Exploiting Opportunities through Product Strategy during a Recession and Beyond

Some Korean high-tech firms’ product strategy has been one of the key factors behind their robust performance during (or after) recessionary times. For instance, since the current global recession hit, Samsung and LG have adjusted their product mix in TV sector, increasing low-end TV sets, although Samsung has become a leader in the high-end LCD TV sector by making high-risk bet on premium LED TV segment. Samsung is the world’s biggest maker of LCD TV sets and panels.

Samsung’s strategic bet during the industry slumps have paid off well, as I have recently pointed out. Samsung’s recent better-than-expected profit guidance seems to stem from their aggressive investment in the next product lines and production technologies during an industry downturn cycle.

Samsung has done very well in LCD panels and TVs owing to its strong LCD TV sales in China and North America and double-digit price gains in LCD panels for monitors and notebooks in 3Q. Korean LCD screen makers could become a world leader by massively investing in the next generation fab lines by anticipating and finding emerging applications for LCD panels from PCs and mobile devices to TVs.

The fact that Korean electronics firms produce its own end products as a set maker has helped to make its strategic decision by seeing new applications being evolved. Even so, making a high-risk bet on emerging products is not easy since a company needs to assemble the required capital, technology, and markets in time to beat competitors. Samsung has done it in its major businesses of memory chips, LCD panels, TVs, and mobile phones over time. Its superb product mix is attributable to its enhanced market sensing capability coupled with its capacity to read technological trajectories and estimate their likely impact.

I understand that this may not be the typical business cycle recession. And yet, my point is that there are opportunities for growth even in the worst of times. Whether some economies are in an inflationary bubble or not, businesses should take advantage of that. This entails a complex set of skills from production and product technology to strategic bet on products.