Case Analysis Lg Electronics

1698 WordsJan 21, 20137 Pages
INTRODUCTION In order to stay competitive in an industry with an increasing number of players, companies have to be able to stay on top of their costs, as well as that of their competitors. Costing is a very tricky business in itself. Companies are wont to making costing mistakes by going with the wrong assumptions. The case of Tork versus LG shows how Tork conducts its breakdown of competitor costs in order to come up with strategies that will eliminate the costing advantage of LG. Tork is also burdened by an additional dilemma of continuing to produce low-end units or buying from LG, as well as deciding whether to pursue a legal battle against LG for dumping - that is, selling its products below cost. CASE CONTEXT LG…show more content…
Company has better grasp of operations because it has been in operation for a longer period Freight cost and distribution advantage Material and labor costs are higher No opportunity for maximization of factory capacity due to seasonal Page 3 of 5 constraints   Opportunities  Can grab market segment composed of price-sensitive customers Can redesign other models to conform to market tastes  Tork might be able to redesign low end models to be more competitive   Threat  Can significantly improve material costs by following the example of LG (shift to lighter materials) Demand has shifted to centralized air conditioning in newer households in North America, so competitive costs in high-end units is a plus LG’s entry into the market Failure to comply with quality standards might reduce its credibility as a brand CONCLUSION To summarize the analyses above, we have come up with the following conclusions:      There is a difference in per unit margins when different categories are used for comparing costs. But both will arrive at the same conclusion that LG’s costs are still cheaper than Tork’s. With this

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