ELJI

ELECTRONICS
Manuel Aristotle R. Bautista
BSA 4-1

Industry Analysis

Company Overview
ELJI Electronics Inc. is a South Korean multinational electronics company headquartered in
Yeouido-dong, Seoul, and a member of the ELJI Group, employing 83,000 people working in
119 local subsidiaries worldwide. With 2013 global sales of USD 53.1 billion (KRW 58.14
trillion), the company operates its business through five divisions: Home Entertainment, Mobile
Communications, Home Appliance, Air Conditioning and Energy Solution, and Vehicle
Components. CEO of ELJI Electronics assumed the role of Vice Chairman of ELJI Electronics
on 1 October 2010. ELJI Electronics' products include televisions, home theater
systems, refrigerators, washing
machines, computer
monitors, wearable
device, smart
appliance and smartphones.
In 2011, ELJI Electronics was the world's second-largest television manufacturer.

PORTERS FIVE FORCES MODEL

1. Potential Entrants (Entry Threat):The potential new entrant in the electronics market is Low due to following reasons.
Huge capital requirement for a firm to enter in this segment.
Rapidly evolving technology is another entry barrier as for a new entrant; it is very
difficult to build technology advanced products right from the start as they will need time to
understand the actual evolutions in this field.
Major firms like ELJI, Samsung, and Sony etc have efficiently built their supply chain
and hence it will be very difficult for a new entrant to compete with them on price. E.g. these
firms can get displays, panels etc at a very less price due to efficient supply chain.
Major players i.e. ELJI, Samsung, Sony, Videocon etc have already developed their huge
brand equity which will be very tough for a new entrant to establish in this market.
Brand loyalty to existing firms. Since brand loyalty is moderate in this sector, hence this
also imposes entry threat on new entrants.
2. The Bargaining Power of Suppliers:According to present market conditions, in electronics sector also the bargaining power of
supplier is on Low end because of following reasons.
Product differentiation is very low. Since most of the companies are developing similar
kinds of products, therefore the power is very less. Like in the TV, each of ELJI, Samsung, Sony
etc have similar product range in LCD, LED, Plasma and Smart TVs; hence they have less
power to bargain.
Since there is no or very negligible switching cost, hence this again makes the supplier
power to be on lower end.
Impacts on inputs on cost:- Since in this sector by changing the inputs i.e. input
technology or other raw material, the firms cannot drastically differentiate on prices in order to
be competitive, hence this also leads to reduced in supplier power.
3. The Bargaining power of customers (buyers):The bargaining power of buyer is High because of following reasons.
Use of internet to get all the information: - Buyer has a power to go online and compare
the prices and features of various products online. Hence buyers are more informative and
educated regarding products and this leads to increase in their power.
Mid to High price sensitivity of buyer. Since buyer are generally very price sensitive, so
this also leads to increase in buyer power.
Feedbacks and suggestions available over internet. With era of internet, there is also
increase in buyer power as buyers can now easily read the feedbacks and suggestions regarding
the products. So they are more informed and also influence buying decisions of other powers.
Buyer switching cost is very less; hence this also leads to increase in buyer power.

4. Threat of substitute products or services

Threat of substitutes are again from Mid to High.
Due to changing technology, there is high threat of substitute products in this industry.
E.g. before 2010 consumer used to use CRT televisions. But after the innovation of Plasma, LED
and LCD TVs consumers and shifted to the newer generation products.
Buyer have huge propensity to substitute if any firm provide more technologically
advanced product.
5. Intensity of competitive rivalry
The competitive rivalry is again very High in this industry due to following reasons.

There is continuous innovation in this industry making an intense competitive rivalry.

Hence innovation leads to sustainable competitive advantage.
Powerful competitive strategy: - If ELJI is to be evaluated on the competitive strategy
then it will be that Samsung is more focussing on product innovations and diversification and
they are quickly launching new products in market. Sony is focussing on both quality and
technology. Hence every firm has a different strategy and core competencies which make their
rivalry even more intensive.

FLOW OF CUSTOMER TRAFFIC

ELJI Electronics is a South Korean multinational electronics company, part of the ELJI
Corporation conglomerate headquartered in Seoul. ELJI Electronics was founded as GoldStar in
1958 as an attempt to rebuild the nations economy after that Korean War. Today, the company
employs over 80,000 people in more than 100 locations around the world and generates yearly
revenue in excess of 50 billion U.S. dollars. Around 14 percent of this revenue is still
generated domestically, whilst almost a quarter is produced in North America and 12 percent in
Europe. The company operates its business through five main divisions: Mobile
Communications, Home Entertainment, Home Appliances, Air Conditioning & Energy
Solutions, and Vehicle Component.
ELJI Electronics is currently the worlds second-largest television manufacturer based on its
shipments and the home entertainment segment of the company generated revenue of almost 20
billion U.S. dollars in 2013. ELJIs share in the global LCD TV market has grown steadily since
2008 and the company held a 14 percent share of the industry as of 2013. This placed it second
in the market behind only Samsung, which held a share of 20.8 percent. ELJI Electronics also
held a considerable share of the flat panel TV market as it earned 16.3 percent of the worldwide
revenue in this sector in the second quarter of 2013, as well as having a 10 percent share in the
worldwide PC
monitor market.
The second biggest industrial sector for ELJI Electronics is the mobile telecommunications
market and the South Korean company held a shipment share of 3.6 percent of the global mobile
phone market at the beginning of 2014. The company shipped a total of 70 million units of
mobile phones worldwide in 2013, making it the fourth largest mobile phone vendor behind
Samsung, Nokia, and Apple. ELJI Electronics also has a growing influence in the smartphone
market and the company held a 5.1 percent share of this market in the third quarter of 2014,
during which it shipped close to 17 million units of smartphones worldwide.
ELJI Electronics also holds a 7 percent share of the global domestic appliances market, which
generates significant revenue for the company. ELJIs revenue in the home appliances sector
reached an all-time high of over 3 billion U.S. dollars in the second quarter of 2013, contributing
to total revenue of 11.3 billion U.S. dollars for the whole year. Although ELJI is only the fifth
largest appliance producer worldwide, it enjoys greater success in the United States, where it
held a market share of 14 percent in 2013, making it the third largest appliance company behind
Whirlpool and General Electric.

PRESENCE OF FOREIGN BRANDS

ELJI is one of Korea's largest business groups. Westerners know the company mainly as Korea's
#2 electronics manufacturer behind the mighty Samsung. It suffered a dip in performance in the
early 2010s as a result of its late entry into the smartphone sector. Yet ELJI is firmly established
as the global #2 in televisions behind its country-mate and has a broad public profile in the
domestic Korean market where - perhaps surprisingly - it is also the leading household and
personal care marketer, and has a finger in numerous other pies including soft drinks (it is the
local Coca-Cola licensee), telecoms, industrial manufacturing and property development. In fact,
it is regarded by many as the model for modern Korean businesses, having undergone a painful
restructuring from a labyrinthine "chaebol" to Western-style diversified conglomerate without the
financial or political scandals which dogged several of its competitors, including Samsung. The
group network now embraces more than 40 separate companies with offices and subsidiaries in
over 120 countries. Like Samsung, it is still firmly controlled by its founding family, in this case
the Koo brothers, grandsons of the man who launched the business in the late 1940s making face
cream. In terms of television ELJI Electronics is the best among its competitors.
Other competitors of ELJI Electronics are:

Sony

Panasonic

Toshiba

Whirlpool

COMPETITIVE STRATEGIES
ELJI has numerous competitors in the market of electronics. Some competitors include Samsung
Electronics, and Toshiba Corporation. They maintain competitive goals for their market strategy
to produce high end mobile devices and other multimedia products. Their primary vision for a
new market position is becoming one of the top three global corporations by 2010.
ELJI uses global differentiation as their business strategy. Like Apple, ELJI uses integrated
collaboration environment and business intelligence system in their organization. ELJI works
together with all departments including design and promotion to keep their products increasingly
well-known for their originality and uniqueness. In recent news, ELJI will be joining for the first
time in the Windows Mobile phone space collaborating with Microsoft. (See article: REUTERS
02/14/07). This collaboration with Microsoft Mobile windows will surely raise revenues and is a
great example as a business intelligence decision for the company because of the tremendous
demand for the internet via your cell phone. Microsoft recently unveiled a new version of its
Windows operating system for mobile devices, making it look more like Windows Vista and
adding features previously only available on personal computers.
For ELJI, much of the power of the 5 forces model comes from the supplier power because the
relative attractiveness through their collaboration efforts with their telecommunication sector
(mobile phones). Buyer power has shown efforts with the display and media sector of the
company but certainly not due to the fact that ELJI will reduce costs in order for a consumer
purchase. Well, an incentive for customers to use ELJI phones through a mobile phone
distributor the companies work together to give a discounted upgrade to consumers to build a
loyalty factor with customer satisfaction of the product. There is a high threat of substitutes and
rivalry among existing competitors in the telecommunications sector due to the fact that there are
many other manufacturers of mobile devices and computer products.
ELJI tailors their product to the prestige customer. Their is no bottom line initiatives taken by
ELJI. They use top-line initiatives to increase revenue through information technology. Much of
ELJI's marketing is through advertising in print, television and outdoor ads. Not only does ELJI
advertise with these tools but also through internet advertising. Banner ads play a role in
promotion for the company. They also use affiliated programs, considering Verizon, Sprint and
Cingular and other mobile plan distributors play a a role in pushing customers to ELJI in the
exchange for money that ELJI would owe to Verizon, Sprint, etc. for the distribution of their
products. By this the company gains a great name and much advertisement. Another example of
online advertisement for ELJI, there are many articles in Google, which is a search engine, to
lead consumers to ELJI. There is also some use pop under, which is an excellent way of
advertisement.
ELJI uses sports marketing in their unique marketing mix to also provide a top line initiative of
the company, advertising through sponsorships. For example, In 2006, ELJI started sponsoring
the US PGA "Skins Game." The Skins Game is the nation's biggest golf championship that opens
during the holiday week of Thanksgiving Day. The Skins Game also has one of the highest TV
viewing of live golf telecast which in turn is giving ELJI great publicity within the prestige

market.
The companys online payment systems are extremely secure, using an s in the https:// secure
format to ensure customers of privacy. For example, if one is trying to purchase one of their
products online, they have to go through a series of steps before purchasing the product. First,
they have to choose what kind of phone they would like to purchase. Second, they have to
choose the kind of plan that their phone provider has. After that the ELJI website goes to a
secured encrypted website where all the payment information is taken and than scrambles their
credit card data so that only a secured bank can get your information. In that website they ask the
customer for all of their information such as their social security number, credit card information
and all their address information.
The internet business model that ELJI uses is a Clicks N' Mortar model, which means that their
customers can go to an actual store or shop online and purchase their products. This gives them a
great deal of flexibility as a world wide company. They have two E-commerce models. A
Business to Business (B2B) model because they sell much of their phone products to other
companies to distribute their product. They also adopt the Business to Consumer (B2C) model
because they offer much of their products online for personal use without going through a store
going to directly to the consumers.