and regulation (External Factor) Company registration and tax duty Are there any rules and regulations concerning my operation process and product

distribution?


What is the country minimum wage? Are there any labor restriction policy/law? Employment law? Product safety?

8. Risk (Plan and Strategy) What are the risks that may occur in the future?

9. Cost (Internal Factor) What is the startup cost? What is the funding source I would like to use? Loan? Person investment? Sell stock?

II. “We will pursue a ‘Blue Ocean Strategy’, which is to move away from ordinary products to create genuine differentiation.”17 Why and in what way has LG put the Blue Ocean Management campaign into practice?

To earn more profit and create new market space To become the top 3 in consumer electronic industry by 2010 To double sale and profit by 2010 with 30% of its sales and 50% of its profits coming

from Blue Ocean products To be the leader in consumer electronics and mobile mobile headset market To focus on high end products and entering new markets like China, India, Middle East

and Africa to create uncontested market space

Blue Ocean Strategy is not easily copied. It reap the benefits of creating Blue Oceans over a lengthy time and the creator gains the advantage of building brand image. It also motivates innovative and reduces cost. Thus, Blue Ocean Strategy gives the business brand recognition, economies of scale and especially earning higher profits through new markets.

The strategies adopted by LG in the Chinese market:

"In China, there is no future competing in 'Red Ocean' markets, so we must focus on the 'Blue Ocean' segment and penetrate high-end sectors. As part of its (LGE’s) new strategy, we had chosennChina as one place where it (LGE) wants to create a "Blue Ocean" market."

LG implemented the Blue Ocean Strategy through new product launches and focused on the high-end segment. LG saw that there were demands of mobile handset in the market. Therefore, they launched their first Blue Ocean product, new GSM mobile phone, named


as ‘Chocolate’. The mobile phones were equipped with features of a .3 mega pixel camera and an MP3 player.

The sale went sharply high. It grew from 3.2 million to 8 million units for this model. The company later launched a new shine phone in this series.

LGE secondary focus was on digital display because it grew worldwide of 214% of LCD TV. They focused on high-end products under Blue Ocean. Their strategy for this market is

to develop a large screen TV to capture the high-end segment of the market achieving economies of scale through localizing production LGE plans to increase research, development and design

III. “Creating Blue Oceans is not a static achievement but a dynamic process.”28 Based on your understanding of the 3rd prerequisite conceptual understanding, explain how companies can sustain the Blue Oceans that they have created? What are the challenges that companies might face in trying to sustain the Blue Ocean Strategy?

Blue Ocean Strategy is a dynamic process. The challenge for sustaining a Blue Ocean practice is imitation by competitors. The other challenge is to create innovative products for customers every time. To sustain benefits from the Blue Ocean, companies have to constantly innovate and upgrade their products and services.

One obvious example is Apple Company. At first, Apple created i-Pod as a Blue Ocean market in the music industry. But competitors soon imitated the i-Pod. When the market for i-Pod went down, Apple developed new product like i-Phone to recapture the market.

Thus innovation is the sustainability of Blue Ocean.
