SUCCESSFUL BUSINESS STRATEGY OF LG

SUBMITTED TO:

KUNWAR MILIND SINGH

(PROFESSOR GHS-IMR)

SUBMITTED BY:

ANAND PANDEY

AJIT TRIVEDI

AMARJEET SINGH

OJAS SHUKLA

ABHISHEK DIXIT

XV BATCH (FULL TIME)

(2009 – 2011, Vth TRIMESTER)

DR. GAUR HARI SINGHANIA INSTITUTE OF MANAGEMENT AND

RESEARCH

About LG:

LG Electronics: LG is a global electronics company headquartered in Yeouido,

Seoul, South Korea. LG Electronics is the world's second-largest manufacturer of

Television sets and third-largest producer of mobile phones.

It is the flagship company of LG Group, one of the world's largest electronic

conglomerates.

The company has 75 subsidiaries worldwide that design and manufacture

televisions, home appliances, and telecommunications devices. LG Electronics

owns Zenith Electronics and controls 37.91 percent of LG Display.

The company was originally established in 1958 as GoldStar, producing radios,

TVs, refrigerators, washing machines, and air conditioners. The LG Group was a

merger of two Korean companies, Lucky and GoldStar, from which the

abbreviation of LG was derived. The current "Life's Good" slogan is a backronym.

Before the corporate name change to LG, household products were sold under

the brand name of Lucky, while electronic products were sold under the brand

name of GoldStar (Hangul:금성). In January 2009 LG was able to buy the

domain name, LG.com, placing it among the companies who own their two letter

brand's domain name.

In 1994 GoldStar gained sponsorship from The 3DO Company to make the first

3DO Interactive Multiplayer. In 1995, GoldStar was renamed LG Electronics, and

acquired Zenith Electronics of the United States. LG Solar Energy is a subsidiary

formed in 2007 to allow LG Chem to supply polysilicon to LG Electronics for

production of solar cells. In 2008, LG took its first dive into the solar-panel

manufacturing pool, as it announced a preliminary deal to form a joint venture

with Conergy. Under the deal, set to be completed by year's end, LG would

acquire a 75 percent stake in Conergy's Frankfurt solar-panel plant. LG has

produced camcorders called ARTCAM and DSLRs.

Evolution of the firm:

Business divisions:

Major landmark or LG India:

Feb’97 : Established LGEIL

May’97: Launched CTV, WM, REF.

Jan’98 : Launched AC

Apr’98 : Inaugurated Noida Plant-CTV, AC, WM

May’01: Started Monitor Prod. …

Jan’04 : Started PC Production

Oct’04 : Inaugurated Pune Plant-CTV, REF

Apr’05 : Started GSM Production (P)

Jan’07 : Started TFT Monitor production

Apr’07 : 5 Star Energy Rating for products

Business strategy:

LG Display Co Ltd uses differentiation as its main business strategy by

producing goods and services that are unique to the market. That is products that

are used to experience new, rich life of digital display through a variety of TFT-

LCD LG Display provides, such as the production and supply of thin-film

transistor liquid crystal displays called TFT-LCD panels, principally used for

televisions to provide slim and sleek design. It also provides large, wide and high

performance screens for notebook computers and wider, brighter and crisper

screens for desktop monitors. In addition, it provides TFT-LCDs for handheld

products such as mobile phones, and lighter and slimmer products for industrial

and other applications such as entertainment systems, automobile navigation

systems, portable DVD players, digital photo displays and medical diagnostic

equipment. The customers served by LG Display include manufacturers of

notebook computers, televisions and desktop monitors.

The customer service center provides product repair and warranty services to

customers in the Americas region, where the demand for LCD TVs is rapidly

growing, especially in the United States, Canada, Mexico and Brazil. The service

center features optimized facilities and analysis equipment to provide warranty

services primarily for LCD panels that are 32 inches and larger. In addition, the

Company has one sales subsidiary and four representative offices in the U.S. As

part of their strategy to improve customer alignment; this enables them to better

respond to the needs of their customers in a timely and efficient manner.

Michael Porter's Five Forces Analysis

In the industry LG Display operates, Michael Porter’s Five Forces Analysis is

crucial in assessing the state of competition.

Other business strategies:

o The Bargaining Power of Buyers

o The Bargaining Power of Suppliers

o Threat of Substitute Products or Services

o Threat of New Entrants

o Rivalry among Existing Competitors

LGE ranked fourth in its industry in Global 500

LGE has five segments: Home Entertainment (TVs and audio products), Mobile

Communications (cellular phones and handsets), Home Appliance (home

appliances), Air Conditioning, and Business Solutions (monitors, commercial

displays for hotels, equipment for automobiles, and security solutions). LGE has

expanded into approximately 80 countries and the number of employees

exceeds 80 thousand.

Its consolidated financial results (FY 2009) and position in the industry are as

follows:

Sales: 73.0 trillion won (a 15.3 percent increase year over year)

Operating profit: 4.2 trillion won (a 3.6 percent increase y-o-y), operating

profit margin: 5.8 percent

Net profit: 2.8 trillion won (a 145.0 percent increase y-o-y)

Total assets: 44.8 trillion won (equity capital: 17.2 trillion won)

LGE was ranked fourth in its industry in 2009 Fortune Global 500 in terms

of sales volume, behind first-place Siemens, second-place Samsung

Electronics, and Hitachi and ahead of Panasonic and Toshiba, which were

ranked fifth and sixth, respectively.

LGE’s TVs or cellular phones market share and respective position in

terms of sales volume in 2009 in the world.

LGE had the second largest market share in terms of TV sales (the same 12.4

percent share as SONY. Samsung Electronics had the largest share of 23.3

percent.) and the third largest share in cellular phones sales(10.5 percent. It was

behind Nokia (38.3 percent) and Samsung (20.1 percent)). The company is one

of the companies with the largest market share with respect to refrigerators, air

conditioners, washing machines, microwaves in the world and is the leading

home appliance supplier in growth markets including India, Brazil, and Indonesia.

Its overseas sales account for 88 percent in its overall sales and is at a higher

level in comparison to competing Japanese manufacturers (SONY: 74 percent,

Panasonic:47 percent, and Sharp:48 percent). This is largely because Korea’s

domestic market is not large enough for the company to expand its businesses.

Strategic features of its global management are as follows:

1. Selection of growth markets based on long -range plans

2. Prompt and bold decisions to expand into new markets and concentration of

management resources

3. Decisions by local offices on development, locally designed products, building

a sales network and internationalization of headquarters

4. Effective sales promotions with emphasis on its brand name

Organization structure of whole LG corp.:

C E O

↓

Director

↓

C F O

↓

C T O

↓

Vice President

↓

Managing Director

↓

Assistant Managing Director

↓

…………

Firms position on integration- Responsiveness grid and key functional strategy:

Grid differentiated services:

Virtual Reservations

The mapping of classes first to the virtual processors, then onto the

physical ones is obviously the key for full processor utilization. This

mapping must be controlled so that each class maps to the full range

of physical processors, as shown in Fig. 8. Provided that the mapping

is controlled, the reservation ensures both application isolation with respect to

computational bandwidth and full processor utilization.

Subsidiary Development 8 headquarter managers, subsidiary managers as well as policy

makers to understand better subsidiary‟s development and value adding activities in a global

context.