“A country's brands are a reflection of its competitive strengths and a manifestation of its innovation and intellectual capacity. I strongly believe that a country's economic capacity is significantly enriched when its institutions build and own internationally competitive brands. Winning brands serve as market anchors to support the competitiveness of the entire value chains of which they are a part. Strong domestic brands create much larger value since they create, capture and retain value within the country. ITC takes justifiable pride in creating world-class Indian brands that have demonstrated immense vitality in the global Indian market place”. Y C Deveshwar, Chairman, ITC Limited LG Electronics (Korean: LG전자, KRX: 066570, LSE: LGLD) is a South Korean multinational electronics company headquartered in Yeouido-dong, Seoul, and a member of the LG Group chaebol. The company operates its business through five divisions: Mobile Communications, Home Entertainment, Home Appliances, Air Conditioning, and Energy Solutions. It is the world's second-largest television manufacturer (after Samsung and Hitachi),[2] and the world's fifth- largest mobile phone maker by unit sales in the second quarter of 2012.[3] History[edit]
The company was originally established in 1958 as GoldStar, producing radios, TVs, refrigerators, washing machines, and air conditioners.[4] The company has received some technical supports from Hitachi for many years, so it has a deep relation with Hitachi. The LG Group was formed through the merger of two Korean companies, Lucky and GoldStar, from which the abbreviation of LG was derived. The current "Life's Good" slogan is abackronym. 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, for a price reportedly to be more than $100 million, 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 the US electronics company Zenith. LG Solar Energy is a subsidiary formed in 2007 to allow LG Chem to supply polysiliconto 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.[5] LG has produced camcorders called ARTCAM and DSLRs.[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, is now the world's largest plasma panel manufacturer.[8] On December 5, 2012, the antitrust regulators of European Union fined LG Electronics and several other major companies for fixing prices of TVcathode-ray tubes in two cartels lasting nearly a decade.[9] Operations[edit] LG Electronics has about 75 subsidiaries worldwide. LG Electronics owns Zenith and controls 37.9 percent of LG Display.[10] Home Entertainment division[edit] The Home Entertainment division offers Plasma TVs, LCD TVs, PDP Modules, OLED Panels, USB Memory, Flat Panel Computer Monitors, Home Theater Systems, Blu-ray Disc players, DVD Recorders, Super Multi DVD Rewriters, CD±RW, Notebook PCs, Desktop PCs, MP3 Players. The Home Entertainment division merged with the Business Solutions Division in October 2010. Mobile Communications division[edit] The Mobile Communications division provides mobile communication terminals, personal computers and communication devices. LG mobile devices are made for CDMA networks worldwide. LG phones are available also in unlocked versions that can be used on any GSM and network worldwide.[11] LG sold 116.7 million mobile phones in 2010, corresponding to a market share of 8.4%.[12] Home Appliances division[edit] The Home Appliances division manufactures refrigerators, washing machines, stoves, microwave ovens, vacuum cleaners, compressors, and motors. Its 2007 sales totaled KRW 11.8 trillion, accounting for 29% of the company's total revenue. The division's profit was KRW 717.1 billion. About 35% of the company's home appliance revenue comes from the North American market.[13] Air Conditioning & Energy Solutions division[edit] The Air Conditioning & Energy Solutions division makes air conditioners and LED lighting. Products[edit]
LG Electronics' products include computers, televisions, mobile phones, home appliances and semiconductors (DRAM, SDRAM and flash memory). Smart TVs and apps[edit] LG Electronics introduced their first Internet TV in 2007, originally branded as "NetCast Entertainment Access" devices. They later renamed the 2011 Internet TV's to “LG Smart TV” when moreinteractive television features were added, that enables the audience to receive information from the Internet while at the same time watching conventional TV programming.[14][15] LG's Magic Remote uses Hillcrest Labs' Freespace technology to allow users to change channels using gestures[16] and Dragon NaturallySpeaking technology for voice recognition.[17]
An LG Direct Drive washing machine An LG Optimus 3D mobile phone/smartphone
An LG laptop PC
An LG water filter
An LG Smart TV Advertising and sonic branding[edit]
The mnemonic G♭ E♭ F♭ D♭ E♭ C♭, (MP3 file of sonic logo) was produced by Musikvergnuegen and written by Walter Werzowa in 2008. The sonic tag has been featured in commercials and devices and is recognized worldwide.[citation needed] Sponsorships[edit]
LG Electronics sponsored the English football club Weyside Rovers (Guildford) from 2000 until 2002 and the English football club Fulham F.C until July 2010. LG sponsored the Brazilian football club Sao Paulo FC from 2001 to 2009, during which time the club were the winners of the 2005 FIFA Club World Championship. LG currently sponsor the Australian Football League teamFremantle Football Club, the Costa Rican football club Liga Deportiva Alajuelense, the Australian National Rugby League team Cronulla Sharks, and the Argentinian club Boca Juniors. In August 2013, it was announced that LG Electronics would sponsor German Bundesliga club Bayer 04 Leverkusen for the next three years with an option to extend for one more year. LG sponsors the International Cricket Council, the world governing body for cricket. It also sponsors ICC Awards.[18] During the period 2001–2003 LG sponsored the snooker Grand Prix. During these years the tournament was known as the LG Cup. In 2008 LG became sponsors of the Extreme Sport 'FSO4 Freeze' festival[19] and in January 2009 LG became a Global Partner and Technology Partner of Formula One.[20] LG is now an official supplier to Virgin Racing, as well as Lotus Racing and engine manufacturer Cosworth.[21] LG sponsors the LG Mobile World Cup texting competition.[22] LG also sponsors London Fashion Week and the LG Arena in Birmingham.[23] They also have sponsored professional Starcraft 2, Incredible Miracle since 2011 Environmental record[edit]
LG is listed in Greenpeace’s Guide to Greener Electronics where it ranked joint 13th (with Toshiba) out of 15 leading electronics makers in November 2011, scoring 2.8 out of 10. LG benefited from having a penalty point lifted from the previous edition (October 2010). The company was penalised for failing to meet its commitment to make products free of polyvinyl chloride (PVC) plastic and brominated flame retardants (BFRs) by the end of 2010. All of LG's mobile phones are now free from PVC and BFRs while other products such as TVs and notebooks contain PVC/BFR free parts; LG aims to phase these substances out from TVs monitors and PCs by 2012 and household appliances by 2014.[24] In the Guide the company scored badly on the Energy criteria, being criticized for setting a weak target for the reduction of greenhouse gas emissions and not making renewable energy part of its low carbon strategy. LG scored most points in the Sustainable Operations category with the company providing take- back for obsolete phones in 52 countries and being in the process of addressing the issue of conflict minerals. However, the guide warned that LG risks incurring a penalty point in future editions as it was still being listed as a client of Asia Pulp and Paper (APP) who have been linked to illegal logging and deforestation in Indonesia.[24] Choice magazine, in independent tests of popular LG fridge models in 2010, found the energy consumption in two models was higher than claimed by LG. LG was aware of the problem and had offered compensation to affected customers.[25] In 2004, LG made 4A-rated water efficiency claims for numerous washing machines before they were certified. LG gave undertakings to theAustralian Competition and Consumer Commission (ACCC) to provide appropriate corrective notices and upgrade and maintain its trade practices compliance program. In 2006, LG overstated energy efficiency on five of its air conditioner models and was again required to offer consumers rebates to cover the extra energy costs.[25] The history of LG has always been based around the company's desire to create a happier, better life.
LG Electronics was established in 1958 and has since led the way into the advanced digital era thanks to the technological expertise acquired by manufacturing many home appliances such as radios and TVs. LG Electronics has unveiled many new products, applied new technologies in the form of mobile devices and digital TVs in the 21st century and continues to reinforce its status as a global company.
LG Electronics 50-year History
Download(PDF, 21.0mb)
1958 Founded as GoldStar 1959 Korea first radios 1998
60-inch Plasma TV 1999 Joint venturewith Philips 2003 Enters UK GSM
handset market 2005 Develops 3G UMTS DMB handset 2007 Launches HD disc player and drive
1958
Founded as GoldStar
1960's
Produces Korea's first radios, TVs, refrigerators, washing machines, and air conditioners
1995
Renamed LG Electronics
Acquires US-based Zenith 1997
World's first CDMA digital mobile handsets supplied to Ameritech and GTE in U.S. Achieves UL certification in U.S.
Develops world's first IC set for DTV
1998
Develops world's first 60-inch plasma TV
1999
Establishes LG Philips LCD, a joint venture with Philips
2000
Launches world's first Internet refrigerator
Exports synchronous IMT-2000 to Marconi Wireless of Italy
Significant exports to Verizon Wireless in U.S.
2001
GSM mobile handset Exports to Russia, Italy, and Indonesia
Establishes market leadership in Australian CDMA market
Launches world's first Internet washing machine, air conditioner, and microwave oven
2002
Under LG Holding Company system, separates into LG Electronics and LG Corporation
Full-scale export of GPRS color mobile phones to Europe
Establishes CDMA handset production line and R&D center in China
2003
Enters Northern European and Middle East GSM handset market
Achieves monthly export volume above 2.5 million units (July)
Top global CDMA producer
2004
EVSB, the next-generation DTV transmission technology, chosen to be the U.S./Canada
Industry standard by the US ATSC
Commercializes world's first 55" all-in-one LCD TV Commercializes world's first 71" plasma TV
Develops world's first Satellite- and Terrestrial-DMB handsets
2005
Becomes fourth-largest supplier of the mobile handsets market worldwide
Develops world's first 3G UMTS DMB handset, 3G-based DVB-Hand Media FLO
DMB Phone with time-shift function and DMB notebook computer
Establishes LG-Nortel, a network solution joint venture with Nortel
2006
LG Chocolate, the first model in LG's Black Label series of premium handsets, sells 7.5 million units worldwide
Develops the first single-scan 60" HD PDP module and 100-inch LCD TV
Establishes strategic partnership with UL
Acquires the world's first IPv6 Gold Ready logo
2007
Launches the industry's first dual-format, high-definition disc player and drive
Launches 120Hz Full HD LCD TV
Demonstrated the world-first MIMO 4G-Enabled technologies with 3G LTE
Won contract for GSMA's 3G campaign
2008
Introduces new global brand identity: "Stylish design and smart technology, in products that fit our consumer's lives."
Following the launch of the holding company, LG Corp., LG Electronics operates under an advanced corporate governance structure that comprises a professional administrator and a Board of Directors. This structure helps us deploy more transparent, value-creating management activities that help increase corporate and shareholder value. MANAGEMENT SYSTEM When LG Electronics removed the Circulating Investment Structure of its affiliated companies (through the launch of a holding company system), this enabled the holding company to take full charge of investments. Consequently, LG Electronics has been able to focus on its own businesses while increasing the overall value of the Company. This corporate governance structure has laid the groundwork for increasing managerial transparency. Through a responsible management system comprising of the CEO of LG Electronics and a Board of Directors, we are taking huge steps in strengthening our competitiveness at both the domestic and international level, in order to maximize corporate and shareholder value. BOARD OF DIRECTORS LG Electronics' Board of Directors maintains independence from its management and major shareholders. Currently, the Board has a total of seven directors, four of whom are outside directors. To ensure that external directors are appointed fairly and independently, the "External Director Recommendation Committee," comprised of one in-house director and one external director, nominates external directors following close examination of their qualifications. These outside directors are then voted on at the next shareholders' meeting. COMMITTEES The BOD is supported by three Board Committees. They are the Audit Committee, the Outside Director Candidate Recommendation Committee and the Management Committee. The Audit Committee consists of three Outside Directors, and is responsible for examining corporate financial records and accounting to ensure compliance with the accounting laws and transparency. The Management Committee reviews and determines the agendas delegated by the BOD and ordinary management activities. In 2010, the Management Committee reviewed a total of 52 agendas. EVALUATION AND COMPENSATION Compensation for the BOD members is made within regulations pertaining to BOD compensation that has been approved at the General Shareholder's Meeting. The evaluation of management and executives of LGE is held annually. Top management and executives are evaluated to determine whether they have set and achieved challenging goals, whether their job objectives composed of quantitative and non-quantitative factors were achieved, as well as their capability through fair and objective process, and appropriate compensation corresponding to the outcome of the evaluation is determined. DIRECTOR
Bon-Joon Koo
Vice Chairman & CEO, LG Electronics Inside Director
View Biography
David Jung
CFO of LG Electronics(Executive Vice President)Inside Director
Yu-Sig Kang
CEO of LG Corp.(Vice Chairman) Non-executive Director
Sang-Hee Kim
Lawyer, Outside Director
Chang-Woo Lee
Professor Seoul National University Outside Director
Kyu-Min Lee
Advisor SK Research Institute for Super Management Outside Director
Chong-Nam Chu
Professor Seoul National University Outside Director
AUDIT COMMITTEE To ensure complete independence from the company’s management and major shareholders, the Audit Committee is composed of three outside directors. The Committee's role is to examine various financial reports and enhance managerial transparency and fairness as supervisors. In addition, the committee members approve the appointment of outside auditors only after careful review of the candidates' professionalism, independence, reputation, capability, ability to audit international businesses, as well as possibilities of conflict of interest associated with the Company.
Chang-Woo Lee
Professor Seoul National University Outside Director
Kyu-Min Lee
Advisor SK Research Institute for Super Management Outside Director
Sang-Hee Kim
Lawyer, Outside Director
LG plans for future with new aggressive
By Kim Yoon-Mi, The Korea Herald/Asia News Network September 28, 2009, 11:07 am TWN
LG Group aims to become a competitive multinational company through aggressive investment strategy despite difficult economic conditions, company officials said yesterday.
The nation's fourth-largest conglomerate recently raised the 2009 investment target by 9 percent to 12.3 trillion won (US$10.3 billion) from the original plan of 11.3 trillion won set in March.
This amount is equivalent to 17.6 percent of a combined investment target of the top 30 Korean conglomerates, according to the Federation of Korean Industries.
LG's newly added 1 trillion won will be spent on extending LG Display's eighth-generation LCD line in Paju, company officials said.
The world's second-largest LCD maker plans to spend a total of 3.3 trillion won in building the eighth- generation LCD plant there.
LG Group's investment in the first half focused on expanding facilities of existing businesses and enhancing R&D activities for new technology development, according to LG.
In the electronics business, the conglomerate built new production lines for solar cells, eighth-generation LCDs and R&D for fourth-generation mobile phones and LED TVs.
LG Display has spent so far a total of 4.4 trillion won in building the eighth-generation LCD line and extending the sixth line in Gumi.
LG Electronics has finished constructing the group's largest R&D center in Seocho-dong in Seoul, in which the company has invested 260 billion won over the past three years. In the chemical business, LG Chem began a 1 trillion won investment early this year to build a battery plant for electric vehicles, which are to be supplied under its long-term contract with U.S. automaker General Motors.
In the communications service sector, LG Telecom invested 300 billion won on the installation of base stations and increasing their capacity in the first half. LG Dacom and LG Powercom focused on enhancing network infrastructure for the Triple Play Service business, which is to integrate high-speed Internet, Internet phone and broadcasting.
In the second half, LG Group's investment will mostly involve expanding facilities and production lines for the new advanced materials complex in Paju, company officials said.
LG said that by 2018 it will spend 4 trillion won on building an advanced materials complex to produce LCD glass substrates and LEDs.
The group's affiliates LG Chem and LG Innotek will spend 3 trillion won by 2018 to produce LCD glass substrates, and 1 trillion won by 2012 to produce LEDs, respectively, LG officials said.
“The materials industry is significant to make the display and information & electronics business successful,” LG Chem vice chairman & CEO Kim Bahn-Suk said in the ground breaking ceremony.
The materials complex in Paju will start producing LED packages in May next year and LCD glass substrates in early 2012, LG officials said.
LG Innotek will spend more than 1 trillion won by 2012 in establishing production lines for LED back light units and LED packages, they said.
By 2018, LG Chem aims to produce 50 million square meters of LCD glass substrates a year by expanding production lines from one in 2012 to seven in 2018.
With the completion of the LCD glass substrate plants, LG will be able to create synergy between LG Display and LG Chem in the LCD display cluster in Paju, LG officials said.
LG Electronics: The Blue Ocean Strategy LG Electronics, Inc. (LGE) was primarily known for its low-cost appliances had more than 72,000 employees working in about 77 subsidiaries and marketing units across the world. Youngdungpo-gu, South Korea based LGE was a technology innovator in electronics, information and communications businesses producing CDMA2 handsets, DVD3 players, optical storage devices, canister vacuum cleaners, air conditioners micro ovens and consumer electronics. LGE comprised four SBUs4: Mobile Communications, Digital Appliance, Digital Display and Digital Media with total revenue of more than US$ 35 billion (consolidated US$ 45 billion)5.
LGE embraced the philosophy of "Great Company, Great People," and pursued two growth strategies which involved "fast innovation" and "fast growth" to secure global competitiveness. The company sought to secure three core capabilities - product leadership, market leadership, and people-centered leadership. (Exhibit I) Since 1993, LGE had been undertaking 'Super A'6 pioneering activities, to strengthen its competitiveness and create profitability. In 2003, LGE repositioned itself as a leading global consumer electronics brand.7 The company also practiced TL 20058, a technological management strategy to build and sustain prominence in the global marketplace.9 LGE embraced the philosophy of "Great Company, Great People," and pursued two growth strategies which involved "fast innovation" and "fast growth" to secure global competitiveness. The company sought to secure three core capabilities - product leadership, market leadership, and people-centered leadership. (Exhibit I) Since 1993, LGE had been undertaking 'Super A'6 pioneering activities, to strengthen its competitiveness and create profitability. In 2003, LGE repositioned itself as a leading global consumer electronics brand.7 The company also practiced TL 20058, a technological management strategy to build and sustain prominence in the global marketplace.9 In addition, to achieve an ideal management base, LGE was carrying out the Six Sigma Campaign. In January 2006, the company launched "Blue Ocean10 Management" campaign11 to be one among the top 3 EIT12 firms in the world by 2010.13 Further, LGE planned to double its sales volume, profit and shareholder benefit with 30% of its sales volume and 50% of its profit derived from blue ocean products.14
About LG Founded in 1947 as Lucky Chemical Industrial Corporation (LCIC), the company initially manufactured a cosmetic called Lucky Cream. . In 1952, LCIC became the first Korean company to enter the plastics industry to make cosmetics containers lids. As LCIC expanded its plastics business, it also established an electronic company, GoldStar in 1958.
In 1959, GoldStar produced Korea’s first radio which opened a new era for the electronics industry22 in Korea. (Exhibit IV). Until 1960 the sales volume was just tens of thousands but soon picked up to 1.34 million units in 1962 and by 1963, GoldStar was exported to the U.S. and Hong Kong.23As sales began to improve, the company began to prepare for a more diversified business management and recruited proven business professionals to lead. It also began to establish mass production centers. In 1966, GoldStar introduced the first Korean-made black and white TV set. In 1969, when President Chul-hwui Koo of LCIC was appointed as the second Chairman of GoldStar, the GoldStar Group underwent a major management restructuring. In the same year, LCIC went public and GoldStar too followed the suit. The Korean electronics industry with active support from the Government in the 1970s showed promising growth. GoldStar established large plants and secured a nationwide production base. The large plants helped the company to expand and sowed the seeds for globalization. In 1975, GoldStar established a central R&D centre to develop color TV, VCRs and computers. In 1976, the company produced the first Korean made color TV. In 1977, GoldStar’s sales were over 100 billion. The export volume in 1978, reached US$ 100 million.24 After this the company laid the foundation for globalizing the Korean electronics industry.
In the early 1980s, GoldStar pursued profit-oriented operations and opted for a series of restructuring exercises to combat rising competition and to be effective in its efforts in globalization program. With the change in international trade scenario, it became essential for the company to establish overseas manufacturing bases to pursue international markets. GoldStar established a manufacturing subsidiary in Huntsville,25 U.S. in 1982 and other manufacturing and sales subsidiaries in Germany. The company established a subsidiary in UK (1988) and a manufacturing subsidiary in Mexico26 in1989. (Exhibit V)
The energy crisis and political unrest in the early 1980s had a negative effect on GoldStar’s growth. But the company was able to overcome the situation and by 1984, the total sales were exceeding 1.2956 trillion. 27 At this point of time GoldStar followed effective business strategies and focused on product diversification and strengthened its national sales channels in Korea. At the same time the company also focused on diversification of its export structure in international sales. the late 1980s LG had adopted a new strategy focusing on quality of product and expanding marketing capabilities. When the South Korean government relaxed trade barriers, there was great penetration of foreign companies entered to compete with domestic firms including LGE. As a result, sales of LG products dropped by US$ 1 billion and profits deceased by 18% between 1986 and 1987. The company was able to challenge foreign companies by restructuring the organization and adopting a new management style with decentralized structure.28 From 1992 onwards the company focused on 'creating value for customers', highlighting its commitment to excellence for customers and internally helped employees to renew their devotion to customer satisfaction.
Digital Display Company The Digital Display Company was the leading producer of digital TVs in LCD and Plasma modules. In the increasingly competitive digital TV market, LG Electronics had cutting-edge products through innovations. Digital Display division was formed in joint venture with Philips to produce LCD TV and plasma TV in 2001. The digital display division had earned $ 2.77 billion which constituted 28% of their global sales in the year 2005.50(Exhibit XI) With the business goal of becoming the dominant leader in digital TV and plasma TV, the division had undergone breakthrough innovations and products under the blue ocean strategy.
Plasma TVs "We will cement our second place in the plasma TV market this year to challenge the No. 1 in 2007," mentioned Yoon Sang Han, LG's executive vice- president in charge of the TV, monitor, and plasma panel module businesses.51
As a leader in the plasma TV industry, the Digital Display Company had set the standard by continuously developing the 60", 71" and 102" full HD plasma TV which was awarded as 2006 Best of Innovations at the Consumer Electronics Association (CEA).52 LG planned to enhance the global production process of its flat panel displays at its four major plants in Mexico, Poland, China and Korea, focusing on region-specific R&D and marketing efforts. Global sales of plasma televisions amounted to 2.2 million units with a growth of 95 % in the April-June quarter of 2006 from 2005, which was 20% of the global TV revenues53. Matsushita, the maker of Panasonic brand, with a share of 28.3% paved its way to become No. 1 position in the Plasma TV while LGE with the sales of 877,000 in 2005, stood at No. 2 position in plasma TV market with a 17.8% global share, with the monthly capacity to produce 310,000 units in 2005. While Samsung the home rival had a market share of 13.6% and Dutch Philips Electronics with 10.3%54. (Exhibit XII)
Plasma TVs LG Electronics attracted global attention with the development of the world’s first 55-inch LCD TV, which was awarded a Design Award at the iF Design Awards and Innovation Awards. Global sales of LCD TVs jumped 135% in the three months to June from a year earlier, to 9.4 million units, accounting for 22% of the world's TV market.55The company, ranked 5th in LCD TV segment, after Sony, Samsung, Sharp, and Philips Electronics. (Exhibit XIII) The company expected sales of 4 million LCD TVs in 2006, up from 1.5 million in 2005.56
Digital Appliance The Digital Appliance SBU was a leader and pioneer in home appliance products, like air conditioner, refrigerator, vacuum cleaner, washing machine, microwave oven, and other home appliances. LGE had developed the world's inbuilt TV refrigerator, ARTCOOL57 air conditioners, steam washing machines and many more core technologies for home appliance parts and products. Building on successful home appliance operations, the company was also expanding their business scope to have a greater emphasis on new product sectors such as commercial air conditioners, built-in kitchen appliances and home networks.
Air Conditioners "We reported over 10 % operating margin from air- conditioner business last year, and profitability will improve further this year thanks to growing sales of premium products." 58 Lee Young-ha, CEO, Home appliances unit, LG With an aim to create a niche market under blue ocean strategy LGE focused on system air conditioners and on high value-added large-capacity commercial air conditioners. The R&D investment was 10% of sales. LGE planned to increase its R&D manpower from the current 1,100 people to 2,000 people by 200859. Also, the company planned to expand air conditioner system production capacity at its Changwon Plant60, and in the long term, build air conditioner production lines in Turkey, China, India, and Brazil to strengthen market accessibility61. The global air-conditioner market was U.S. $2.6 billion in 2005, and total world sales of the product reached 51 million sets in 200462. (Exhibit XIV) Air-conditioner sales returned profit margins above 10%, higher than other products such as washing machines and ovens for LGE63. LGE estimated the air conditioner market to expand from US$ 21.2 billion in 2005 to US$ 29 billion by 2010, and hoped to garner US$ 3.5 billion in sales by 2010 to seize the world's top position.64
Digital Media With the global sales of $5.7 billion the digital media segment generated synergy with its audio and video (home theater, DVD recorder), digital storage (super multi DVD rewriter) and personal computer (desktop and notebook PC) divisions65. Through continued technology innovation, the company had developed the world's first Satellite DMB notebook66 in 2005. In particular, the company was actively penetrating multimedia product markets with mobile technologies, such as PDAs and MP3 players, and with composite products, such as super-multi drives and super-multi DVD recorders. This segment was also focusing on its Car Infotainment business.
LG Electronics Plans $1.5 Billion Vietnam Expansion HANOI--LG Electronics Inc. (066570.SE) will spend up to $1.5 billion to expand production in Vietnam, which is emerging as an important manufacturing base for electronics makers seeking to take advantage of a low-cost and well-educated workforce. LG plans to build up a production complex in Haiphong City, 100 kilometers east of Hanoi, over the next 10 years, it said in a statement. The first factory in the 40-hectare complex is scheduled to start production of televisions and household appliances in the second half of next year. It will also relocate its two existing plants in Vietnam to the complex.
The majority of the goods produced in LG's Vietnam facilities will be sold locally, the company said. Its existing plants in the country have a combined annual production capacity of 750,000 TV sets, 400,000 cell phones, 150,000 air conditioners, 500,000 washing machines and 500,000 vacuum cleaners.
"For global companies like LG, Vietnam is an attractive place to invest," said LG Electronics spokesman Ken Hong. "The country is politically stable and has a young, increasingly well-educated workforce." Vietnam, with a population of 92 million people, has attracted other global electronics companies such as Samsung Electronics Co., Foxconn Technology Co., Intel Corp. and Canon Inc., which account for a large proportion of Vietnam's total export revenue.
Samsung earlier this year started building a $2 billion complex in the northern province of Thai Nguyen to produce smartphones and other electronics products. It also has a $1.5 billion plant in Bac Ninh province and another in Ho Chi Minh City.
According to government data, exports of electronics products from Vietnam, including computers, cellphones and cameras and components, rose nearly 90% last year to $22.25 billion, accounting for 19.4% of total export revenue.
Title: MARKETING STRATEGIES OF LG Electronics India (Pvt.) Ltd. Objectives: 1. To understand the marketing and advertising strategies of LG Electronics India (Pvt.) Ltd 2. To analyze their strategies and its effect on the corporate profile of the company. 3. To compare the strategies of LG Electronics India (Pvt.) Ltd with its competitors and to analyze its strengths. 4. To realize the role being played by advertising and promotion on the sales volume of the company. 5. To understand the future trends in advertising and marketing in LG especially electronic segment. 6. To Analyse the Advertising and Marketing strategies of competitors.
Limitations: While doing the project the following inevitable hurdles has come my way: Inability in meeting high marketing personnel in the concerned companies due to their busy schedule.
Information regarding stage of various products in the product life cycle is not available. The information base is limited due to resource constraints. The critical aspect like price could not be covered completely. The other hurdles which I had to face, the secrecy of the company policies due to which complete information regarding financial position & salary and wage structure could not fully covered. Areas of marketing research are not revealed by the company’s official.
Conclusions & Recommendations: The Indian Consumer Electronics & Home Appliances Industry is traditionally dominated by the inferior quality and sub-standard products. People go for price while buying home appliances. They seem unaware of the features needed in a standard white good. Earlier mostly the white goods are manufactured to cater the present defined demand are need. The whole scenario got changed in the post liberalization era with the entry of multinationals like Samsung, LG, and Sony etc. LG is among the great chaebols (confederation of small industries) from Korea. It has started its operation in India in May 1997 by opening a 100 % fully owned subsidiary. LG is a company positioned as manufacturer of innovative and world-class products. Its growth strategy is based on sales and distribution network. It has penetrated in 1800 town with population of 1 lakh and above. They are planning to expand their dealer network to over 3000 dealers by the end of 2002. They are planning to penetrate towns with 50,000 populations and above. It means 7,000 more towns in its network. They have maintained a fast pace of growth since their entrance in the Indian market. It has products in the categories of CTV, Washing Machines, Refrigerators, Air conditioners and Microwave Ovens. It has established a strong brand name standing apart in the consumer’s mind. In the beginning of 1999 a survey by Taylor Nelson depicted LG’s brand awareness at around 49 %, the Gall-up Survey conducted during Cricket World Cup 2002 demonstrated LG’s brand recognition at 85 %. It has invested 100mn US $ in the manufacturing facility and is planning to invest US $ 289 mn over the next 3 years and is also planning to export product worth 100 mn US $. LG believes in honest pricing and not being gimmicks of discounts and price reduction as lure. Their strength of marketing is consumer pool, good products and pricing power. Its product designs are centred on the middle & upper class and the ads screened highlight the product features. Its employees are totally committed to quality and innovation. They chant “TPI 50 and TDR”, which signifies, total productivity innovation and tear down re-engineering. Through this method the company is bringing down its costs & developed new products. LG’s corporate image is that of being the Digital leader of the new millennium. Marketing v In case LG intend to have an entire range of washing machines to cater to all segments of the market, it should have a smaller capacity washing machine as Videocon ( 3 Kgs etc ) as the market for them is still very large. v The colours of LG Semi Automatic Washing Machines (Off White, Pale Beige, and Light Grey) are very trendy and appeal to the customers. v It has to give more warranty periods like other players do in the industry v More Demonstrators are required for LG Products. Instead of go for a limited distribution network it has to build a wide channel network.
Advertising & Public Relations: - The communication strategies for washing machines are not fruitful for the target segments. So, there should be developed a new communication strategy for it. Instead of going for clean clothes and longer life for clothes, the ad theme should target to the women’s or females, which other players do like Videocon & Whirlpool. Because a lady in the family is the main buyer in purchasing the product. So, a new USP was to be developed...... This section provides information on LG Electronics' financial results. Our performance results from 2009 to the present day are available to view and download for both parent and consolidated bases. The financial results are reported in accordance with the International Financial Reporting Standards as adopted by the Republic of Korea. (“Korean IFRS”). For past data, please visit Financial Statements.
Financial Highlights Parent Consolidated
Financial Highlights 2009 2010 2011 2009 2010 2011
KRW bn KRW bn KRW bn KRW bn KRW bn KRW bn
Sales 30,513 29,239 28,097 55,491 55,754 54,257
Operating Profit (Loss) 1,412 -1,105 -299 2,681 176 280
Net Profit (Loss) 1,147 -636 -278 2,350 1,282 -433
Total Assets 22,143 22,975 24,199 32,115 32,319 32,659
Total Liabilities 11,255 13,049 13,704 19,689 19,459 19,510
Total Shareholder's Equity 10,888 9,926 10,495 12,425 12,860 13,148
ROE 11.1% -6.1% -2.7% 20.6% 10.1% -3.3%
EBITDA 1,951 -579 58 4,020 1,466 1,483
Capex 579 1,082 1,503 845 1,232 1,771
Income Statement Parent Consolidated
Income Statement 2009 2010 2011 2009 2010 2011
KRW bn KRW bn KRW bn KRW bn KRW bn KRW bn
Sales 30,513 29,239 28,097 55,491 55,754 54,257
Cost of goods sold 23,407 24,894 23,053 41,341 43,453 42,058
Gross profit 7,107 4,345 5,044 14,151 12,301 12,199
Selling & admin expense 5,411 5,468 5,340 11,190 12,213 11,856
Other operating gain (Loss) 1,670 19 -3 -279 88 -63
Operating income (Loss) 1,412 -1,105 -299 2,681 176 280
Financial income (Expense) 6 28 -103 -251 -219 -349 Net profit (Loss) before tax 1,419 -1,077 -402 2,865 435 -399
Tax 272 -441 -125 589 0 34
Net profit (Loss) 1,147 -636 -278 2,350 1,282 -433
Balance Sheet Parent Consolidated
Balance Sheet 2009 2010 2011 2009 2010 2011
KRW bn KRW bn KRW bn KRW bn KRW bn KRW bn
Assets 22,143 22,975 24,199 32,115 32,319 32,659 Current Assets 7,692 8,094 8,154 16,910 16,515 15,783
Cash and cash equivalents 1,013 869 1,364 2,424 1,944 2,346 Accounts receivable 5,155 5,488 5,077 7,637 7,002 6,753 Inventory 767 1,065 886 4,899 5,872 4,947 Other 757 673 827 1,950 1,696 1,738
Non-current Assets 14,452 14,881 16,046 15,204 15,804 16,875
Investment 7,897 7,845 7,965 4,404 6,008 5,603 PP&E 4,657 4,661 5,191 7,709 6,500 7,290 Intangible assets 686 726 916 804 763 1,036 Other 1,211 1,649 1,974 2,288 2,532 2,946
Liabilities 11,255 13,049 13,704 19,689 19,459 19,510
Accounts payable 3,820 4,285 3,854 5,316 5,824 5,487 Debt 3,458 5,000 5,826 6,909 7,193 7,436 Other 3,977 3,764 4,025 7,465 6,442 6,588
Equity 10,888 9,926 10,495 12,425 12,860 13,148
Financial Ratios Parent Consolidated Financial Ratios 2009 2010 2011 2009 2010 2011
Operating Profit Margin 4.6% -3.8% -1.1% 4.8% 0.3% 0.5% Net Profit Margin 3.8% -2.2% -1.0% 4.2% 2.3% -0.8% ROA 5.3% -2.8% -1,2% 7.4% 4.0% -1.3% ROE 11.1% -6.1% -2.7% 20.6% 10.1% -3.3%
Current Ratio 88.7% 86.5% 91.9% 104.6% 107.3% 111.0% Liabilities -to- Equity Ratio 103.4% 131.5% 130.6% 158.5% 151.3% 148.4% Debt -to- Equity Ratio 31.8% 50.4% 55.5% 55.6% 55.9% 56.6% Net Debt- to- Equity Ratio 22.5% 41.6% 42.5% 36.1% 40.8% 38.7%
Sales Growth 10.4% -4.2% -3.9% na 0.5% -2.7% Operating Profit Growth 15.1% nm nm na -93.4% 58.9% Net Proft Growth 137.6% nm nm na -45.4% nm Total Assets Turnover 1.4 1.3 1.2 1.7 1.7 1.7 1) Net Debt = Debt - (/Cash and cash equivalents + Short-term financial instruments)
Market Overview The global electronics industry is growing rapidly. From an estimated size of US$ 950 billion in 2005, it is estimated to grow to nearly US$ 2100 billion by2010. The market is dominated by Asian countries such as China, Taiwan,Singapore and South Korea. The industry is characterized by rapid innovationand speed to market, short product lifecycle, highly automated manufacturing to give consistent quality at low cost,high volume production, continuous improvement in capabilities for reducingcosts and profit accrual through volumes.India’s electronics industry is nascent by global standards. Despite a populationof over one billion, India has a relatively small electronics market. It is rankedt w e n t y - s i x t h w o r l d w i d e in t e r m s of s a l e s a n d t w e n t y - n i n t h in t e r m s of production. The total size of the industry in 2004-05 was US$11 billion.India’sElectronics s e c t o r h a s s i x k e y se g m e n t s T h e I n d i a n e l e c t r o n i c i n d u s t r y is d i v i d e d i n t o s i x s e g m e n t s : C o n s u me r electronics, I n d u st r i a l electronics, Computers, Strategic electronics, Communication and Broadcasting equipmentand Electronic components. The consumer electronics sector dominates theindustry with 27 per cent share and has benefited from a large and expandingmarket. The industrial electronics and computer sector each has a share of over15 per cent. Electronics Production (2004-05) Consumer 34%Electronics Industrial Electronics 15%Computers 18%Commn. & Broad. Eqpt. 9%Strategic Electronics 6%Components 18% LG
LG Electronics India Pvt. Ltd. (LGEIL) is a wholly owned subsidiary of LG Electronics, South Korea. It has a plant each in Noida and Pune. Its productsinclude TV, air-conditioner, refrigerator, washing machine, monitor, vacuum cleaner and projector. LG India Pvt. Ltd. recorded a growth of 37 per cent from the consumer electronics division, contributing to 46 per cent of the totalturnover in 2003.
Overview of company LG is one of the leading manufactures in home appliances in the world. ORGANISATIONAL STRUCTURE - LG electronics is largely divided in 22 units. On the domestic side, there are four business units, the marketing division, and seven functional divisions in thehead office. The overseas network consists of seven regional headquarters andthree functional areas (support,R&D,design).There are seven business sites (in Pyeongtaek, Cheongju, Changwon, Gumi)u n d e r t h e f o u r b u s i n e s s u n i t e s . T h e o v e r s e a s o p e r a t i o n s i n c l u d e 36 sa l e s subsidi aries, 22 production subsidiaries,8 product sales subsidiaries,5 servicesubsidiaries,and branch offices. EMPLOYES --The number of employees at LG electronics stood at aproximately 82,000 asthe end of 2007. Of the total,29000 were stationed in Korea and53,000 a b r o d , m e a n i n g t h a t over 60% of e m p l o y e e a r e w o r k i n g in overseas.The n u m b e r of o v e r s e a s e mployeesshould c o n t i n u e to i n c r e a s e in l i n e w i t h our l o c a l i z a t i o n strategy.Female employees comprices 16% of total domesticworkforce(2% for manager and above) and the figure is on steady rise.The average age of entire workforce,male and female,is 33.8 years,disabled peoplerepresent 0.8% of total workforce. CORE BUISNESS --
LG electronics is c o m p o s e d of four business d i v i s i o n s , w h i c h a r e D i g i t a l appliance,Digital display,Digital media and Mobial communication
LG Vision Every home, everywhere with pride, passion and performance. We create theworld’s best home appliances, which make life easier and more enjoyable forpeople. Our goal is a LG product in every home everywhere and a way to achive global top 3 status till 2010. LG Mission
Every one passionately creating loyal customers for life .
LG Strategy Brand focused and value creation (BFVC).D e f i n e s h o w c o m p a n y w i l l c r e a t e v a l u e by b u i l d i ng u n m a t c h e d customer loyalty to our brands .
Culture and values: - Diversity with inclusion.It defines how company is and what it believes in. C o r e competencies : - Customer Excellence, innovation,Customer centered ,costomer insight management.It defines the unique skills that enable company tobuild the customer loyalty
Company’s products and their specifications Presently Whirlpool offers four products in market. • Refrigerators (Frost free/ Direct cool) • Air-conditioners (Window/ Split) • Washing Machine (Semi/ Fully automatic) • Microwave Oven (Solo/Grill/Convection)
Important Issues about Company 1 . E m p l o y e r Type: Private l i m i t e d 2.Stock Exchange: K o r e a st o c k exchange(KOSCOM) 5. M.D. : Mr. Moon B. Shin 3. Vice Chairman and CEO:Mr Yong Nam 4. 2007 Employees: 82,0005 . 2 0 0 7 Revenue ($ billion.): 4 3 . 8
Milestone of LG so far in India 1. M ost admired company in India by A&M magazine in 1998. 2. No.1 consumer durable company by A&M magazine in 1999. 3. Techies award best flat screen monitor by computer world magazine in2000. 4. Best employer by business today/hewitt assts in 2001. 5. Entrepreneur of the year by Ernst &young in 2002. 6. Gold rating for environmental performance by CII in 2003. 7. Green technology gold award by Green tech foundation in 2003. 8. Award for IT innovation by business today in 2004. 9. Consumer durable retailer of the year by ICICI bank in 2005. 10. Excellence in corporate leadership and entrepreneurial sprit byCNBC TV in 2005. 11. 4P Award: Refrigerator and air-conditioner in 2006. 12. India’s most trusted brand 2007, by brand equity in 2007. 13. Brand for excellence 2008 award by VAR India in 2008. 14. Most preferred brand-consumer electronics and home appliancesaward by CNBC Awaaz consumer awards in 2008. 15. Most admired MNC in India by 4Ps award in 2008.