LG shifts focus from suppliers to consumers

LG shifts focus from suppliers to consumers

Author | Source: The Economic Times | Saturday, Sep 16,2006 9:06 AM

LG shifts focus from suppliers to consumers

Consumer electronics major LG Electronics will soon restructure its business model in India. It plans to move from a supplier-focused business to a more customer-focused management approach to achieve a quantum leap in its Indian operations.

The company's cost innovation efforts have so far been on supply chain and vendor development. But LG Electronics India's future efforts on cost innovation will be on value creation for the end consumer. This restructuring of the Indian operation is in line with LG's recently drawn global '2 by 10' strategy, whereby it is targeting a turnover of Rs 16,000 crore from India by '10.

In the latest issue of LG's global newsletter LG News, some of the key initiatives which the company proposes to adopt include revision of the entire management system to be more customer-centric, creating a swift responsive capability to customer niches from earliest business planning stages to execution and reinforcing of the process of gathering and analysing market signals.

Confirming this, Girish Rao, vice-president (sales) at LG Electronics India, said: “The company will draw up a strategy for ground-level implementation of their new business model by the end of this month. LG India is going to adopt this strategy for taking the company to the next level.”

LG Electronics India will also work on critical areas like product design and customer care. “We currently move up the value chain from the vendor to customer. The entire process will be reversed to add more value to the consumer. This new business model will be implemented from '07,” Mr Rao said.

Furthermore, extracts of LG News note that the decision to restructure the business model was taken in a 'Global CEO Strategy Meeting' held on August 24-25 at the LG Academy in Kyunggi Province, Korea. The meet was presided over by Bon-Moo Koo (LG's global chairman), Yu-Sig Kang (LG's global vice chairman) and SS Kim (LG Electronics global CEO).

The Rs 7,500-crore company saw a significant fall in its sales growth over the last two years in India. While LG Electronics India had grown by nearly 44% in '04, the turnover growth plunged by 15% in '05 and the company is now targeting a 13% growth in turnover in '06.

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