From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution and Analysis
Intro
From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution is a widely known international brand in technology market, founded in 1938 by Lee Byung Chul, in South Korea. From Free Lunch To Black Hole Credit Default Swaps At Aig deals in large number of product classifications consisting of Semiconductors, Telecommunications, Digital Media, Digital Appliances and a lot more other electronic items. Historically, the business's core consumers consist of the Original Equipment Manufacturers (OEMs), which utilized to offer Corp items withtheir own brand. Till early 1990s, the core proficiency of Enterprise depend on its low rate offerings than its competitors by producing existing items at economies of scale. Its client circle consists of Original Equipment Manufacturers (OEMs), who utilized to sell From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help products with their own trademark name. Company was not merely understood outside Korea. There were also no or little interest in building the trademark name globally. Marketing spending plan was managed by production department with a focal point on providing low-cost products.During the 1997 Asian Financial Crisis the company nearly got bankrupt, however with the Vision of Chairman Lee it completely turn its fortune around and in 2002 was listed the top 25 most important company on the planet. When Kim was worked with as a Chief Marketing Officer in 2000 the company was not even listed. He repositioned Venture as a global brand and educated his divisional managers to comprehend marketing and its value. Now their objective is to reach the top 10 by 2005.
Issue Declaration
Business's transition from a product based to a marketing business is not going as efficiently as planned.Overcoming the unwillingness of divisional managers to include marketing efficiently is still a significant obstacle. Producing a constant brand identity across the whole world and using marketing strategies that best fits the local culture is no simple task.
Situational Analysis
Yun had a quite clear image in his mind about how From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help can transform from a low end to a high end item company. He understood that transformation can just be done through positioning Enterprise as a company using high-end products and this could only be done through high level of marketing.
In spite of having a clear vision about how to develop Org brand name, with a possible assistance of its executives, Yun faced a number of marketing difficulties in early years of its efforts.
One of the marketing challenges for Yun was the perceptions of executives about the worth of marketing. They thought about marketing and selling as exact same tools and thought that quality products do not needed marketing for increasing sales. As their focus towards marketing was rather low in their previous business practices, and the existing marketing requirement was excessive high, the space was too broader and to fill this space with wrong understandings about marketing was rather challenging for Yun.
Along with it the product variety of the business was increasing with the ripening of new product concepts by the R&D sector of Business. Yun had an obstacle to carry out marketing preparation and to develop marketing budgets for existing as well as for new items from the very beginning, and this would take a huge time.
A substantial shift would be needed in existing marketing expenditures to develop the From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help brand name. This would result in increased marketing expenses for Business and could disturb the administration concerning increased expenses, as they were reluctant to marketing expenditures previously and an unexpected big shiftwould make them interrupt. This could lead to decreasing executive assistance for international marketing. In this scenario, Yun faces a difficulty for justifying increased marketing expenses by demonstrating the long term worth of huge marketing expenses.
Internal Analysis
SWOT Analysis
Strengths
Venture strengths lie in its big product portfolio. Enterprise has biggest variety of patents in the market with overall variety of 15499 patents approved in United States( USP). Large quantity of R&D spending has actually enabled the business to grow its product portfolio at a greater rate than its competitors. From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help spent about $13.079 billion on its R&D sector in 2016, which is 7.3% of its overall revenues.
Another strength of From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis is its capability to establish ingenious items at a constant rate. It major proves for the development and item developing of Organization is that the company has actually gotten so many awards for its innovation and product style.
Unlike Apple and other competitors, Corporation is focused on producing devices which can be easily integrated with any type of open source Os (OS) and software application. This provides Corporation an edge over Apple gadgets.
Corp's capability to produce luxury products at low cost of production is also among the major strength of Corp as it allows the company to record more market by providing quality items with cost control.
Weak points
From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help weak points are concealed in the company's dependence on outsourcing software application for its gadgets due to business's inability in establishing software application, unlike Sony. Org likewise has low profit margins as compare to Apple due to big distinction in the rates of Apple and Organization with a much lower difference in quality. The varied focus of the company due to a great deal of items in its portfolio, result in the less effective production and make the business not able to charge higher costs like Apple. The company is likewise inefficient in handling its patents and frequently deals with the issue of patent offense.
Opportunities
Opportunities for Enterprise depend on the growing Smart device market and the company's performance in the market. It can increase its market share and revenues from mobile phone as the business is quite efficient in mobile phone market. Company currently runs in about 80 countries and the company has an opportunity to increase its geographical expansion by moving towards more emerging markets outside Asia. Org can move towards acquisitions to acquire patents. It would make it possible for the business to increase its item portfolio with an increase in its wealth.
Risks
The vibrant market environment of innovation industry position a serious risk on Organization's survival and require the business to spend much of its profits share on R&D in order to survive in the long run. The market saturation in industrialized nations i.e. saturation of mobile business is likewise a big threat for the business's growth in the existence of strong rivals like Apple.
4 P's of Marketing
Product
From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help uses quality items and has a rather abundant portfolio which caters to various sections. Most of the products remain in the top three of their respective markets. LCD and cellphones are the biggest products of Company, whereas DRAM is also not far behind in comparison of them. Following is the product line of Enterprise:
• LCD/ TELEVISION
• Laptops.
• Smart phone.
• Air conditioner.
• Computer.
• Hard disks.
• Washing machines.
• Refrigerators.
• Cams.
• Microwaves.
• Flash memory.
• DRAM.
Rate.
From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help uses both market competitive and market skimming pricing strategies for its wide array of items. In competitive rates it changes the rate according to the competitors in order to get benefit, whereas, it utilizes market skimming technique where the item has actually an included value and by selling a few items it can reach break-even.
Place.
It has among the best supply chain networks, with retail distributors, their own sole distributors, E commerce channels like Amazon and so on. All its products are timely supplied to the selling location/ provided to the consumers straight in case of online order.
Promotion.
It wasn't a popular business outside of Korea until 1993. The management effort taken by their CEO has actually pushed them to market more efficiently outside the borders and now it has actually gone into the league of top 25 business in the world in simply 9 years. This is an amazing accomplishment in spite of the ongoing arguments amongst the managers about adopting marketing practices. It utilizes both offline & online channels of promotion to market their items. Paid item ads, social promo and digital advertisements are uses to produce awareness about Company products.
Worth Chain Analysis.
It's an analytical structure for identifying business activities that include worth or competitive advantage for the company.
Inbound Logistics.
For its inbound logistics it owns numerous logistics companies as it subsidiaries. It looks after its suppliers and develops an unified relationship with them and even decreased their payment cycles to increase this relationship further which adds worth to their chain network.
Operations.
Venture's core competency is its mass making it produces 90% of its products in-house. Divided into 3 various departments its operations are namely IT & Mobile Communications, Device Solutions and Consumer Electronics. It is preserving operation hubs worldwide to further include value to its value chain network.
Outbound Logistics.
Its outgoing logistics system efficiency is one of the primary factors From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis has the ability to compete with Apple. Business's own Electronic Logitec system plays a major role in the outbound logistics operations. It even carries out the jobs of collection of payment, settling insurance claims, etc. on behalf of Corporation.
Marketing and Sales.
Attracting target customer attention towards the item is done through marketing and sales to communicate with them the worth and competitive advantage the item uses. From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution advertising budget plan is continuously increasing since they started their repositioning worldwide and will continue to do so as they are continuously aiming to invest and broaden in high possible development markets. The budget plan is invested in occasions, print and media advertisements, public relations and so on.
Organization put their customers at the top and continuously aim to provide unmatchable client service requirements. By including a direct support line to contact them 24 hours they have actually further increased the included worth of Venture service.
Division.
From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis has diversified market segmentation, based upon its provision of wide range of items to a great deal of customers. Organization target client sectors can be divided into 3 categories i.e. From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help IT and Mobile Communications, Business Customer Electronic Devices and Enterprise Gadget services.
Geographic.
From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution geographical segmentation is based upon 2 requirements i.e. area and density. Org serves about 80 countries worldwide with its products provided to Urban as well as Backwoods of the country. The Business is likewise growing its international existence and the company's flexibility in locating its plants motivates worldwide growth of Corporation.
Demographic.
The demographic division of From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Help is based upon gender, age, life-cycle phase and profession. Org produces products that can be utilized by both males and females. The target consumers for Corp IT and mobile communication items have an age variety of 18-65 with bulk at a young or newly married life cycle phase. They are mainly workers, trainees and experts. Apart from it, Org Consumer Electronics are targeted to a client sector with an age series of 25-65. They are primarily employees and experts. Nevertheless From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution Gadget Solutions are targeted at trainees, staff members and professionals with an age series of 25-65.
Psychographic.
The psychographic division of From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis s based upon the social class and the lifestyle of the consumer. Business target clients on the basis of social class are primarily upper middle, middle and working class customers, as Business sell products like cellular phone very little more affordable i.e. Motorola as well as very little pricey i.e. Apple. It offers quality products to middle level consumers at a somewhat high rate than others targeting the same section.
Behavioural.
From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis bulk target consumers have unique behavioural qualities. They are drawn in towards Venture since of its moderate rates with an extent of quality.
Quantitative analysis.
Sales of From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution has actually increased amazingly from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net revenue of.48 billion $ to 5.9 billion $. Digital media is the biggest selling category of Enterprise with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales.
Qualitative analysis.
Whereas, the core strength of the company is currently producing however long gone are those days when great items were selling themselves. Kim has actually currently started to enhance the marketing activities of Business and extremely soon it will become one of its core strength like manufacturing if not better.
VRIO.
Worth.
Enterprise runs designs, makes and offer a huge portfolio of customer electronic devices. It operates in a very competitive environment and has effectively positioned itself as the maker of quality products. The response is yes.
Rarity.
As, stated previously that From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis operates in an extremely competitive environment, which means all the business have similar products. The answer for rarity is no.
Imitability.
Due to the nature of the industry, it is really simple for competitors to comprehend the functionality of the items and quickly make their own models. Yes, Corporation is just behind IBM in registering brand-new patents annually, however the benefit is really short term in this industry.
Company.
Chairman Lee has entirely turn-around Organization, from going nearly insolvent throughout the Asian monetary crisis of 1997 to the top 25 company in the world. Absolutely yes there is proper company in the business and the results promote themselves.
External Environmental Analysis
PESTLE Analysis
Political
Being an international brand spread nearly in every nation worldwide, majority of the environments like USA, Europe, China and so on, are very conductive for its operations. It deals with some political pressures in less industrialized nations where law and order circumstance is not great. Latin American, African and some Asian countries fall in this classification, where political instability do have an effect on From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis operations.
Economic
Buying power of consumers is vital for companies like Enterprise to be successful and grow. Emerging markets like India, middle-eastern countries etc. provide growth opportunities, whereas, due to economic crisis even the customers of industrialized nations suffer severely. It is very essential for the company to keep an eye on the ongoing economic circumstance of the nation before entering the market.
Socio-Cultural
Multinational companies need to deal with different social and cultural concerns throughout its operations in a foreign nation. Org has actually also faced numerous concerns however have actually adopted to the regional environments of the majority of the nations incredibly well. It has tailored its items, practices, policies etc. accordingly in order to succeed.
Technological
With a yearly expenditure of 2.4 billion dollars in Research & Development, and with continuous ingenious product launches, From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution is among the leading innovative companies of the world. With a clear mission to be ahead of the rest when it concerns technological improvements, Corporation has risen to the no 25 of the top successful business of the world.
Legal
Each nation has their own laws and policies, being a multinational company Company have to strictly follow those laws in their jurisdictions. Failure to do so, will lead to serious legal consequences. It has to study or hire a regional law expert before starting its operations in a particular nation.
Environmental
With the rising awareness among consumers about the ecological & ethical infractions of companies, Company has to make sure that it follows all the security standards. Ecological damages, ethical misbehaviors are not acceptable and in some nations the repercussions can be extremely severe. On the other hand it needs to do some Corporate Social Duty practices to show the residents that it appreciates their environment and individuals.
Porter's Five Forces
Danger of Replacement
Hazard of replacement for Company's each item classification is rather substantial. Running in an extremely vibrant market lead the company to deal with a high threat of alternative. Aspects for high danger of replacement for From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis Smart device include the existence of high number of providers and Market saturation in industrialized nations, which make the expense of switching for customers almost absolutely no. Replacement dangers for Venture visual display lie in the altering life style of customers. Consumers can switch to watching visuals at home towards outside activities. In addition to it, Organization printing services items are threatened by the increasing tourist attraction of consumers towards cloud storage.
Rivalry Amongst Existing Firms:
The rivaly among Organization and its close rivals is extreme. The significant reason behind this is the technique of market saturation in different number of item categories, requiring Corp to introduce more ingenious features in existing products and brand-new ingenious products to preserve its growth. Other element for the extreme competition among the rivals is the little item differentiation among the products. The prominent players in the innovation market are quite familiar with the significance of R&D spending for their survival and are facing a race of marketing and R&D costs, to record the marketplace. The significant rivals for From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO etc. High competitors rivalry leads to the varying market shares which can be seen in Exhibit F.
Bargaining Power of Suppliers:
( Company Sustainability Report, 2016) Provider's bargaining power for Business is low as Enterprise runs economies of scale and its orders are of possible size and worth. Due to incapability of From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution to develop its own software, it has to outsource its software application development to Google, which becomes a possible provider of software application for Organization, resulting in high bargaining power of Google.
Bargaining Power of Purchasers:
Negotiating power of buyers for various variety of product categories of Business is intense. One of the aspect causing the intense bargaining power is the availability of a great deal of competitors in practically each item classification i.e. rivals of Company Smart device, with a very little differentiation. The high schedule of providers of Mobile phones with minimum distinction, make the changing cost for purchasers practically absolutely no, hence increasing the bargaining power of purchasers. Market saturation in most of the item classifications also make the bargaining power of purchasers more extreme in for From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution. In spite of igh bargaining power Company is quite capable of selling its items at a greater rate than much of its competitors, due to high end quality product and a reasonable brand name image.
Risk of New Entrants:
Threat of new entrants for Venture is quite low. Among the significant factor for low hazard of new entrants is the high competition in the industry. The requirement of big quantity of capital to enter in the market is also one of the prospective barrier to entry. Along with it, requirement of substantial proficiency and research study and development expenditures for survival in the market likewise make brand-new entrants unwilling to go into in the marketplace. Market saturation is also among the barrier of entry in innovation industry. High bargaining power of providers require the players in the industry to charge as low rates as possible and this can just be accomplished by production efficiency. Brand-new companies, in bulk cases, lack the production efficiency, thus increasing the dangers for entrance in the innovation market.
Competitive Analysis
Company's high product diversification offers it differentiation from its rivals. It is one of the three leading brand names by market share. Unlikely to its close rivals consisting of Sony, Intel and Nokia, who focus majority on a single product category with Sony concentrating on consumer electronic devices, Nokia on cell phones and Intel on chips, Corporation had a substantial R&D costs on all of its product categories which allow the business to make prospective income from sales of nearly all of its items. (See Exhibit) However, due to the broad product variety the business faces high variety of competitors.
The company ranks initially in 4 item classifications i.e. DRAM Chips, LCD Displays, Cinema TVs and Microwave ovens, in regards to worldwide market share, amongst 8 various item categories. Org was the international leader in manufacturing DRAM, SRAM and NAND flash chips. Corporation revenues from chips was less than Intel however its profits from chips was growing faster than Intel and has actually grown close to the income levels of Intel, as provided in the case Exhibit 2.
In addition to the chips Venture mobile market was likewise flourishing at a high rate than its rivals i.e. Motorola and Nokia. Org's cellular phone's sales growth was 51% as compare to Motorola with just 4% and Nokia with absolutely no sales development. The major reson behind Company's high development despite of greater prices than Nokia and Motorola was the company's high-end quality cell phones.
Corp was likewise reaping the benefits from increasing market share of high-end LCDs as given in case Exhibit 3. The major reason, making the company make it possible for to obtain the opportunity is its mass production at low expense. Sony was the biggest competitor for From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Solution in LCD market, nevertheless, it had actually also begun joint endeavor with Corporation in 2003 for LCD making, decreasing the competition for Corporation.
Porter's Competitive Technique
Low Cost Leadership strategy of porter is totally carried out by Org the method they accomplish economies of scale by strengthening their core proficiencies of manufacturing. Even to the point that their competitor SONY chose to form an alliance with them to produce for them, since they were unable to compete with them on low expense. Distinction is another strategy well carried out by Business by constant investment in the R&D and staying ahead of the competitors. They always bring something brand-new and innovative whether it's a service or a product.
Alternatives
Alternative Solution 1
The Chief Marketing Officer (CMO) of From Free Lunch To Black Hole Credit Default Swaps At Aig Case Study Analysis would develop a new brand image by targeting the more youthful generation of the particular country. As, particularly cellphones of Enterprise are incredibly popular among the younger demographic.
Pros
1. It is the best technique to construct Client Lifetime Worth (CLV) by developing a long-lasting relationship with consumers. Construct commitment through providing value and reap the benefits for long-term, as research has revealed it is much cheaper to retain existing clients than to draw in brand-new ones.
2. Another pro of this option is that word of mouth spread quicker among more youthful individuals and which in turn will generate new customers for my items.
Cons
1. Old clients who were connected with Company prior to may not like this brand-new image the business is trying to depict.
2 It will incur further expenditures to rearrange some items and it may not even bring success as the trends change extremely rapidly amongst the younger market.
Alternative option 2.
It would be done by arranging training workshops throughout which value of marketing will be taught and numbers will be provided. Marketing environment ought to be developed internally initially as genuine marketing begins inside the corporation.
Pros
1. Its pro will be that all the marketing technique advocates will come out and likewise the opposite ones.
Cons
2. Its con can produce a very unhealthy environment in the office, as people typically resist change because they fear it.
Identify the very best alternative
Very first alternative is the best as it clearly has more pros due to the fact that when a Consumer Lifetime Value is developed the business will make money from it till that client is alive and has buying power also. Plus, our target clients are the more youthful generation which are bound to live longer than the present old age people. However, Venture's primary goal is to develop commitment among its customers and make them bought it from them and even purchase their various items also.
Application Plan
• Targeting more youthful generation through social marketing, producing a relate to them like Pepsi make with music. And set the expectations attainable and reasonable.
• A group including best marketing and sales specialists should be assemble, and both views need to be taken into consideration before protecting the resources required to execute the strategy.
• Thorough interaction of the plan must be done as it is extremely crucial for everyone to be on the same page to make it work.
• Jobs and timelines need to be develop and communicated appropriately to each individual responsible.
• The supervisor should utilize a control panel which shows the development of all the jobs which have actually been done or about to be done and by whom.
• The supervisor need to keep an eye on and keep a constant examine the private and total efficiency.
• Everybody should want to adjust midway since any brand-new pattern or policy might come in due to which all the important things already prepared have to be adjusted. It's much better to have contingency plans currently prepared.
• At the end of the campaign the manager must interact the outcomes and if successful ought to commemorate with the group.
Budget plan
The M-net program exposed engaging analysis about the low and high growth possible areas and just how much marketing budget must be designated accordingly. This modification the spending plan allocation of numerous supervisors and different countries were unhappy and argued but the analysis done by the program was accurate and showed figures like The United States and Canada and Russia development potential warranted a 35% allotment while they were getting 45%. Whereas, China and Europe must be getting 42% but were instead provided 31%. It actually helped to relatively distribute the resources and record more clients by spending more on ads on the high growth capacity areas of the world.
Conclusion
Its constant financial investment in R&D and innovative practices have propelled them to brand-new heights but for them its' only the start and they desire to be among the leading 3 brands in the world. Their marketing efforts should be directed towards more youthful group in the middle of the internal arguments about marketing and must develop Consumer Life time Value as it will not only provide them advantages now but will continue to enjoy it till the customer life time. As the expense of maintaining the client is much less expensive than drawing in a brand-new one.
