The Internationalization Case Study of LG Electronics

1. About the Firm LG Electronics (LG) is the second largest Korean Chaebol in consumer electronics after Samsung. Established in 1958, LG was originally known under the brand Lucky Goldstar. During the 1960s, LG produced Korea’s first radios, television sets, refrigerators, washing machines, and air conditioners. In 1995, renamed LG Electron­ics, the Korean conglomerate

The Elements of Entry Strategy

Entry strategy for international markets is a comprehensive plan. It sets forth the objectives, goals, resources, and policies that will guide a compa­ny’s international business operations over a future period long enough to achieve sustainable growth in world markets. For most companies the entry-strategy time horizon is from three to five years, because it

1 Comments

Classification of Entry Modes

An international market entry mode is an institutional arrangement that makes possible the entry of a company’s products, technology, human skills, management, or other resources into a foreign country. For a domes­tic company already located in the country that contains its market, the question of entry mode as distinguished from market entry (the marketing

2 Comments

Factors Influencing the Choice of the Entry Mode

A company’s choice of its entry mode for a given product/target country is the net result of several, often conflicting, forces. The variety of forces, difficulties in measuring their strength, and the need to anticipate their direction over a future planning period combine to make the entry mode decision a complex process with numerous

1 Comments

Dynamics of Entry Mode Decisions

Once started in international business, a company will gradually change its entry mode decisions in a fairly predictable fashion. Increasingly, it will choose entry modes that provide greater control over foreign marketing operations. But to gain greater control, the company will have to commit more resources to foreign markets and thereby assume greater market

The International Marketing Plan

The design of a company’s market entry strategy for a given product/target country requires the formulation of a marketing plan as well as the choice of an entry mode. The entry mode is intended to penetrate the foreign Table 3 Stages in the International Evolution of a Manufacturing Company target country; the marketing plan

2 Comments

A Logical Flow Model of the Entry Decision Process

Figure 4 presents a logical flow model of the entry decision process. In the remainder of this text, we shall flesh out this model, with the intent of helping managers make better decisions. Source: Root Franklin R. (1998), Entry Strategies for International Markets, Jossey-Bass; 2nd

1 Comments

Target International Market

In planning international market entry strategies, managers are striving to match products against markets. Which products shall we market abroad? To which countries? These are the two key questions at the start of the planning process. It follows that decisions on international products and markets involve the simultaneous determination of a candi­date product and

1 Comments

Choosing the Candidate Product

The most critical element in planning international market entry strategies is the choice of the product. A company with a single product needs only to decide whether that product is a suitable candidate for international market entry, that is, a product with good enough prospects to warrant an investi­gation of foreign markets. But the

1 Comments

Adapting Products for International Markets

Manufacturers may need to adapt their products to foreign markets to gain a desired level of buyer acceptance. Adaptation may be called for in the physical product, the way in which the physical product is identified and presented to final buyers (product package), or the way in which the use of the physical product

1 Comments

Preliminary Screening of Country Markets

After choosing the candidate product, company managers can turn to the identification of the country market with the highest sales potential. We discuss the process of deciding on the foreign target market according to the model presented in Figure 7. In this section we consider the first phase of the model: preliminary screening. The

1 Comments

Estimating Industry Market Potentials

After preliminary screening, the next stage of the target market selection model depicted in Figure 7 is a more refined estimate of the market poten­tials for the candidate generic product in the comparatively small number (say, 15) of prospective target countries. We define industry market potential as the most probable total sales of a

1 Comments

Estimating Company Sales Potentials

We define company sales potential as the most probable sales of a compa­ny’s product in a designated country over a strategic planning period, given assumptions with respect to entry mode and marketing effort.8 Company sales potential may also be viewed as a company’s most probable share of a country’s industry market potential. CSP depends

1 Comments

Exporting as a Learning Experience

To go international for the first time, a company must overcome anxieties about its ability to compete in foreign markets. The neophyte international firm, therefore, is more concerned with minimizing international market and political risks than with maximizing control over international market­ing operations. Given this situation, exporting will usually appear to the manufacturer as

2 Comments

Direct Exporting

To get its product into a foreign target market, a company can use any one of several export modes or channels. The principal export channels are depicted in Figure 11. The key distinction among these alternative channels is the presence or absence of independent export agencies located in the home country. When a manufacturing

1 Comments

Determining the Direct Export Channel

To make a rational determination of a direct export channel for a target country/market, managers need to make decisions on three levels. First, they must decide what the channel is intended to accomplish (determining performance specifications). Second, they need to decide which channel (or channel mix) is optimum by matching their performance specifications against

1 Comments

Choosing a Foreign Agent/Distributor

When a company decides that its most attractive export channel is an agent or distributor channel, it must then initiate a screening process to choose individual agents or distributors.6 Finding good foreign distributors and agents is a major problem for manufacturers, and demands considerable attention and effort. In this section, we shall focus on

1 Comments

Export Operations

It is beyond the scope of this text to describe export operations in any detail. Instead, this section highlights three key aspects of the export trans­action: (1) documentary requirements, (2) price quotations, and (3) pay­ments arrangements. The section closes with some observations on organizing for export. 1. Documentary Requirements The documentary requirements of international

2 Comments

Letting Started in Export

This section is addressed to the company that wants to enter export mar­kets but has no prior experience in international business. To obtain information on foreign markets and how to go about export­ing, the U.S. manufacturer can contact many sources, but three sources deserve special mention: (1) the U.S. Department of Commerce and its

1 Comments

Licensing as a Primary Entry Mode

As is true of any entry mode, licensing offers both advantages and disad­vantages to manufacturers. 1. Advantages of Licensing The most obvious advantage of licensing as an entry mode is the circum­vention of import barriers that increase the cost (tariffs) or limit the quan­tity (quotas) of exports to the target market. Instead of transferring

3 Comments