Internal Economic Environment and Associated Processes: LG
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|✓ Wordcount: 3373 words||✓ Published: 1st Dec 2020|
1.1 Size and Location
LG Corporation launched as Lak Hui Chemical Industrial Corp in 1947. In 1952 it is turned into the primary South Korean industry enters plastic business. As the organization expands its business, it built up Goldstar Co. Ltd. In 1958. It made a change of administration in 2003 to improve business straightforwardness and build up its management. The two organizations Lucky and Goldstar consolidated and shaped Lucky-Goldstar in 1983. Lg has 110 multi subsidiaries like LG Electronics ,LG Display, LG Uplus, LG Chem, LG Solar Energy and LG Household & Health Care. Lg has branches worldwide and it is operating from Seoul, South Korea. LG Corp. with workforce of 210,000 in excess of 80 nations. The merged income set apart about KRW 141 trillion.
1.2 Vision and principles
“The ultimate goal of LG is to be recognized as the market leader in business performance as well as in management practices” (LG.com)
The statement explains their single motto to become global leader
Customer value creation and people-oriented management are the two principles they followed to reach the great position in the market
Lg prefers the ethical management and capability development programs to make their employees to do well in the competitive market.
1.3 Products Services and Processes
LG Corporation is a main organization that works worldwide through in excess of 30 organizations in the gadgets, chemical, and telecom fields. Its gadgets auxiliaries assembling and sell items running from electronic and advanced home machines to TVs and cell phones, led screens to security gadgets and semiconductors. In the chemical field, making and selling of beauty products, mechanical materials, battery-powered batteries and toner items, polycarbonates and surface enriching materials. LG likewise works with Coca-Cola Korea Bottling Company, oversees land, offers the board consultation, and works on pro athletics clubs. It enters the telecom industry with its broadband services.
- Mobile Phones: Lg launched its mobile phones in the year 2006 December with the model LG PRADA which was the first touch screen mobile. Lg beat the biggest mobile manufacturer apple by few months after its launch. Later lg launch number of mobile phones from budget phones to costly mobiles They entered into international mobile market with several models to reach to every customer but failed to capitalize the situation. Even they made a flagship mobile with the nexus and launched as nexus 5X. but failed to grab the attention of the customer and its previous model was best when compared with the 5X. Now their market is very low when compared with their rivalry companies.
- Televisions and LCDs: Lg electronics earned around 100 million revenue from exports in its history. Lg forecast the future and invested more in the field of electronics and established its first production in the USA. In 1995 it is acquired the us television manufacture Zenith. Along with the Philips company it manufactures world’s first 60-inch plasma tv which was called as LG display. It was second largest LCD tv makers in 2013. Lg launch all kinds of tele vison from 90’s. Now they are very successful makers of smart TV. They have their own operating system WEBOS, voice recognition remote and one button application, it sold over 5 million in the span of eight months after release. Now they are into 8k OLED televisions.
- Home appliances: Lg launch all home appliances refrigerators, washing machine micro oven, etc. And the market for these are in the top position. After globalization so many brands are entering into market with low prices and more features but still Lg holds its position even with the price differentiation.
- Household Goods: Lg Household and Health Care has kept up an overwhelming number one position in Korean family merchandise industry and keeps on expanding its share on the overall industry through different items, and categorization. They are into hair care, oral care, body care and detergent powder
Apart from the above products they are into sports and cosmetics and they have 57 subsidiaries.
1.4 Market Segmentation
Lg divide the market into four segments
- Geo graphic
1.5 Target Market
LG has targeted its market based on the product that they are offering to the consumer. Their main target audience are upper class who focuses on branded items whose cost is more in the market. Their majority of the products in to upper middle-class premium segment. So, their target audience are the consumer having branded life style.
LG manufactured LED and plasma television and 8k segment in their recent release TV DIOS for example their premium launch. They made home appliances for the consumers who are more concern about health. Even their appliances are targeting upper middle-class families. Now they are shifting to mid class market.
1.6 Position in Marketplace
Lg positioned them self as the top brand in the premium segments. As they are in premium segment sector, their branded products are attracting, and they have premium appearance. With the tagline Life’s Good; LG positioning is to differentiate their products based on technology which appealed to the consumer based on health benefits. With the slogan 'Life's good' its corporate way of thinking to make individuals life better, advantageous and more beneficial. Their strategies are innovatively keen and advanced. LG has separated its item utilizing innovation and medical advantages. The tele vision has ‘Golden Eye Technology’ and AC have the ‘Health Air System’ and Microwave ovens have the ‘Health Wave System’. All these technologies we are talking positioned themselves in the better position in the international market.
1.7 Technology Base
Lg is potential in manufacturing the smart TV, refrigerators, washing machines and smart phones. They have their own technology for developing their applications. In recent auto news Mercedes Benz Announces that Lg technology is behind their new model for the motion detection system. It can perform all the functions like changing the gears and change the volume of music system and observe all motions of a driver.
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In recent conference Lg official Dr. I.P. Park, LG Electronics president and chief technology officer, declares that Lg is focuses on artificial intelligence soon. A basic example of this is washing machines that help create optimal experiences of less water usage and quieter operating durations based on various patterns of the user or automatic volume adjustment of televisions such as that which LG already offers via its Alpha 9 capability.
Internal Economic Environment
2.1 Internal Economic Environment
Internal Economic environment refers to the economic factors which will affect the commercial and consumer behaviour. The economic environment considers different things from different people. For example, for farmer price of fertilizer and weather are important.
2.2 Core values
Core values for Lg are
The completion of projects in a faster way collaborating with different teams with faster communication.
2.3 Mission and vision
- Mission: “To deliver superior sustainable value we run our business with integrity and openness, delivering optimum financial results within clearly defined business principles.”
- Vision: “To be the most competent, profitable, and innovative financial organization in the world.”
These are the two statements which shows the main objective of the company. They want to deliver the best unique services to the consumers who believe their services are trustworthy.
2.4 Structure of the Company
Figure 2: LG corporate organization
LG has a logical structure that LG can use as it has numerous divisions that produce a variety of unrelated products. As a global company, it must also create subsidiaries for these companies to operate locally. Despite this independent structure, LG's corporate organization is very strong and is responsible for unifying key processes like supply chain management so that LG can leverage its size and limit the threat of suppliers.
2.5 Use of technology
The whole world is working on artificial intelligence and neural network. Lg is going to implement AI technology in all appliances. Recently Benz is using the technology from LG company to detect and observe the motion detection of driver in all situation. This technology studies the whole behaviour of the human and behaves accordingly. We can able to see driver less cars in future with AI technology.
LG THINQ is the technology used in OLED television’s with artificial intelligence.
LG had presented an innovation that exhibited the capacity to have an easy-going discussion with home apparatuses, much like having a discussion with your loved ones. Further, these discussions can turn into a way to control also, screen the extremely shrewd gadgets you are addressing. LG link is the home chat enabled device are going to rule the world. They will chat with the customer like a friend and understand the needs of consumer.
For instance, LG Link will even advise her regarding what number of eggs remain in fridge. Through Home chat, the Widowed Wife will never miss a thing and stay educated about the status of her home. Not only limit to refrigerator lg expands its technology to all home appliances.
2.6 Core competency
Core competency is the ability the firm emphasizes and performs well while achieving their vision.
LG Electronics has all the abilities to develop and manufacture all products which are linked with AI. They failed to promote their products in effective way. The continuous technical advancements provide the amazing experience to the consumers. The core competency of LG is marketing and sales promotion. Lg uses effective marketing strategy and sales strategy to boost up their sales. Theses strategies were designed in a manner that conveys product is apt for the customer. Technology lives at the very core of what LG does.
2.7 Corporate Culture and work-life balance
Figure 1 Progress for work life balance
Lg has a single motto for their Employees “work-life balance”. They believe that happiness in both personal and professional leads to the strong business performance. They created different programs for their employees to achieve work life balance.
Lg creates an organizational culture for the smooth communication between the employer and employee through online or offline channels. This innovation makes them to communicate from the higher-level authority to co-employees. The programs are junior Board, open communication, Voice of employees.
Apart from the communication company gives wings to the employees to create innovative things and spends millions on R&D. “IGNITE LG” program launched in 2011 for sharing the employee’s knowledge for the betterment of applications.
Their organization culture comprises to five main statements
- Working Style Unique to LG Electronics
- Organizational Alignment for Fast Execution
- Change Activities Led by Employees
- Ignite LG
- Communication Systems that Promote Synergy and Collaboration
Working Style Unique to LG Electronics
LG Electronics puts great energy into fashioning a working style unique to LG Electronics and a corporate culture that celebrates creativity and autonomy, which form the foundations of our efforts to achieve leadership in the global market. As part of a comprehensive range of initiatives organized to this end, we have the Monthly Morning Meeting led by the CEO and attended by all our employees to facilitate communication that enables fast response to ever-changing markets and enhanced business performance. In order to promote communication between organizations and employee groups, we also have in place leadership meetings and team workshops.
Organizational Alignment for Fast Execution
In line with the CEO’s strong commitment towards promoting communication, we clearly present the direction for our business management to all our employees at our quarterly morning meetings to form a consensus and motivate employees’ voluntary participation and execution. This approach to communication was expanded to all business companies and plays an integral part in promoting participatory communication between management and employees (top-down and bottom-up). Our business companies make conscious efforts to share corporate-level management issues with their members to promote understanding and consensus among employees, while implementing initiatives to boost executional performance on change activities under the slogan, “Changes From Within.”
Change Activities Led by Employees
At LG Electronics, we have team workshops to boost the sense of belonging and cohesion among employees based on their voluntary involvement and to promote unrestricted and free communication. Team workshops review topics such as improving the meeting/reporting style, establishing a roadmap for organizational capacity building, and creating an action plan for business projects. At the team workshop organized on a semi-annual basis, our employees assess the previous action plan against actual performance to review progress and changes in the organization, taking it as an opportunity for employee-led change activities. Our employees also participate in product idea contests organized on the IDEAS bulletin board launched in 2005, and their creative ideas serve as a fresh driver for our business growth. As of February 2015, the bulletin has received more than 25,000 ideas from our employees.
Ignite LG Launched in 2011, “Ignite LG” is an open forum for our employees to share their knowledge and experience. LG Electronics created this forum to “Ignite” the creative energy of both its organizations and employees by encouraging our employees to offer up their valuable knowledge and experience voluntarily and without pressure. We expect “Ignite LG” to help us create an open and inclusive corporate culture in which knowledge and experience of great diversity are shared openly and celebrated
Communication Systems that Promote Synergy and Collaboration
In order to resolve conflicts and prevent potential issues by promoting communication between organizations and employee groups, LG Electronics implements a comprehensive range of communication programs including “Cross Open Communication” and “Harmony 1+1,” through our systematic communication channels. Designed to maximize our strength, which is horizontal communication, and promote inter-organizational synergy, Cross Open Communication is a discussion session between executives and members from a different business unit aims to promote inter-organizational understanding. Harmony 1+1 is a communication program that aims to address the silo effect and create a strong synergistic effect through collaboration by promoting active inter-team discussions
2.8 SWOT Analysis
- Products in all categories
- Quality products with strong focus on technology
- Branding is the major asset
- Fit for money and offers products to all over the world
- Strong market in India, China and brazil
- Providing quality service assurance with 24X7 customer care
- Sponsoring different sport events make them visible more in international platform
- Limited share when compared with competitors
- In efficient financial planning
- Business model is not compatible for expansion
- Profit ratio is below the industry average
- Products are offered to upper middle-class category
- Categorization of products are less
- Stick to the premium range products
- Inventory of stock is higher than rivalry industries
- Not a very good forecaster fails to capitalize the opportunities
- Fast growth of ten ology in home appliances
- New markets associated with the government
- Low transportation cost and shipping cost will boost their business with the low price and gain better market
- Inflation rate is less in current market means more stability in the market
- Government green drive additionally opens an open door for the acquisition of LG Group items by the state just as government contractual workers.
- The new technology opens the gate to practice new pricing policies with different range products
- Competition between Korean companies like Samsung who are strong in the market
- Reduction of prices because of competition with rivalry companies
- Usage E commerce leads to low purchase on physical market
- Quiet urban interest
- Initiation of low-quality products to merge into middle class market
- Rising pay level particularly developments, for example, $15 an hour and expanding costs in China can reduce the profit of LG Group
- The increasing pattern toward nonintervention in the American economy can prompt comparative response from other government accordingly adversely affecting the global sales
Richard M, Gary.B (2019). Importance-Performance Analysis based SWOT analysis. International journal of information management vol 44, pages 194-203
P R BHATT (2003) Market innovative Strategy a Case of LG Electronics. Journal of business perspective
LG group swot analysis/matrix. (http://fernfortuniversity.com)
LG Reveals Power-Packed Plans for A Future Driven by Artificial Intelligence. (https://www.forbes.com)
LG link, technology to bridge the future with the present. (https://www.lg.com)
Corporate culture / work-life balance. (https://www.lg.com)
LG said to supply gesture-reading tech for Mercedes (https://europe.autonews.com)
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