LG Operation Strategy Final Report
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LG Operations strategy Final Report
Introduction
Founded in 1947 as Lucky Chemical Industrial Corporation, they established their electronics arm, called
GoldStar in 1958. It did a sizeable business in manufacturing radio sets and went on to make one of the first and highly selling color TVs in Asia. Domestic competition led them to restructure their operations in early 90s, merging the two major business heads under a new name – LG Electronics. In 2006, they launched the now popular “Blue Ocean Strategy” to become one of the top 3 in the mobile handset market. However, their strategic alliance with Microsoft did not give the dividends they expected. In other segments of the consumer electronics industry, they stand in the top 4 globally. LG’s consistent revenue patterns can be attributed to their operational strategy, by means of which they have been able to keep costs down. In 2010 LG entered the smartphone industry. Following is a division wise breakup and the financial performance of the smartphone division of LGE.
Fig. 1 Division wise breakup
Fig. 2 Financial Performance of smartphone division of LGE
Group 4
Final report for Prof. Kihoon Kim
S3Asia MBA
Page |2
SWOT Analysis
1. Strength
Most of all, LG Electronics has as many global network in sales and manufactures as Samsung
Electronics. Its brand awareness can stand even with Samsung Electronics. For research and development, LG Electronics maintains one of the most advanced technologies in smartphone and home appliance. Its smartphone and home appliance can compete against Samsung Electronics. Namely, strength in technology stems from robust research and development activity.
2. Weakness
Due to huge spending in marketing promotion, its profits can plummets significantly in case sales amount is not sufficient. More importantly, because of inappropriate management philosophy towards smartphone industry – consulted by McKinsey - LG Electronics has small shares in global smartphone market. And we
LG Operations strategy Final Report
Introduction
Founded in 1947 as Lucky Chemical Industrial Corporation, they established their electronics arm, called
GoldStar in 1958. It did a sizeable business in manufacturing radio sets and went on to make one of the first and highly selling color TVs in Asia. Domestic competition led them to restructure their operations in early 90s, merging the two major business heads under a new name – LG Electronics. In 2006, they launched the now popular “Blue Ocean Strategy” to become one of the top 3 in the mobile handset market. However, their strategic alliance with Microsoft did not give the dividends they expected. In other segments of the consumer electronics industry, they stand in the top 4 globally. LG’s consistent revenue patterns can be attributed to their operational strategy, by means of which they have been able to keep costs down. In 2010 LG entered the smartphone industry. Following is a division wise breakup and the financial performance of the smartphone division of LGE.
Fig. 1 Division wise breakup
Fig. 2 Financial Performance of smartphone division of LGE
Group 4
Final report for Prof. Kihoon Kim
S3Asia MBA
Page |2
SWOT Analysis
1. Strength
Most of all, LG Electronics has as many global network in sales and manufactures as Samsung
Electronics. Its brand awareness can stand even with Samsung Electronics. For research and development, LG Electronics maintains one of the most advanced technologies in smartphone and home appliance. Its smartphone and home appliance can compete against Samsung Electronics. Namely, strength in technology stems from robust research and development activity.
2. Weakness
Due to huge spending in marketing promotion, its profits can plummets significantly in case sales amount is not sufficient. More importantly, because of inappropriate management philosophy towards smartphone industry – consulted by McKinsey - LG Electronics has small shares in global smartphone market. And we