麦肯锡_天津LG发展战略咨询报告

010326SH_120703_085v5iCONFIDENTIALDevelopingaWinningStrategyfortheMicrowaveOvenBusinessinChinaLGElectronicsTianjinAppliancesCo.,LtdFinalprogressreviewApril9,2001Thisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.010326SH_120703_085v5i1THEJOINTLG/McKINSEYTEAMHASCOMPLETEDTHEPROJECTWITHIN5WEEKSModulesKeyactivitiesMarketDemand/Forecast•Forecastpotentialmarketbysegmentthroughrefiningmarketsegmentation,understandingkeygrowthdrivers,andmodelingmarketgrowthLGEperformanceassessment•ConductinternaldatacollectionwithinLGE•DevelopsoundunderstandingofvaluepropositionbasedonavailablemarketresearchincludingbrandingandconsumersurveyStrategicdevelopmentopportunities•Analyzedifferentproductmixoptions•Gatherinformationonbrandingandmarketing•Conductchanneldiagnosis•AnalyzevaluechaincostsCompetitor•Developcompetitiveassessmentformicrowaveovencompetitors•Conductinterviewswithdistributors,retailers,governmentagencies,competitorstocollectcompetitorinformationConsumer•Conductconsumersurveyviaexternalresearchhousein6specifiedcitiesand1ruralareatounderstandconsumerpurchasingbehaviorEndproducts•Marketdemandforecastbyareasandproducttype•Currentorganization’sstrengthsandweaknesses•Currentprocessesandincentivesystemsstrengthsandweaknesses•LGEaspirationsforfuturegrowth•Highlevelrecommendationonproductmix•Brandpositioningstatusandrecommendations•Channelmixdiagnosisandhighlevelchannelprioritization•Detailedbreakdowncomparisononcosts,COGSinparticular•Analysisonoverallcompetitiveenvironment•Detailedinformationoncompetitorperformanceincludingsales,branding,pricing,channelmixandincentives•Keycompetitors’COGSanalysis•Strengthsandweaknessesofeachcompetitorgroupandtheimplications•Detailedanalysisonconsumerpurchasingpattern010326SH_120703_085v5i2TODAY'sDISCUSSION¶TheMicrowaveovenmarketinChinawillcontinueitsstronggrowthandshouldreach7.5millionunitsin2003.PrimaryregionswillbeCentralChina,followedbySouthandSouthwestChina.Otherregionsshoulddevelopasincomegrows.Computergrillandmechanicalgrillshouldfurtherincreasetheirshareaspricesdecline.¶Fourcustomersegmentsarefoundfrommarketresearch:Premiumbuyers,basicbrandbuyers,rationaltechnophile,andgenericbuyers.Allsegments,exceptpremiumbuyers,arehighlyprice-sensitive,thusskewingmarketdemandtowardslow-endproducts.Atthesametime,reliableperformance,easeofuse,andgoodafter-serviceareimportantacrosssegments.¶ThecompetitioninChinaisalreadyintenseandwillcontinuetoincrease,asGalanzandMideahavehugeambitionsinthemarket.Inaddition,thesevereovercapacity(about45%)willcontinuetoforcepricesdownwardsthusthreateningprofitabilityforallbutthelowestcostplayers.¶LGhasbuiltasuccessfulplatformforgrowth,becoming#2inChina,althoughfarbehindGalanz,byfocusingonpremiumproductsandintheBeijingarea.Facedwiththeissueoffurthergrowthandimprovingprofitability,LGnowneedstochoosebetweenahighgrowthstrategy,withtheobjectiveofbecomingtheleadingplayerandtoreachbreakevenin2005,ortoremainapremiumnicheplayerfortheforeseeablefuture.¶Toachievetheaspirationofbecomingaprofitable#1PlayerinChina,LGneedstolaunch5strategicinitiatives:(1)launchathreestepregionalexpansion,firstfromBeijingtoWuhan,(2)introduceentryproductstocoverallpricepointswhilecontinuingtointroducehighendproductstocreatemargins,(3)improvechannelcoveragebyincreasingthedistributornetworkandthesalesforceresources,(4)increasesignificantlyadvertisingspendingwhileoptimizingmediamix,(5)reduceaggressivelycostbyleveragingeconomiesofscale.010326SH_120703_085v5i3TODAY'sDISCUSSION¶TheMicrowaveovenmarketinChinawillcontinueitsstronggrowthandshouldreach7.5millionunitsin2003.PrimaryregionswillbecentralChina,followedbySouthandSouthwestChina.Otherregionsshoulddevelopasincomegrows.Computergrillandmechanicalgrillshouldfurtherincreasetheirshareaspricesdecline.¶Fourcustomersegmentsarefoundfrommarketresearch:Premiumbuyers,basicbrandbuyers,rationaltechnophile,andgenericbuyers.Allsegments,exceptpremiumbuyers,arehighlyprice-sensitive,thusskewingmarketdemandtowardslow-endproducts.Atthesametime,reliableperformance,easeofuse,andgoodafter-serviceareimportantacrosssegments.¶ThecompetitioninChinaisalreadyintenseandwillcontinuetoincrease,asGalanzandMideahavehugeambitionsinthemarket.Inaddition,thesevereovercapacity(about45%)willcontinuetoforcepricesdownwardsthusthreateningprofitabilityforallbutthelowestcostplayers.¶LGhasbuiltasuccessfulplatformforgrowth,becoming#2inChina,althoughfarbehindGalanz,byfocusingonpremiumproductsandintheBeijingarea.Facedwiththeissueoffurthergrowthandimprovingprofitability,LGnowneedstochoosebetweenahighgrowthstrategy,withtheobjectiveofbecomingtheleadingplayerandtoreachbreakevenin2005,ortoremainapremiumnicheplayerfortheforeseeablefuture.¶Toachievetheaspirationofbecomingaprofitable#1PlayerinChina,LGneedstolaunch5strategicinitiatives:(1)launchathreestepregionalexpansion,firstfromBeijin