Electronics Sector

By:Group BG-5ITM Business School

INTRODUCTION

• Until 1984, the electronics sector was primarily government owned.

• The late 1984s witnessed a rapid growth of the electronics industry

• In 1991, private investments - both foreign and domestic - were encouraged.

OVERVIEW• Market capitalization

• Size of the industry

• Total contribution to the economy/ sales

• Employment opportunities

Top leading Companies

LG Electronics, Philips, Sony; Sansui, Samsung, BPL, Videocon, Onida, Aiwa, Akai, Thompson, Panasonic.

Cameras/Camcorders: Sony, Canon, Olympus, Fuji film, Nikon

PESTEL ANALYSIS

Economic• Globalization

• Consumers Disposable Income

• Exchange Rates

• Labor Costs

• Inflation Rate (Cost of Capital)

Political• Government Type & Stability

• Corruption

• FDI Policy

Social• Population Growth Rate

• Age Distribution

• Perception of Safety

• Health Consciousness

• Employment Patterns

• Corporate Social Responsibility (CSR)

Environmental• Climatic Conditions

• Environmental Protection Agency of India

• E-Waste Management (Waste like Lead, Cadmium, Mercury, etc.)

Technological• Degree of Automation• Emerging Technologies• Impact of Internet• Rate of Technological Change• R&D Activity

Legal• Tax Policies• Labor Laws• Trade Restrictions• Government Acts (Ex: Environmental Protection

Act, 1986)

RIVALRY

MODERATE

BARGAINING POWER OF SUPPLIERS

HIGH

THREAT OF NEW

ENTRANTS

LOW TO MODERATE

BARGAINING POWER OF

BUYERS

MODERATE TO HIGH

THREAT OF SUBSTITUTES

LOW

PORTER FIVE FORCES

Market Share of Major Electronic Companies

Pricing Strategies

• 1997 – Sold imported products that were priced high, equivalent to Japanese products.

• Make local customers feel that LG products were not inferior to Japanese products.

• 1998 – Launched Sampoorna, first low priced TV for rural consumers.

• LG started introducing quality products in quality range.

• For first few years, LG did not get into price wars.

Promotion• 2004 – 5% of revenue spent towards

advertising.

• Similar to promotional activities of an FMCG company.

• Unlike others, LG advertised all round the year.

Pricing Strategies• Believed in an “Honest Pricing Policy”.

• Message to customers - No scheme, no gimmick, great products and honest prices.

Market Size

Growth Drivers 

Continued economic growth (9.5-10.5 % CAGR).

Favourable demographics.

Increasing Urbanization, nuclear families.

Increasing disposable incomes and affordability .

Availability of new products and technologies.

Increase in organized retail.

Targeting rural markets.

Zero interest EMI and credit card purchases.

Festival deals and discounts.

Demand Forecasting Earlier LG Electronics' Demand forecasting

analysis model only included logistics, inventory and production information for performing analysis.

Shift of demand forecasting paradigm from producer oriented to consumer oriented model in 2009.

Expansion of Business Intelligence (BI) from a perspective of Market Sensing concept.

Now customer tendencies, market trends, real economy and technology trends are also included while demand forecasting analysis.

Demand Forecasting Methods Opinion Poll methods

Expert opinion

Delphi Method

Market Studies and experiment

Statistical techniques

Extrapolation

Reference class forecasting

Time series projection methods

CONCLUSION :Conclusions • Electronics sector has shifted from primarily

public sector to private sector and has immense growth opportunities.

• Its total contribution to economy and sales is ever increasing.

• Contribution in creating employment opportunities.

• Rivalry among firms are moderate.

• Changing lifestyle and increasing income is a stimuli for its growth.

Conclusions• Big brands with greater market share

include Sony, whirlpool and Voltas.

• Entire sector is moving towards being more

and more customer oriented.

• New rural markets present huge potential

for growth.

THANK YOU