Please solve the case study your own words

Question:

a. Why LGEIL was not successful to expand its market in India in the preliminary stage?

b. What5 kinds of training LGEIL provided their employees to be market competent?

CASE: LG Electronics LG Electronics (LGE) is a global company based in South Korea. As of 2006, LGE has about 130 subsidiaries and branch offices all around the world and 85 percent of the company's revenues comes from outside Korea. LGE has grown rapidly as a global consumer electronics and telecommunications company where 60 percent of the total workforce is recruited in the local country. LG Electronics India Limited (LGEIL) is one of the fastest growing companies among the 130 subsidiaries and is often credited as a successful localization case by writers on management. (continued) Before 1997, LGE made two attempts at penetrating the Indian market. Both these attempts falled. The first was in the form of a joint venture with Bestavlsion and the second was a joint venture with a Birla Group company. A dramatic shift in policy by the Government of India that allowed transnational companies to set up shop in India encouraged LGE to set up a 100 percent subsidiary in India and this has been a runaway success. LGEIL holds the top market share in the Indian con- sumer electronics market. In color televisions, it has a market share of 22.6 percent followed by Samsung and Onida with 13.6 percent and 10.4 percent, respectively. In refrigerators, it has a market share of 23.8 percent and is neck-to-neck with Godrej (19.9 percent) and Whirlpool (21.7 percent). It is the market leader in the washing machines and microwave ovens segment with a market share of 30.5 percent and 40.7 percent. What has contributed to the success of LGEIL? Y. K. Kim, chlef HRO, believes that the company owes it success to tapping local talent and the passion of its employees for innovation. When LGEIL was set up in 1995 the unchallenged trend at most MNCs was that expatriates manned all all 1 crucial functions. All the policies were formulated at headquarters and then unquestioningly executed at various branch offices. This left very little elbow room for local managers to manoeuvre things at their end. Consequently, none of these initiatives factored in local considerations leading to huge disconnects between what the local consumers wanted and what the corporate office thought they wanted. In contrast, the LGEIL story got scripted very differently. The three crucial decisions which established the DNA of LGEIL were as follows: Indian employees were appointed as key decision makers at LGEIL. The role of foreign service employees (FSEs) remained limited and they acted as facilitators, which implied that they would coordinate with LG Korea and would provide expertise where needed. The head of sales and marketing division and head, HR, would always be Indians. The heads of manufacturing and finance and accounting would be FSEs but would be assisted by Indian managers who would provide key support to these functions. These decisions became the cornerstones of LGE's operational strength in India and enabled it to emerge as a market leader in many product categories. Retention of employees was a major challenge for LGEIL. The industry attrition rate was 35 percent. Over a period of five years, LGEIL has achieved a dramatic reduction in manpower attrition that stands today at 6 percent. According to Yasho Verma, Director, HR, the three factors that have contributed to this has been career planning, employee engage- ment, and empowerment of managers. Fresh MBAs in LGEIL can make all decisions unlike other MNCs. Identifying and rewarding talent was an initiative undertaken at LGEIL to retain its ster performers. In 1998-1999, the reward and recognition system was made comprehensive and strong, including in its ambit the broadest spectrum of people working for LGEIL. On the first working day of every month, LGEIL distributes around 250 to 300 rewards and citations among its star performers, a ceremony that concludes with a message (continued from the CEO. Like all LGEIL meetings, this one too, is extremely short, sweet, and crisp. In a little less than 10 years, LGEIL products have managed to conquer the hearts, minds, and imagination of thousands of ordinary housewives and children through whom it has been able to reach millions of house- holds in India. Yasho Verma believes that training is the fulcrum of growth for an or- ganization that is scaling up fast. At LGEIL, the entire gamut of knowledge, skill, and attitude training is covered. The best training, however, comes from empowerment, accountability, and job rotation, all of which is prac- tised in varying measures at LGEIL. At LGEIL, the pyramid of learning starts with skill training, next comes conceptual training, and at the top is mindset training, which is the most difficult to impact. Every employee is mandated to complete at least two e-modules in a month. The modules could relate to product specifications, a functional domain, a specific company policy or any of the Six Sigma programs that have been implemented at LGEIL. Over 95 percent of employees follow this schedule. At the end of each training module is a Q & A section. Every negative reply automatically generates the correct answer. A mistake made twice, generates a sheet, which has the correct answer underlined for reiteration. Once a quarter, all work at LGEIL comes to an absolute standstill. That's the day when everybody is in the classroom taking a global test that is administered in all parts of the globe, wherever LGE has operations. Everybody from the top to the bottom of the pyramid appears in this test and those who score the highest walk away with attractive prizes. On an average, each LGEIL employee undergoes 10 days of training cycle every year. Source: Adapted from "How South Korea Conquered India." Fortune (April 2004)