Wednesday, April 13, 2011
LG Blue Ocean Strategy
LG started a campaign in 2006 entitled ‘BLUE OCEAN 2 BY 10’ which represented LG Electronics’ aim to be among the world’s Top 3 mobile communications in three years. It also focused on high end products and emerging markets like China, India, Middle East and Africa. The company invested a considerable amount of resources on this initiative and planned to achieve the goals by 2010.
LG adopted the mantra ERRC framework which stands for Elimination (of factors that the industry have taken for granted), Reduction (of factors that are below the industry standards), Raising (of factors well above the industry standards) and Creation (of factors that the industry has never created).
The company launched LG chocolate and Black label series in Blue Operation strategy in action in 2006 in mobile communications category along with several ultra premium fashion phones like Shine and Prada in 2008. In 2009, LG launched high end handsets Arena, Viewty Smart, Crystal GD900 and GM730 featured the S-class touch screen user interface.
According to Gartner LG market share,(as shown in the graph) LG suffered a major setback in 2010.
So what was the cause of the setback? It was the LG smart phone strategy. It entered into an agreement with Microsoft to use Microsoft Windows Mobile OS which was not up to the mark. It stressed on a more user friendly interface and more aggressive marketing strategy rather than focusing on the smart phone strategy. Now, the android phone Optimus is one of the best selling smart phones.
What should LG learn from its failure to adopt to the Blue Ocean Strategy?