Company Profile

Establishing LGEGF was an important step in the Growth strategy of the company. As part of

the global expansion of LG Electronics, the Middle East has a very high priority and setting up

LGEGF indicates enhanced Commitment to the region.

The stable and growing markets of the area are also the reasons to open a new subsidiary

located in the Jebel Ali Free Zone.

Being in center of Dubai brings us close to local markets, which means we can respond to

customers needs and market changes immediately.

CORPORATE NAME: LG Electronics Gulf FZE

ESTABLISHED: 14th October 1996

PRESIDENT: Mr. Hyun Shik Paik

OUR BUSINESS UNITS

LG is comprised of six business units:

•Home Entertainment

•Home Appliances

•IT Products

•AE (RAC, CAC, Solar & Lighting)

•Business Solutions

•Mobile Communications

MAIN PRODUCTS

LED TV, Plasma TV, LCD TV, LCD Monitor, Commercial Monitor, CD-ROM Drives, DVD-ROM

Drives, CD Rewritable Recorder, VCR, DVD Player, DVD Recorder, Portable DVD, Home Theater,

Notebook, Air Conditioner, Refrigerator, Microwave Oven, Washing Machine, Vacuum Cleaner,

Compressor for Air Conditioner, Compressor for Refrigerator, Air Purifies, HomNet, Built-in

Appliances.

OFFICIAL WEBSITES

http://www.lg.com/ae

http://www.lg.com/ae_ar

http://ae.lgworld.com/web.main.dev

OTHER LINKS

http://www.twitter.com/lggulf

http://www.facebook.com/lgfanclub

Company Background

LG Electronics Inc. (Korean: LG 전자, KRX: 066570, LSE: LGLD) is a South

Korean multinational electronics company headquartered in Yeouido-dong, Seoul, and a

member of the LG 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. [2] CEO of LG

Electronics is Bon-joon Koo, who assumed the role of Vice Chairman of LG Electronics on 1

October 2010. In 2011, LG Electronics was the world's second-largest television manufacturer.

History

1958–1960s

In 1958, LG Electronic was founded as GoldStar (Hangul:금성). It was established in the

aftermath of the Korean War to provide the rebuilding nation with domestically-produced

consumer electronics and home appliances. LG Electronics produced South Korea's first radios,

TVs, refrigerators, washing machines, and air conditioners.[4] GoldStar was one of the LG group

with a sister company, Lak-Hui (pronounced "Lucky") Chemical Industrial Corp. which is now LG

Chem and LG Households. The Goldstar corporate name had been changed to LG Electronics

(Lucky-Goldstar) and LG Cable in 1995, after merging with Lucky Chemical.

2000–present

In order to create a holding company, the former LG Electronics was split off in 2002, with the

"new" LG Electronics being spun off and the "old" LG Electronics changing its name to LG EI. It

was then merged with and into LG CI in 2003 (the legal successor of the former LG Chem), so

the company that started as Goldstar does not currently exist.

LG Electronics plays a large role in the global consumer electronics industry. LG launched the LG

Chocolate mobile phone in 2005 and is the second-largest LCD TV manufacturer worldwide as

of 2013.[6] By 2005, LG was a Top 100 global brand, and in 2006 LG recorded a brand growth of

14%.[7] Its display manufacturing affiliate, LG Display, as of 2009 was the world's largest LCD

panel manufacturer.[8] In 2010, LG Electronics entered the smartphone industry. Since, LG

Electronics continued to develop various electronic products, such as releasing the world's first

84-inch ultra-HD TV for retail sale.[9]

On 5 December 2012, the antitrust regulators of European Union fined LG Electronics and

several other major companies for fixing prices of TV cathode-ray tubes in two cartels lasting

nearly a decade.[10]

In 2014, LG Electronics began to a new typeface for the "LG" in its logo.

On June 11, 2015, LG Electronics found itself in the midst of a human rights controversy

when The Guardian published an article by Rosa Moreno, a former employee of an LG television

assembly factory.[11] Moreno reported that she had lost her hands in an industrial accident, and

that the factory initially provided her only $3,800 for the devastating loss. Moreno has

continued to battle LG to find sufficient compensation for the loss of her hands, and the

company has been notably unresponsive and unsympathetic to her case.

Products

LG Electronics' products include televisions, home theater systems, refrigerators, washing

machines, computer monitors, wearable device ,smart appliance and smartphones.

Televisions

LG Electronics launched an OLED TV in 2013 and 65-inch and 77-inch sizes in 2014. LG

Electronics introduced its first Internet TVin 2007, originally branded as "NetCast Entertainment

Access" devices. They later renamed the 2011 Internet televisions to "LG Smart TV" when

more interactive television features were added, that enable the audience to receive

information from the Internet while at the same time watching conventional TV programming.

In November 2013, a blogger discovered that some of LG's smart TVs silently collect filenames

from attached USB storage devices and program viewing data, and transmit the information to

LG's servers and LG-affiliated servers.[18][19] Shortly after this blog entry went live, LG disabled

playback on its site of the video, explaining how its viewer analytics work, and closed

the Brightcove account the video was hosted on. By December 2013, the page itself was

removed from LG's website.

LG's remote uses Hillcrest Labs' Freespace technology to allow users to change channels using

gestures[22] and Dragon Naturally Speaking technology for voice recognition.[23]

As of 2014, LG is using webOS with a ribbon interface with some of its smart TVs. LG reported

that in the first eight months after release, it had sold over 5 million webOS TVs.

Mobile devices

Mobile

LG G4 Global Launching

LG Electronics manufactures a wide range of smartphones and tablet devices.[25] Other than

the G3, LG officially unveiled the curved smartphone, G Flex, on 27 October 2013. LG has

released it in South Korea in November 2013, and later announced releases in Europe, the rest

of Asia, and North America. At Consumer Electronics Show in January 2014, LG announced an

U.S. release for the G2 across several major carriers. In 2015, LG has released LG G4 globally in

late May through early June.

Tablet

In 2014, LG revealed three new additions to the G series of tablets, which each include LG's

Knock Code feature, allowing users to unlock devices with a series of taps. The tablets also

feature Q Pair which allows tablets to sync up with a smartphones, and for phone calls and text

messages passed on to the tablet in real time.[30]

Smart watch

LG Watch Urbane LTE

LG G watch R

LG and Google announced the Android Wear-based smartwatch, the LG G Watch, that was in

June 2014. In August 2014, the LG G Watch R that has a round face (similar to the Moto 360)

was released. The G watch urbane that LG's third android watch has released in April, 2015.

This is the first device to support new features such as Wi-Fi, and new parts of Android

Wear's software interface, like the ability to draw emoji to friends.

Rolly Keyboard

In 2015, LG announced the first Bluetooth keyboard that folds up along the four rows of keys

that can be tossed in a purse or pocket. The rolly keyboard is made of solid plastic. Two tiny

plastic arms fold out from the end of the keyboard to support a tablet or smartphone, and it

can toggle between two different Bluetooth-connected devices at a time. Battery life is an

expected three months on a single AAA battery.

Home appliances

LG manufactures and sells home appliance products such as refrigerators, washers and dryers,

vacuum cleaners, kitchen appliances, and residential air conditioners. In June 2014, LG

Electronics also announced the launch of its smart appliances with HomeChat™ messaging

service in South Korea. HomeChat™ employs LINE, the mobile messenger app from Korean

company 'Naver', to let homeowners communicate, control, monitor and share content with

LG’s smart appliances. Users can send simple messages, such as "start washing cycle," in order

to control their washing machines.

SUPPLY CHAIN MANAGEMENT STRATEGY

LG Electronics is continuously expanding green partnerships with its suppliers which called

“Green Program Plus”.

GREEN PARTNERSHIP

GREEN PROGRAM PLUS

First implemented in 2005, “Green Program Plus (GP Plus)” is a sustainability management

program for our supply chain. Not only does the program help us respond to regulations on

managing hazardous substances, but it also enables us to identify risks existing in our supply

chain and to promote our suppliers’ competitiveness in sustainability management. This

program has now been expanded to parts procurement and GHG emissions, and includes

second-tier and third-tier suppliers as well as primary suppliers. LG Electronics also validates

and evaluates the green management system as well as the capacity of our existing and new

suppliers on an ongoing basis.

CERTIFICATION PROCESS

The certification examination only takes place at factories of companies that have passed the

LG Electronics' review along with verification of the documents related to hazardous

substances. For the company that passed the examination, and actual business is initiated with

conclusion of a parts warranty.

DOCUMENTS FOR SUPPLIERS

LG Electronics distributes related information such as 'LG Electronics manual of the hazardous

substance management in parts and models' both online and offline, so that its partner firms

can easily adapt their operations to the GP Plus. This manual also contains detailed LGE

principles and standards with regard to hazardous substance management in parts and models.

Click to download the latest version of 'LG Electronics manual of the hazardous substance

management in parts and models' in each language.

English Korean Chinese

CERITIFICATION CRITERIA

All vendors have to secure the eco-friendly quality by renewal examination continuously, after

new approval.

SUPPLIER TRANING

In order to strengthen green partnerships with suppliers, LG Electronics provides annual

training on green technology, compliance response and GHG emissions management to

suppliers (staff members from environmental management departments) and LGE employees

in charge of the partnership. In 2013, 239 supplier staff members (Green Expert Program) and

106 LGE employees(Green Auditor Program) completed the training. We also introduced new

programs to foster experts in green equipment analysis (Green Equipment Expert Program) and

in measuring hazardous substances (Environmental Data Collection Expert Program) in 2013,

and conducted training for the equipment testing operators of our suppliers, all in an effort to

improve the credibility of collected data and hazardous substance management systems. In

2013, a total of 165 supplier staff members completed the program, and we plan to expand

training targets in 2014.

Global strategy of LG Electronics as a leading Korean company

Tomikazu Hiraga

Senior research Fellow

NLI Research Institute

Economic recovery in advanced countries including Japan is still sluggish, although corporate

financial performance has been recovering gradually. And companies whose business activities

in emerging countries experiencing an economic boom account for a larger proportion tend to

show better financial performance. Leading Korean companies have a larger presence in the

world market and attract considerable attention.

I will focus on LG Electronics, Inc., a leading company ranking with Samsung Electronics Co., Ltd.

in the world’s electrical and electronics industries, with the largest market share in home

appliances markets in important emerging countries, such as India, Brazil, and Indonesia, and

relatively advanced management methods including corporate governance, which are highly

valued, and will discuss features or important points of its global management and personnel

strategy in this article.

(Reference: Exchange rates as of August 5, 2010 were as follows. The Japanese yen/Korean won

foreign exchange rate was approximately ¥0.074 to the Korean won. The Japanese yen/Indian

rupee rate was approximately ¥1.87 to the Indian rupee. )

Leading Korean zaibatsu—The LG group

The Korean zaibatsu (chaebol), a unique large companies group, is very influential in Korea’s

corporate sector. Top 28 companies by market capitalization other than public corporations

account for 58 percent in the aggregate market value (Korea Composite Stock Price Index:

KOSPI) at the end of 2009 and most of those companies belong to zaibatsu company groups.

Striking features of the zaibatsu are as follows:

1. Many zaibatu started as a family company.

2. Zaibatsu leaders and their relatives and affiliated companies are major shareholders.

3. Share holding relationships are complicated.

4. Zaibatsu companies are engaged in businesses in diversified business areas.

Table 1 shows changes of companies groups and the LG group has occupied a higher position,

although some groups failed or are downgraded due to the Asian currency and financial crisis in

1997 and 1998. Also its LG’s leader is in the third generation ahead of other major zaibatsu and

he introduced a holding company system, aiming at clarifying the structure of owning and

controlling group companies.

Total assets of the LG group with 53 affiliated companies reach 78.9 trillion won, the fourth

largest in Korea’s private sector (following Samsung, Hyundai Automobile and SK) and

combined market capitalization of the group’s leading four companies (LG Corp., (a holding

company), LG Electronics, LG Display, and LG Chem.) accounted for approximately seven

percent of the aggregate market value (KOSPI) at the end of 2009. LG Corp., a group’s core

company, controls three large segments, that is, “electronics,” “chemicals,” and

“telecommunications and services”. Among these, LG Electronics plays a central role in the

“electronics” segment. However, the group expects LG Chemistry to play a heightened role in

its battery business, one of the most important and promising business areas.

Management policy of “H armony and solidarity, Respect for human beings”

Features of LG group’s management policies are as flows:

1. Relatives including the zaibatsu leader, large shareholders, carried out corporate

management in collaboration

2. Its extent of diversification of business lines is relatively limited and electronics and chemicals

businesses have grown mainly.

3. The group’s management has abided by its management policies of “considering human

beings first” (“Harmony and solidarity, Respect for human beings”) and the group was the first

zaibatsu to start recruiting employees publicly. Thus it has actively wrestled with the

appointment and training of promising staff to be professional managers.

4. The group is said to have fewer relationships with politicians and less reliance on them. As a

result, it managed to grow its businesses and concentrate management resources by its own

policies and strategies.

In Korea, many companies face difficulties in dealing with unions and labor strikes. However,

“both employers and employees agreed on a pay increase for 20 years in a row without any

offensive negotiations” in LG Electronics (NNA for March 9, 2009). The situation is different

from Samsung Electronics which does not have a labor union. The February 26, 2005 issue of

the Toyo Keizai describes corporate culture of the leading zaibatsu as “Samsung’s management,

Hyundai’s guts, and LG’s harmony and solidarity.”

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

Its main markets targeted for growth have been those of emerging countries with large

potential for growth and fewer strong rivals. LGE expanded into India with the second largest

population in the world and a younger age structure and longer population bonus period in

1997 (establishment of LG Electronics India, LGE’s fully owned subsidiary). Although many of its

rival companies including Japanese companies exported their products from home countries to

India at that time, LGE started producing products at its factories ahead of the rivals and

acquired a competitive advantage. LGE placed a priority on strategic advantages of taking the

lead and determined it without hesitation, despite insufficient infrastructure with respect to

operations of the factories, product distribution, or representatives’ daily lives.

The company has marketed a series of products, fully taking into accounts consumers’ tastes

and regional needs or features, including TVs which work in an unstable voltage situation,

various kinds of colorful and flowery and lockable refrigerators with large crispers for

vegetarians and cooler cases for women’s cosmetics, TVs with on-screen display options in ten

regional languages, washing machines with a "sari" (a national female costume) cycle, and

microwave ovens with cooking menus including 77 kinds of Indian dishes. Its products attract

customers’ attention. Also it markets low-end products, while marketing high-end products at

the same time in order to increase brand images, in relation to its brand strategy. Furthermore,

it has made efforts to establish sales and service offices, building a network of offices across

India.

Expatriates dispatched from Korea (around 30 people) are mainly involved in the strategic

matters or so ,and it has employed many talented local employees who knew markets and

consumers since its start of local production. The company has actively made use of such local

human resources with respect to sales of products and customer service, or development and

design of products. (Its R&D center has 3,000 engineers now and plans to hire 2,000 more

engineers)

The organization has been operated by local staff over a long time and heads of personnel and

sales and marketing divisions are Indians. The company has introduced an evaluation system on

a performance basis which is understood and acceptable by local employees and welfare

program including welfare facilities, trying to motivate such employees.

On the other hand, there are some points to be noted with respect to representatives

dispatched from Korea. First of all, the head of the local subsidiary has held the position since

the creation of the subsidiary over a long time and made efforts to enable the company’s

business to take root and expand from a longer point of view. Secondly, many Korean

representatives are accompanied by their families and it appears easier for them to commit to

their work, unlike Japanese representatives, many of whom are employees working away from

their families in Japan.

Furthermore, when it comes to marketing methods on raising company’s awareness or

corporate image, LGE places more emphasis on concentration and efficiency effects in each

market than Samsung Electronics which seems to address the methods worldwide. As a result,

it becomes a sponsor for cricket events which is very popular in India, as sports marketing

rooted in the region.

Additionally, LGE has two factories (It will start another new factory shortly.) and one R & D

center in India. Although the company’s total investment amounts to approximately 13 billion

rupees, it plans to spend 15 billion rupees to expand its production as a production and export

base in accordance with its worldwide strategy, not just for sales in India. Sales in its Indian

business stood at 130.9 billion rupees in 2009, accounting for approximately six percent in LGE’s

total sales. It plans to increase the percentage to 12 percent in 2015, which will exceed the

proportion of Korea.

Operations Management Strategy

OUR GOAL: TO LEAD GLOBAL ELECTRONICS AND INFORMATION TECHNOLOGY WORLDWIDE

In order to sustain leadership among global electronics and information technology companies,

LG Electronics' R&D is driving the development of "Great Products" and strengthening core

technological capabilities through a process of "select and focus" in key areas such as cell

phones and digital TVs.

In important business areas such as digital appliances and audio/video products, LG is

establishing global leadership in development by focusing on premium products while

enhancing R&D capacities in new product categories.

Furthermore, in new-business areas such as home networking, GPS, and mobile A/V, the

company is directing its efforts toward developing convergence products in response to the

current trend of merging different technologies and products. What's more, the company is

leading the new market by actively participating in pilot projects to develop new products with

various service providers.

ACHIEVEMENT THROUGH TOP TALENT RECRUITMENT AND R&D SYSTEMS CONSOLIDATION

To achieve its lofty goals, LG Electronics continuously recruits new talent and strives to increase

its global business by consolidating R&D systems oriented toward local markets in strategic

countries such as China and India. The company is also building international R&D capacity by

pushing ahead on strategic alliances with other major companies in regard to standardization

and new products.

LG Electronics operates a global R&D system that consists of more than 30 research centers

around the world. Through this system, the company facilitates open innovation utilizing

innovative technologies from the outside, in order to secure core technologies and the early

identification of future growth engines. In all these ways, LG is on target toward realizing its

vision: Top Global R&D.