Lufthansa Case Analysis Case Study Solution and Analysis
Lufthansa Case Analysis Case Study Solution is a popular international brand in innovation market, established in 1938 by Lee Byung Chul, in South Korea. Lufthansa Case Analysis deals in a great deal of item classifications consisting of Semiconductors, Telecommunications, Digital Media, Digital Appliances and much more other electronic products. Historically, the business's core clients include the Original Devices Manufacturers (OEMs), which utilized to sell Org items withtheir own brand. Till early 1990s, the core proficiency of Corp depend on its low rate offerings than its rivals by manufacturing existing products at economies of scale. Its client circle consists of Original Equipment Manufacturers (OEMs), who utilized to sell Lufthansa Case Analysis Case Study Help products with their own brand name. Corp was not simply understood outside Korea. There were likewise no or little interest in building the brand name worldwide. Marketing budget plan was managed by production department with a focal point on providing low-cost products.During the 1997 Asian Financial Crisis the business practically got insolvent, however with the Vision of Chairman Lee it completely turn its fortune around and in 2002 was listed the top 25 most valuable company on the planet. When Kim was worked with as a Chief Marketing Officer in 2000 the business was not even noted. He repositioned Corp as a global brand and informed his divisional supervisors to comprehend marketing and its importance. Now their goal is to arrive 10 by 2005.
Corporation's shift from an item based to a marketing company is not going as efficiently as planned.Overcoming the unwillingness of divisional managers to incorporate marketing effectively is still a major obstacle. Developing a constant brand name identity throughout the whole world and using marketing strategies that finest fits the regional culture is no easy task.
Lufthansa Case Analysis Case Study Solution efforts for constructing its brand name across the world was begun after presenting the "new management initiative" by Chairman Lee in 1993. The objective was to change Organization from a low-cost OEM to a high value-added item supplier. To make the vision of Company a truth, Chairman Lee appointed Yun as a vice chairman in 1997. Yun had a quite clear image in his mind about how Company can change from a low end to a luxury product company. He knew that transformation can only be done through positioning Org as a company providing high-end items and this could only be done through high level of marketing.
In spite of having a clear vision about how to build Enterprise brand, with a possible support of its executives, Yun dealt with several marketing obstacles in early years of its efforts.
Among the marketing obstacles for Yun was the perceptions of executives about the value of marketing. They thought about marketing and selling as very same tools and believed that quality products do not needed marketing for increasing sales. As their focus towards marketing was rather low in their previous organisation practices, and the present marketing requirement was too much high, the gap was too wider and to fill this space with incorrect perceptions about marketing was quite tough for Yun.
As mentioned above, marketing focus was extremely low in previous practices, for that reason there were no correct marketing spending plans for each of the product on the portfolio. There was no marketing planning provided for the existing products. In addition to it the product series of the company was increasing with the ripening of brand-new item ideas by the R&D sector of Corporation. Yun had an obstacle to perform marketing preparation and to produce marketing budget plans for existing as well as for brand-new products from the very start, and this would take a substantial time.
A substantial shift would be needed in present marketing expenses to construct the Organization brand. This would result in increased marketing expenditures for Corp and might disrupt the administration concerning increased expenses, as they were reluctant to marketing expenditures formerly and a sudden huge shiftwould make them disturb.
Lufthansa Case Analysis Case Study Help strengths lie in its huge item portfolio. Corp has biggest number of patents in the industry with total number of 15499 patents approved in United States( USP).
Another strength of Lufthansa Case Analysis Case Study Analysis is its ability to develop ingenious items at a constant rate. It major proves for the innovation and item developing of Org is that the company has gotten numerous awards for its development and item style.
Unlike Apple and other rivals, Corp is concentrated on producing gadgets which can be easily incorporated with any kind of open source Operating System (OS) and software application. This offers Organization an edge over Apple gadgets.
Corporation's capability to produce luxury products at low expense of production is likewise among the significant strength of Venture as it makes it possible for the company to record more market by providing quality items with cost control.
Lufthansa Case Analysis Case Study Help weaknesses are concealed in the business's dependence on outsourcing software for its devices due to business's failure in establishing software, unlike Sony. Corporation also has low earnings margins as compare to Apple due to big distinction in the prices of Apple and Venture with a much lesser distinction in quality. The diverse focus of the company due to a great deal of items in its portfolio, lead to the less efficient production and make the business not able to charge higher prices like Apple. The company is likewise ineffective in managing its patents and regularly deals with the issue of patent infraction.
Opportunities for Org depend on the growing Smart device market and the business's efficiency in the market. It can increase its market share and revenues from cell phone as the company is rather effective in smart phone market. Organization currently runs in about 80 countries and the company has an opportunity to increase its geographical growth by moving towards more emerging markets outside Asia. Enterprise can move towards acquisitions to acquire patents. It would make it possible for the company to increase its item portfolio with an increase in its wealth.
The vibrant market environment of technology industry position an extreme hazard on Venture's survival and force the business to invest much of its revenues share on R&D in order to endure in the long run. The market saturation in industrialized countries i.e. saturation of mobile business is likewise a huge threat for the company's development in the existence of strong rivals like Apple.
4 P's of Marketing
Lufthansa Case Analysis Case Study Help provides quality products and has a quite rich portfolio which caters to various segments. Most of the items remain in the top 3 of their particular markets. LCD and cellphones are the biggest products of Enterprise, whereas DRAM is also not far behind in contrast of them. Following is the line of product of Business:
• LCD/ TV
• Smart phone.
• Air conditioning unit.
• Personal computers.
• Hard drives.
• Flash memory.
Lufthansa Case Analysis Case Study Help uses both market competitive and market skimming pricing techniques for its wide variety of products. In competitive pricing it adjusts the cost according to the competitors in order to get advantage, whereas, it uses market skimming technique where the product has an included worth and by selling a couple of items it can reach break-even.
It has one of the very 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 place/ delivered to the clients directly in case of online order.
It wasn't a well-known business beyond Korea till 1993. The management initiative taken by their CEO has pushed them to market more efficiently outside the borders and now it has gone into the league of leading 25 business in the world in just 9 years. This is a remarkable accomplishment despite the ongoing arguments amongst the managers about adopting marketing practices. It utilizes both offline & online channels of promo to market their items. Paid item advertisements, social promotion and digital ads are uses to produce awareness about Org products.
Value Chain Analysis.
It's an analytical structure for recognizing business activities that include worth or competitive advantage for the company.
It has among the most efficient and effective supply chain network and has more than 2700 suppliers across numerous markets around the world. Almost 80% of which is based in Asia and the remaining around the world. For its incoming logistics it owns different logistics firms as it subsidiaries. It looks after its suppliers and creates an unified relationship with them and even reduced their payment cycles to improve this relationship even more which adds value to their chain network.
Organization's core proficiency is its mass manufacturing it produces 90% of its items internal. Divided into 3 various departments its operations are namely IT & Mobile Communications, Gadget Solutions and Customer Electronics. It is preserving operation hubs worldwide to further add value to its value chain network.
Its outgoing logistics system efficiency is among the main factors Lufthansa Case Analysis Case Study Analysis is able to compete with Apple. Business's own Electronic Logitec system plays a major role in the outgoing logistics operations. It even carries out the jobs of collection of payment, settling insurance claims, etc. on behalf of Business.
Marketing and Sales.
Drawing in target customer attention towards the product is done through marketing and sales to interact with them the worth and competitive advantage the product provides. Lufthansa Case Analysis Case Study Solution marketing budget plan is constantly increasing since they started their rearranging globally and will continue to do so as they are continuously aiming to invest and expand in high possible development markets. The budget plan is invested in events, print and media advertisements, public relations and so on.
Corporation Service. Org put their consumers at the top and constantly make every effort to provide unmatchable customer service requirements. As after sales service is ending up being exceptionally important to keep clients pleased and engaged, they even carry out surveys through third parties to find out their consumer's feedback and implement it in the positive method to reduce or if possible entirely eliminate their client concerns. By including a direct support line to call them 24 hr they have actually further increased the added worth of Lufthansa Case Analysis Case Study Help service.
Lufthansa Case Analysis Case Study Help has actually diversified market segmentation, based upon its provision of vast array of items to large number of customers. Venture target client sectors can be divided into 3 categories i.e. Lufthansa Case Analysis Case Study Help IT and Mobile Communications, Corp Customer Electronic Devices and Org Device services.
Lufthansa Case Analysis Case Study Analysis geographic segmentation is based upon two requirements i.e. region and density. Org serves about 80 nations worldwide with its products provided to Urban along with Rural areas of the country. The Venture is also growing its international existence and the business's versatility in locating its plants encourages international expansion of Enterprise.
The group segmentation of Lufthansa Case Analysis Case Study Help is based upon gender, age, life-cycle stage and profession. Org produces items that can be utilized by both women and males. The target clients for Company IT and mobile communication products have an age variety of 18-65 with bulk at a young or freshly married life process stage. They are mainly employees, professionals and students. Apart from it, Venture Customer Electronics are targeted to a customer section with an age range of 25-65. They are primarily professionals and staff members. Nevertheless Lufthansa Case Analysis Case Study Help Device Solutions are targeted at students, staff members and specialists with an age series of 25-65.
The psychographic division of Lufthansa Case Analysis Case Study Analysis s based upon the social class and the lifestyle of the customer. Venture target consumers on the basis of social class are generally upper middle, middle and working class consumers, as Company sell products like cell phones not much more affordable i.e. Motorola as well as not much expensive i.e. Apple. It provides quality products to middle level customers at a slightly high rate than others targeting the same segment.
Lufthansa Case Analysis Case Study Analysis majority target customers have unique behavioural attributes. It has customers with an enthusiastic, trendy and identified character with moderate level of loyalty towards the brand name. Its clients have some degree of shift towards other distinguished brand names i.e. Apple. Most of Venture customers want quality as well as cost control. Since of its moderate prices with a level of quality, they are attracted towards Company.
Sales of Org has increased amazingly from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net revenue of.48 billion $ to 5.9 billion $. It has also minimized its debt from 15 billion $ to 4.6 billion $. Digital media is the biggest selling classification of Venture with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales. Because of the high overhead expense, incomes/ sales are increasing however net earnings is not increasing accordingly. New expansions and hiring's were the primary reason of the increase in the overhead costs, with china presently not supplying any revenue to Business, but there is so much potential in the present market with 75 % yet to be explored.
Whereas, the core strength of the company is presently producing however long gone are those days when excellent products were selling themselves. Kim has actually already started to reinforce the marketing activities of Company and extremely soon it will end up being one of its core strength like manufacturing if not better.
Org runs styles, manufactures and offer a large portfolio of consumer electronic devices. It operates in an exceptionally competitive environment and has successfully positioned itself as the maker of quality items. The response is yes.
As, stated earlier that Lufthansa Case Analysis Case Study Analysis operates in an extremely competitive environment, which means all the business have similar items. The answer for rarity is no.
Due to the nature of the industry, it is very simple for competitors to comprehend the functionality of the items and quickly make their own designs. Yes, Corp is just behind IBM in registering brand-new patents each year, but the benefit is very short term in this market.
Chairman Lee has totally turn-around Corporation, from going practically bankrupt throughout the Asian financial crisis of 1997 to the leading 25 company worldwide. Certainly yes there appertains organization in the business and the results speak for themselves.
External Environmental Analysis
Being an international brand spread practically in every nation worldwide, majority of the environments like USA, Europe, China etc., are extremely conductive for its operations. Nevertheless, it faces some political pressures in less industrialized countries where law and order situation is not good. Latin American, African and some Asian nations fall in this classification, where political instability do have a result on Lufthansa Case Analysis Case Study Analysis operations.
Purchasing power of consumers is essential for business like Corp to grow and be successful. Emerging markets like India, middle-eastern nations and so on provide development opportunities, whereas, due to economic crisis even the customers of developed nations suffer badly. Hence it is extremely crucial for the company to watch on the ongoing financial scenario of the country before entering the marketplace.
International business need to deal with different social and cultural problems throughout its operations in a foreign nation. Company has actually also dealt with lots of issues however have actually embraced to the local environments of the majority of the countries extremely well. It has actually customized its products, practices, policies and so on accordingly in order to achieve success.
With a yearly expenditure of 2.4 billion dollars in Research study & Development, and with consistent innovative product launches, Lufthansa Case Analysis Case Study Solution is among the leading ingenious companies of the world. With a clear mission to be ahead of the rest when it concerns technological developments, Corporation has actually increased to the no 25 of the leading effective companies of the world.
Each country has their own laws and policies, being a multinational company Organization have to strictly follow those laws in their jurisdictions. Failure to do so, will lead to serious legal repercussions. It has to study or hire a regional law specialist before beginning its operations in a specific country.
With the increasing awareness amongst customers about the environmental & ethical offenses of business, Org has to guarantee that it follows all the safety guidelines. Environmental damages, ethical misconducts are not acceptable and in some countries the effects can be very extreme. On the other hand it has to do some Corporate Social Duty practices to show the locals that it appreciates their environment and people.
Porter's Five Forces
Danger of Replacement
Risk of substitution for Company's each product category is rather significant. Elements for high threat of alternative for Lufthansa Case Analysis Case Study Help Smartphone include the presence of high number of suppliers and Market saturation in developed countries, which make the expense of changing for customers practically no. Along with it, Corporation printing services items are threatened by the increasing attraction of customers towards cloud storage.
Rivalry Amongst Existing Firms:
The rivaly among Company and its close competitors is extreme. The major reason behind this is the method of market saturation in numerous number of item categories, forcing Enterprise to introduce more ingenious functions in existing products and brand-new innovative products to keep its growth. The major competitors for Lufthansa Case Analysis Case Study Help samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO etc.
( Corporation Sustainability Report, 2016) Provider's bargaining power for Org is low as Corporation runs economies of scale and its orders are of prospective size and worth. Due to incapability of Lufthansa Case Analysis Case Study Solution to construct its own software application, it has to outsource its software advancement to Google, which becomes a potential supplier of software application for Corporation, resulting in high bargaining power of Google.
Bargaining Power of Purchasers:
Negotiating power of buyers for different variety of item categories of Venture is extreme. Among the aspect causing the intense bargaining power is the schedule of a great deal of rivals in almost each product category i.e. competitors of Corporation Smart device, with a very little distinction. The high accessibility of providers of Smartphones with minimum distinction, make the changing expense for buyers practically no, thus increasing the bargaining power of purchasers. Market saturation in the majority of the item categories likewise make the bargaining power of purchasers more extreme in for Lufthansa Case Analysis Case Study Solution. In spite of igh bargaining power Venture is rather capable of selling its items at a higher cost than much of its rivals, due to high-end quality item and a fair brand name image.
Hazard of New Entrants:
Risk of brand-new entrants for Lufthansa Case Analysis Case Study Solution is rather low. Along with it, requirement of huge expertise and research and advancement expenses for survival in the industry likewise make new entrants hesitant to enter in the market. Market saturation is likewise one of the barrier of entry in technology market.
Corp's high product diversification provides it distinction from its rivals. It is among the 3 top brand names by market share. Unlikely to its close rivals including Sony, Intel and Nokia, who focus majority on a single product category with Sony focusing on customer electronic devices, Nokia on mobile phone and Intel on chips, Venture had a big R&D spending on all of its product categories which allow the company to make potential earnings from sales of nearly all of its products. (See Display) However, due to the broad item variety the business faces high number of competitors.
The company ranks initially in 4 product categories i.e. DRAM Chips, LCD Displays, Cinema Televisions and Microwave ovens, in terms of international market share, among 8 various item categories. Corporation was the global leader in making DRAM, SRAM and NAND flash chips. Venture revenues from chips was less than Intel but its earnings from chips was growing quicker than Intel and has actually grown close to the profits levels of Intel, as offered in the case Exhibit 2.
Along with the chips Corp mobile market was also flourishing at a high rate than its rivals i.e. Motorola and Nokia. Corporation's cellular phone's sales development was 51% as compare to Motorola with just 4% and Nokia with zero sales growth. The significant reson behind Enterprise's high growth despite of higher costs than Nokia and Motorola was the company's high-end quality cellular phone.
Enterprise 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 avail the opportunity is its mass production at low cost. Sony was the most significant rival for Lufthansa Case Analysis Case Study Analysis in LCD market, nevertheless, it had actually also started joint endeavor with Enterprise in 2003 for LCD manufacturing, reducing the competitors for Corporation.
Porter's Competitive Technique
Low Cost Leadership strategy of porter is totally executed by Business the way they attain economies of scale by reinforcing their core proficiencies of production. Even to the point that their rival SONY decided to form an alliance with them to make for them, because they were unable to compete with them on low expense. Distinction is another method well carried out by Enterprise by constant financial investment in the R&D and remaining ahead of the competition. They always bring something brand-new and innovative whether it's an item or a service.
Alternative Option 1
The Chief Marketing Officer (CMO) of Lufthansa Case Analysis Case Study Analysis would create a brand-new brand name image by targeting the more youthful generation of the particular country. As, especially smart phones of Business are incredibly popular amongst the younger demographic.
1. It is the very best strategy to construct Client Life time Value (CLV) by producing a long-lasting relationship with clients. Build commitment through providing value and profit for long-lasting, as research has actually showed it is much cheaper to maintain current consumers than to attract new ones.
2. Another pro of this option is that word of mouth spread more quickly among younger individuals and which in turn will bring in brand-new consumers for my items.
1. Old clients who were associated with Enterprise before may not like this new image the business is attempting to represent.
2 It will sustain additional expenses to reposition some products and it may not even bring success as the patterns change very quickly among the younger demographic.
Alternative solution 2.
Corporation has made making its core competency for the most part of their business and due to which its managers are not scared to completely step out of their comfort zone. It would be done by organizing training workshops during which value of marketing will be taught and numbers will be offered. Failure to get the passing scores will get benched. Marketing environment must be developed internally first as real marketing starts inside the corporation.
1. Its pro will be that all the marketing method supporters will come out and likewise the opposite ones.
2. Its con can create a very unhealthy environment in the workplace, as people typically resist change since they fear it.
Recognize the very best alternative
Very first alternative is the best as it clearly has more pros due to the fact that when a Customer Lifetime Worth is constructed the business will make money from it till that consumer lives and has buying power also. Plus, our target clients are the younger generation which are bound to live longer than the present aging individuals. Company's main goal is to create loyalty amongst its consumers and make them redeemed it from them and even purchase their various products.
• Targeting more youthful generation through social marketing, producing a link with them like Pepsi finish with music. And set the expectations attainable and sensible.
• A team including finest marketing and sales experts need to be put together, and both views should be taken into consideration before protecting the resources required to execute the strategy.
• Thorough interaction of the strategy need to be done as it is very essential for everybody to be on the exact same page to make it work.
• Tasks and timelines ought to be build and communicated accordingly to each person responsible.
• The manager need to use a dashboard 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 track of and keep a continuous examine the specific and general efficiency.
Due to the fact that any brand-new trend or policy might come in due to which all the things currently planned have actually to be adjusted, • Everyone must be ready to adjust midway. It's much better to have contingency strategies already prepared.
• At the end of the campaign the manager must interact the results and if effective should celebrate with the team.
This change the budget plan allotment of various nations and many supervisors were unhappy and argued however the analysis done by the program was precise and showed figures like North America and Russia development prospective warranted a 35% allocation while they were receiving 45%. It really helped to relatively disperse the resources and catch more consumers by spending more on ads on the high growth capacity areas of the world.
Lufthansa Case Analysis Case Study Help is a top 25 company worldwide now and prepares to get ahead of Sony who sits currently at no. 20. Its consistent investment in R&D and innovative practices have actually moved them to new heights however for them its' just the start and they wish to be among the leading 3 brands in the world. They totally turnaround from nearly going bankrupt during the Asian Financial Crisis to a world distinguished brand name, understood for quality and innovation. Their value chain and their core competency their production ability, along-with international brand image structure have seen their sales go from 16 to 44.6 billion $ from 1997-- 2002. With additional expansion in China and other emerging markets those numbers will just increase even more in the future. Their marketing efforts ought to be directed towards younger group in the middle of the internal arguments about marketing and need to create Client Life time Value as it will not just give them advantages now but will continue to reap it till the customer lifetime. As the expense of retaining the customer is more affordable than drawing in a brand-new one.