Case Study: LG Electronics Global Strategy in Emerging Markets LG Electronics is the lead company of LG Group, a South Korean multinational

corporation. The group consists of five business units - Home Entertainment, Mobile Communications, Home Appliance, Air Conditioning and Business Solutions. LG Electronics had been quite instrumental in launching the LG brand worldwide. Given its suite of consumer products, ranging from home appliances to mobile telephones, LG had been at the forefront of the groups globalization efforts. In general LG, exemplified a come from behind approach to defining its strategy by focusing first on markets that few dared to enter. It had formulated a unique mix of management principles and practices to fight its way to the top in the consumer electronics and appliances industry. It owed much of its origins to the competitive context within which it had evolved.1 LG emerged in Korea during the decades following the Second World War. This gave LG key strengths to enter developed-economy markets and strongly affected its ability to expand into the BRIC economies. The domestic Korean market was highly competitive, which helped its ability to endorse come from behind approaches in other locations in both the developed and the developing world. As the Korean Government placed strong emphasis on R&D within LGs home economy, it enabled LG to have quick and effective localization of products and services. Also, LG made use of the OEM model in its formative years to enter into the markets of developed countries where brand recognition was one of the major factors that played an important role in the customers purchasing decision. Korean electronics market also made use of cheap labor and raw materials available in the country to produce new and innovative differentiated products to help them enter into the developed markets with their own brand names. On the other side, LG built on its experience of working with governments; which it then displayed most effectively in Brazil. As the Korean Government encouraged foreign direct investment, LG partnered with Hitachi of Japan, again allowing it to develop valuable partnership experience that would be brought to bear on joint ventures within emerging economies. Lastly, emerging within an economically disadvantaged South Korean economy gave LG an awareness of its social responsibility, which it displayed most effectively in India. Faced with the difficulties in establishing a foothold in developed-country markets, LG established an alternative approach in emerging markets. LG has used a combination of 'globalization' and 'localization' strategies through extensive research and development, and customization efforts to take and stay at the top of these emerging markets. LG customized their efforts for each country, focusing on unique cultural and social dimensions of their consumers lives through this heavy R&D emphasis. With in each country came different unique challenges and changes that needed to be done to keep LG at the forefront of the electronic world, constantly re-determining their position in their market in order to tailor their plan accordingly. For example, in Brazil, LG tried to show local support and gain brand recognition and popularity through sponsoring sporting events and even united with the government in the fight against the smuggling of grey products into the country. In India, LG made product variations that would meet the unique demands of the local consumer as the small TV with a cricket video game. This TV also had other features to deal with Indias unique needs, i.e. fluctuating power currents and lighting. In Russia LG brand recognition was accomplished by event sponsorships as LGs customization of the products for the Russian market began to enter popularity. The government approval of LG the use of the NarodnayaMarka logo was a true sign of a successful localization strategy. Mentioning the long history of LG in emerging market, one can deduce many critical points of learning that can be distilled from LGs success in these markets. LG Electronics success in the emerging markets can be attributed to its localization approach, dedication to customer values, public visibility and distribution channels. These advantages allowed LG to stay competitive while its competitors scaled down their operation or exited the marketplace. LGs Localization Management Strategy focused on production localization, R&D localization, human resource localization and market localization.

1 LG Electronics: Global Strategy in Emerging Markets (Thunderbird Global School of Management 2007)