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To: Robert Utne who wrote (4551)	3/4/1998 12:30:00 AM
From: Robert Utne	Read Replies (1) \| Respond to of 6570

Crises equals Opportunities for LG Mexican subsidiary... "Recent reports on Korean economic crisis reminds me of Mexico in 1994. I remember that time as a nightmare. I saw our dream of starting a new subsidiary in black being shattered into pieces right in front of our own eyes," reminisces Kyung-Sun Park, president of LGEMS (LGE's sales subsidiary in Mexico). There are many similarities between Mexico in 1994 and Korea's current woe. At the time, value of Peso took a nose dive and the stock market hit bottom, leading to an IMF bailout in December of the same year. It was like a mirror image of Korea now. The shock to the Mexicans were greater since up to that point, Mexico was being hailed as a country of economic miracle by the international press. LGEMS, re-established as a subsidiary from a branch office in 1994, was also one of the victims. Up to the foreign exchange crisis in December 1994, the company had recorded sales of US$ 32 million and was excited about seeing the company record profit from the first year of its birth. But, due to the unexpected spiral in exchange rate, the end result turned to a deficit of US$ 1.7 million. The economy in Mexico worsened in 1995 and when investment deficit reached US$ 1 million, closing of LGEMS seemed only matter of time. Economic crisis of 1994 pushed LGEMS into "red," resulting in suggestions of business closure. But the flame of hope was still burning. "Pressure was building from all directions including from the regional operations. But we tried to keep calm and stay focused on building a survival plan. We concentrated more on marketing strategies for a mid- to long-term growth rather than an immediate jump in sales. We identified the key to success as "price" and "service." While others were busy cutting their prices, we maintained our price range. It was kind of a risk but we wanted to use the crisis as an opportunity to show the customers the strong confidence we had in quality of LG products. Furthermore, while others became more conservative in their investment, we became more aggressive. We opened new distribution bases and customer service centers. They were all part of our strategy to gain customers' confidence. We tried to make most of open doors because our competitors were moving more towards sidelines", explains Park. As part of the mid- to long-term strategy, LGEMS initiated D-Project (Double Project) in 1996. This innovation campaign served as the springboard for LGEMS in turning itself around. D-Project aimed to boost sales of LGE's main products such as TV and VTR to US$ 43 million, 50% more than the original target. This ambitious, in a way reckless plan proved to be a resounding success. At the end of 1996, thanks to the D-Project, LGEMS was able to exceed its sales target by 69% and saw its net profit rise to US$ 1.3 million. Achieving the dream of solid profit in 1997 and eliminating the accumulation of deficit Customer was always at the heart of D-Project. There was always one question for LGEMS' marketing strategy was "What can we do satisfy the customer?""At the time, we were in no condition to offer lower prices or better trade conditions than our competitors. Against this background, the only way to differentiate ourselves from the competition was by giving greater confidence to the first customer(distributors) and the second customer(consumers). That is how we came to the idea of 'utilizing Promoters,' and 'establishing real-time service and service tour system.' We wanted to help our distributors sell more LG products and make the consumers feel secure in purchasing LG products by giving them faster after service," says Deputy Manager Il-Kyun Chung who was the leader of D-Project.'Promoter system' is unique to Mexican market and one of the strengths of LGEMS. There are currently more than 140 Promoters in Mexico who visit various shops to sell LG products, improve product display, and offer product training to the sales people. Through these activities, Promoters pay a central part in increasing distributors' satisfaction. Differentiated Service' is another proud strength of LGEMS. Well aware of the relative weakness of customer service in Mexico, LGEMS set up large customer service centers in major cities including Mexico City and launched free national after service tours. Its 'Express Service' that guaranteed full service within 24 hours also attracted much interest as an industry first in Mexico. A clear proof of LGEMS success would be the fact that the company has earned more than 50% approval rating in 2 consecutive years as the best service provider in a survey conducted with participation of distributors and consumers. If 1994 was the worst of times for LGEMS, 1997 was the best of times, a year of great reversal when the hardship of the past was completely eradicated. Source: LGE