Lufthansa Case Analysis Case Study Solution and Analysis
Introduction
Lufthansa Case Analysis Case Study Analysis is a well-known international brand name in innovation industry, established in 1938 by Lee Byung Chul, in South Korea. Lufthansa Case Analysis deals in large number of product categories consisting of Semiconductors, Telecommunications, Digital Media, Digital Appliances and much more other electronic products. Historically, the business's core clients include the Original Equipment Manufacturers (OEMs), which utilized to sell Organization products withtheir own brand name. Till early 1990s, the core competency of Venture depend on its low cost offerings than its competitors by manufacturing existing items at economies of scale. Its consumer circle includes Original Devices Manufacturers (OEMs), who used to offer Lufthansa Case Analysis Case Study Help items with their own brand name. Venture was not simply known outside Korea. There were also no or little interest in developing the brand name internationally. Marketing budget was managed by production department with a prime focus on offering inexpensive products.During the 1997 Asian Financial Crisis the company almost got bankrupt, however with the Vision of Chairman Lee it totally turn its fortune around and in 2002 was listed the leading 25 most important business worldwide. When Kim was worked with as a Chief Marketing Officer in 2000 the company was not even listed. He repositioned Enterprise as an international brand name and informed his divisional supervisors to understand marketing and its significance. Now their goal is to arrive 10 by 2005.
Issue Declaration
Venture's transition from a product based to a marketing business is not going as efficiently as planned.Overcoming the unwillingness of divisional supervisors to incorporate marketing successfully is still a significant obstacle. Developing a consistent brand name identity throughout the entire world and employing marketing methods that best fits the regional culture is no easy job.
Situational Analysis
Yun had a rather clear picture in his mind about how Lufthansa Case Analysis Case Study Solution can transform from a low end to a high end product supplier. He knew that improvement can only be done through positioning Company as a company providing high-end items and this might only be done through high level of marketing.
In spite of having a clear vision about how to construct Corp brand name, with a prospective assistance of its executives, Yun faced several marketing challenges in early years of its efforts.
One of the marketing difficulties for Yun was the understandings of executives about the worth of marketing. They thought about marketing and selling as exact same tools and believed that quality items do not required marketing for increasing sales. As their focus towards marketing was rather low in their previous business practices, and the current marketing requirement was too much high, the gap was too wider and to fill this gap with wrong understandings about marketing was rather difficult for Yun.
Along with it the product range of the business was increasing with the ripening of brand-new item concepts by the R&D sector of Company. Yun had an obstacle to perform marketing preparation and to create marketing budget plans for existing as well as for new products from the very start, and this would take a substantial time.
A substantial shift would be required in current marketing expenditures to develop the Corporation brand name. This would result in increased marketing expenses for Enterprise and could interrupt the administration concerning increased expenses, as they were hesitant to marketing expenditures formerly and an unexpected big shiftwould make them interrupt.
Internal Analysis
SWOT Analysis
Strengths
Corp strengths lie in its substantial product portfolio. Business has biggest variety of patents in the market with overall variety of 15499 patents approved in US( USP). Large amount of R&D spending has enabled the business to grow its item portfolio at a higher rate than its rivals. Lufthansa Case Analysis Case Study Solution spent about $13.079 billion on its R&D sector in 2016, which is 7.3% of its total profits.
Another strength of Lufthansa Case Analysis Case Study Help is its ability to develop ingenious products at a continuous rate. It significant shows for the development and product creating of Corporation is that the business has received a lot of awards for its innovation and item design.
Unlike Apple and other rivals, Org is focused on producing gadgets which can be easily incorporated with any type of open source Operating System (OS) and software application. This supplies Company an edge over Apple gadgets.
Corp's capability to produce high-end items at low expense of production is also one of the major strength of Organization as it makes it possible for the company to capture more market by providing quality products with cost control.
Weaknesses
Lufthansa Case Analysis Case Study Help weak points are hidden in the company's dependence on outsourcing software application for its devices due to company's failure in establishing software application, unlike Sony. Organization likewise has low earnings margins as compare to Apple due to big distinction in the costs of Apple and Venture with a much lower distinction in quality. The diverse focus of the business due to large number of products in its portfolio, result in the less effective production and make the company unable to charge greater prices like Apple. The business is likewise inefficient in managing its patents and frequently faces the issue of patent infraction.
Opportunities
Opportunities for Lufthansa Case Analysis Case Study Analysis lie in the growing Smartphone market and the company's performance in the market. Org presently runs in about 80 nations and the company has a chance to increase its geographical expansion by moving towards more emerging markets outside Asia.
Risks
The vibrant industry environment of technology industry posture an extreme danger on Business's survival and force the company to invest much of its earnings share on R&D in order to survive in the long run. The market saturation in developed 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
Item
Corporation uses quality products and has a quite abundant portfolio which caters to various sectors. LCD and mobile phones are the most significant items of Company, whereas DRAM is likewise not far behind in comparison of them.
• LCD/ TELEVISION
• Laptops.
• Cellphone.
• Ac system.
• Personal computers.
• Disk drives.
• Washer.
• Fridges.
• Cams.
• Microwaves.
• Flash memory.
• DRAM.
Price.
Lufthansa Case Analysis Case Study Help utilizes both market competitive and market skimming prices methods for its wide variety of items. In competitive rates it changes the cost according to the competitors in order to acquire advantage, whereas, it utilizes market skimming technique where the product has actually an included worth and by selling a few products it can reach break-even.
Place.
It has among the best supply chain networks, with retail distributors, their own sole suppliers, E commerce channels like Amazon etc. All its products are timely provided to the selling place/ provided to the customers directly in case of online order.
Promo.
It wasn't a popular business outside of Korea till 1993. The management effort taken by their CEO has actually pushed them to market more effectively outside the borders and now it has actually gotten in the league of top 25 companies in the world in just 9 years. This is an impressive achievement despite the continuous arguments among the supervisors about embracing marketing practices. It uses both offline & online channels of promotion to market their products. Paid item advertisements, social promotion and digital ads are utilizes to produce awareness about Corp products.
Worth Chain Analysis.
It's an analytical structure for determining organisation activities that include worth or competitive benefit for the business.
Incoming Logistics.
It has one of the most reliable and effective supply chain network and has over 2700 suppliers across different markets around the globe. Almost 80% of which is based in Asia and the remaining all over the world. For its incoming logistics it owns various logistics companies as it subsidiaries. It looks after its suppliers and develops an unified relationship with them and even lowered their payment cycles to increase this relationship even more which adds value to their chain network.
Operations.
Company's core proficiency is its mass making it produces 90% of its products internal. Divided into 3 different departments its operations are specifically IT & Mobile Communications, Gadget Solutions and Consumer Electronic Devices. It is preserving operation centers worldwide to even more include value to its worth chain network.
Outbound Logistics.
Its outbound logistics system performance is one of the main factors Lufthansa Case Analysis Case Study Analysis is able to take on Apple. Org's own Electronic Logitec system plays a significant function in the outbound logistics operations. It even carries out the tasks of collection of payment, settling insurance claims, etc. on behalf of Company.
Marketing and Sales.
Drawing in target client attention towards the item is done through marketing and sales to communicate with them the worth and competitive advantage the product offers. Lufthansa Case Analysis Case Study Solution marketing spending plan is continually rising given that they began their repositioning globally and will continue to do so as they are continually wanting to invest and broaden in high possible growth markets. The budget is spent on occasions, print and media ads, public relations etc.
Corporation put their clients at the top and continuously make every effort to provide unmatchable consumer service standards. By including a direct assistance line to contact them 24 hours they have actually further increased the included worth of Corporation service.
Division.
Lufthansa Case Analysis Case Study Help has actually diversified market segmentation, based upon its provision of wide range of products to a great deal of consumers. Business target client segments can be divided into 3 categories i.e. Lufthansa Case Analysis Case Study Analysis IT and Mobile Communications, Organization Consumer Electronics and Enterprise Gadget options.
Geographical.
Lufthansa Case Analysis Case Study Analysis geographic division is based upon two criteria i.e. region and density. Company serves about 80 countries worldwide with its products provided to Urban as well as Backwoods of the nation. The Corp is likewise growing its international presence and the company's flexibility in finding its plants encourages worldwide expansion of Business.
Demographic.
The group division of Lufthansa Case Analysis Case Study Analysis is based upon gender, age, life-cycle stage and profession. Enterprise produces products that can be utilized by both females and males. The target consumers for Organization IT and mobile communication items have an age variety of 18-65 with majority at a young or recently wed life cycle phase. They are primarily staff members, trainees and professionals. Apart from it, Venture Customer Electronics are targeted to a consumer section with an age variety of 25-65. They are mostly professionals and workers. Venture Gadget Solutions are targeted at students, employees and experts with an age range of 25-65.
Psychographic.
The psychographic division of Lufthansa Case Analysis Case Study Help s based upon the social class and the lifestyle of the customer. Organization target customers on the basis of social class are generally upper middle, middle and working class clients, as Corporation sell products like mobile phone not much more affordable i.e. Motorola as well as not much costly i.e. Apple. It offers quality products to middle level customers at a somewhat high cost than others targeting the exact same segment.
Behavioural.
Lufthansa Case Analysis Case Study Help bulk target consumers have unique behavioural qualities. They are drawn in towards Company because of its moderate rates with a level of quality.
Quantitative analysis.
Sales of Business 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 $. It has actually also decreased its financial obligation from 15 billion $ to 4.6 billion $. Digital media is the biggest selling classification of Company with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales. Profits/ sales are increasing but net earnings is not increasing appropriately since of the high overhead expense. New growths and working with's were the main factor of the boost in the overhead costs, with china currently not providing any earnings to Venture, however there is so much potential in the present market with 75 % yet to be checked out.
Qualitative analysis.
Whereas, the core strength of the business is presently making but long gone are those days when excellent items were selling themselves. Kim has currently begun to strengthen the marketing activities of Corp and extremely quickly it will become one of its core strength like manufacturing if not much better.
VRIO.
Value.
Company runs designs, makes and offer a vast portfolio of customer electronics. It operates in an exceptionally competitive environment and has effectively positioned itself as the maker of quality products. The response is yes.
Rarity.
As, said earlier that Lufthansa Case Analysis Case Study Solution runs in an extremely competitive environment, which indicates all the companies have comparable items. The answer for rarity is no.
Imitability.
Due to the nature of the market, it is extremely easy for competitors to comprehend the performance of the items and easily make their own models. Yes, Organization is only behind IBM in registering brand-new patents each year, but the advantage is extremely short term in this industry.
Company.
Chairman Lee has completely turn-around Organization, from going nearly bankrupt during the Asian financial crisis of 1997 to the leading 25 business on the planet. Absolutely yes there is proper company in the business and the outcomes speak for themselves.
External Ecological Analysis
PESTLE Analysis
Political
Being a multinational brand name spread almost in every country worldwide, majority of the environments like U.S.A., Europe, China etc., are very conductive for its operations. Nevertheless, it deals with some political pressures in less industrialized nations where law and order circumstance is bad. Latin American, African and some Asian countries fall in this classification, where political instability do have an effect on Lufthansa Case Analysis Case Study Help operations.
Economic
Buying power of clients is crucial for companies like Organization to succeed and grow. Emerging markets like India, middle-eastern nations etc. provide growth opportunities, whereas, due to recession even the customers of industrialized nations suffer terribly. It is very essential for the business to keep an eye on the ongoing economic circumstance of the nation prior to getting in the market.
Socio-Cultural
Multinational companies have to face different social and cultural problems throughout its operations in a foreign country. Company has actually likewise faced lots of problems but have actually adopted to the regional environments of the majority of the countries remarkably well. It has actually customized its items, practices, policies and so on appropriately in order to achieve success.
Technological
With a yearly expenditure of 2.4 billion dollars in Research study & Advancement, and with consistent ingenious item launches, Lufthansa Case Analysis Case Study Help is among the leading innovative companies of the world. With a clear mission to be ahead of the rest when it concerns technological developments, Organization has increased to the no 25 of the leading effective business of the world.
Legal
Each country has their own laws and policies, being an international business Corporation have to strictly follow those laws in their jurisdictions. Failure to do so, will result in severe legal effects. It has to study or employ a regional law specialist prior to starting its operations in a particular country.
Environmental
With the rising awareness amongst consumers about the ethical & environmental infractions of business, Business has to make sure that it follows all the security guidelines. Ecological damages, ethical misconducts are not acceptable and in some nations the repercussions can be extremely extreme. On the other hand it needs to do some Corporate Social Obligation practices to reveal the residents that it cares about their environment and individuals.
Porter's Five Forces
Danger of Replacement
Danger of replacement for Venture's each product classification is quite substantial. Running in a very vibrant industry lead the company to face a high risk of replacement. Elements for high risk of replacement for Lufthansa Case Analysis Case Study Solution Smart device include the presence of high number of suppliers and Market saturation in developed nations, which make the expense of changing for customers nearly absolutely no. Replacement threats for Org visual display screen depend on the changing life style of consumers. Customers can switch to viewing visuals in the house towards outdoor activities. In addition to it, Business printing options products are threatened by the increasing destination of customers towards cloud storage.
Competition Amongst Existing Companies:
The rivaly among Company and its close competitors is extreme. The major reason behind this is the method of market saturation in different number of item categories, forcing Business to introduce more innovative functions in existing items and new innovative items to maintain its growth. Other factor for the extreme competition amongst the rivals is the little item distinction amongst the products. The prominent gamers in the innovation market are quite aware of the value of R&D spending for their survival and are facing a race of marketing and R&D costs, to record the market. The major competitors for Lufthansa Case Analysis Case Study Help samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO etc. High competitors rivalry results in the varying market shares which can be seen in Exhibit F.
Bargaining Power of Suppliers:
( Org Sustainability Report, 2016) Supplier's bargaining power for Org is low as Business runs economies of scale and its orders are of potential size and worth. Due to incapability of Lufthansa Case Analysis Case Study Analysis to develop its own software, it has to outsource its software advancement to Google, which ends up being a possible provider of software for Enterprise, resulting in high bargaining power of Google.
Bargaining Power of Purchasers:
Market saturation in many of the product categories likewise make the bargaining power of purchasers more extreme in for Venture. In spite of igh bargaining power Organization is rather capable of offering its items at a higher rate than much of its competitors, due to high end quality product and a fair brand image.
Risk of New Entrants:
Threat of brand-new entrants for Lufthansa Case Analysis Case Study Solution is rather low. Along with it, requirement of substantial competence and research and development expenditures for survival in the market also make brand-new entrants hesitant to enter in the market. Market saturation is also one of the barrier of entry in technology industry.
Competitive Analysis
Corporation's high item diversity provides it differentiation from its rivals. It is one of the three leading brands by market share. Unlikely to its close competitors consisting of Sony, Intel and Nokia, who focus majority on a single product category with Sony concentrating on customer electronics, Nokia on mobile phone and Intel on chips, Enterprise had a huge R&D costs on all of its product classifications which enable the company to earn prospective profits from sales of nearly all of its items. (See Exhibit) However, due to the broad item variety the company faces high variety of rivals.
The business ranks initially in 4 product categories i.e. DRAM Chips, LCD Displays, Cinema Televisions and Microwave, in terms of international market share, amongst 8 various product classifications. Org was the global leader in manufacturing DRAM, SRAM and NAND flash chips. Venture incomes from chips was less than Intel but its earnings from chips was growing much faster than Intel and has actually grown close to the revenue levels of Intel, as offered in the case Exhibition 2.
Together with the chips Corporation mobile market was likewise thriving at a high rate than its rivals i.e. Motorola and Nokia. Org's mobile phone's sales growth was 51% as compare to Motorola with only 4% and Nokia with no sales growth. The major reson behind Corp's high development despite of higher rates than Nokia and Motorola was the company's high-end quality cellular phone.
Venture was also reaping the benefits from increasing market share of high end LCDs as given up case Exhibition 3. The major factor, making the company make it possible for to obtain the opportunity is its mass production at low cost. Sony was the biggest competitor for Lufthansa Case Analysis Case Study Solution in LCD market, nevertheless, it had actually likewise started joint venture with Corp in 2003 for LCD producing, lessening the competitors for Organization.
Porter's Competitive Method
Low Expense Leadership strategy of porter is totally implemented by Corporation the method they attain economies of scale by enhancing their core proficiencies of manufacturing. They constantly bring something ingenious and brand-new whether it's a product or a service.
Alternatives
Alternative Solution 1
The Chief Marketing Officer (CMO) of Lufthansa Case Analysis Case Study Help would develop a brand-new brand image by targeting the younger generation of the specific nation. As, especially mobile phones of Business are popular among the younger group.
Pros
1. It is the best technique to build Consumer Life time Worth (CLV) by producing a long-term relationship with customers. Build commitment through delivering worth and reap the benefits for long-lasting, as research has showed it is more affordable to retain existing consumers than to attract new ones.
2. Another pro of this alternative is that word of mouth spread quicker amongst younger people and which in turn will bring in new customers for my products.
Cons
1. Old customers who were associated with Enterprise before may not like this brand-new image the business is trying to depict.
2 It will incur further costs to reposition some items and it may not even bring success as the patterns change extremely quickly among the younger market.
Alternative service 2.
Corporation has actually made producing its core competency for the many part of their business and due to which its supervisors are not scared to completely get out of their comfort zone. It would be done by arranging training workshops during which significance of marketing will be taught and numbers will be offered. Failure to get the passing ratings will get demoted. Marketing environment must be produced internally first as genuine marketing begins inside the corporation.
Pros
1. Its pro will be that all the marketing method advocates will come out and likewise the opposite ones.
Cons
2. Its con can produce an extremely unhealthy environment in the work environment, as individuals typically resist modification because they fear it.
Identify the very best alternative
First alternative is the best as it clearly has more pros since once a Client Life time Worth is built the business will benefit from it till that consumer lives and has acquiring power also. Plus, our target customers are the more youthful generation which are bound to live longer than the existing aging people. Nevertheless, Corp's primary objective is to develop commitment among its customers and make them repurchase it from them and even buy their various products too.
Implementation Plan
• Targeting younger generation through social marketing, producing a link with them like Pepsi do with music. And set the expectations possible and reasonable.
• A team consisting of finest marketing and sales specialists must be put together, and both views ought to be considered prior to protecting the resources required to implement the strategy.
• Thorough communication of the plan should be done as it is very crucial for everybody to be on the exact same page to make it work.
• Jobs and timelines must be construct and interacted accordingly to each individual accountable.
• The manager should utilize a control panel which reveals the progress of all the tasks which have been done or about to be done and by whom.
• The manager must keep an eye on and keep a consistent check on the specific and overall efficiency.
Because any new trend or policy may come in due to which all the things currently prepared have to be adjusted, • Everybody need to be ready to adjust midway. It's better to have contingency strategies already prepared.
• At the end of the project the manager need to interact the results and if effective must celebrate with the group.
Budget
This change the spending plan allotment of lots of supervisors and various nations were dissatisfied and argued but the analysis done by the program was precise and showed figures like North America and Russia growth possible merited a 35% allowance while they were getting 45%. It actually helped to fairly distribute the resources and record more clients by spending more on advertisements on the high development capacity regions of the world.
Conclusion
Lufthansa Case Analysis Case Study Analysis is a top 25 company in the world now and plans to get ahead of Sony who sits currently at no. 20. Its constant financial investment in R&D and innovative practices have propelled them to brand-new heights however for them its' just the start and they want to be amongst the leading 3 brand names in the world. They totally turn-around from almost going bankrupt during the Asian Financial Crisis to a world renowned brand, understood for quality and development. Their value chain and their core proficiency their manufacturing capability, along-with global brand image structure have actually seen their sales go from 16 to 44.6 billion $ from 1997-- 2002. With more 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 more youthful market in the middle of the internal arguments about marketing and should create Customer Life time Worth as it will not only give them advantages now but will continue to enjoy it till the consumer life time. As the cost of keeping the customer is much cheaper than bring in a brand-new one.
