LG ELECTRONICS STRATEGIC PLANNING ASSINGMENT by Dainius Skirbutas A Capstone Project Presented to LCC International University in Partial Fulfillment of the Requirements for the B.A. Degree LCC International University April 2013 LG Electronics 2 Business Administration Department Supervisor: Sargent Bradford Instructor: Frank Thomas M.B.A LG Electronics 3 INTRODUCTION .....................................................................................................................5 MISSION/VISION STATEMENT........................................................................................5 INTERNAL ASSESSMENT.....................................................................................................6 MANAGEMENT...................................................................................................................6 Organizational Structure ....................................................................................................6 Management System..........................................................................................................6 Planning .............................................................................................................................7 Motivation..........................................................................................................................8 Organizing..........................................................................................................................8 Staffing...............................................................................................................................9 MARKETING......................................................................................................................11 Marketing, Management Philosophy...............................................................................11 Customer Analysis...........................................................................................................11 R&D Workforce and Investment.....................................................................................12 Innovation ........................................................................................................................12 Patent Holdings................................................................................................................13 Marketing Mix .................................................................................................................13 Distribution ......................................................................................................................16 Production........................................................................................................................17 Green Product Strategy....................................................................................................17 FINANCIAL STABILITY ..................................................................................................19 MAIN STRENGTHS AND WEAKNESSES......................................................................21 Strengths ..........................................................................................................................21 Weaknesses......................................................................................................................22 EXTERNAL ASSESSMENT..................................................................................................22 Political Trends ................................................................................................................22 Economic Trends .............................................................................................................23 Technological Trends.......................................................................................................25 Socio-cultural Trends.......................................................................................................25 Competition Trends .........................................................................................................27 MAIN COMPETITORS ......................................................................................................28 Samsung...........................................................................................................................29 Sony .................................................................................................................................29 LG Electronics 4 Philips ..............................................................................................................................30 Panasonic .........................................................................................................................30 LG’s Competitive Strategy ..............................................................................................31 LG’s Porter Five Forces Model .......................................................................................31 MAIN OPPORTUNITIES AND THREATS ......................................................................32 Opportunities....................................................................................................................32 Threats..............................................................................................................................33 NEW LG VISION AND MISSION STATEMENT................................................................34 Vision Statement..............................................................................................................34 Mision Statement .............................................................................................................34 OBJECTIVES..........................................................................................................................34 STRATEGY FORMULATION AND IMPLEMENTATION ................................................35 SWOT Matrix ..................................................................................................................35 SO Strategies....................................................................................................................35 WO Strategies ..................................................................................................................36 ST Strategies ....................................................................................................................36 WT Strategies...................................................................................................................36 BOSTO CONSULTING GROUP (BCG) MATRIX.......................................................37 THE GRAND STRATEGY MATRIX............................................................................38 STRATEGY FORMULATION...........................................................................................38 Joint Ventures and Alliances ...........................................................................................38 South Africa, BRIC and Other Emerging Countries .......................................................40 New Technologies, Investments in R&D and Innovation ...............................................40 Reorganize Marketing......................................................................................................41 CRITICAL RISK ISSUES.......................................................................................................42 References................................................................................................................................43 LG Electronics 5 INTRODUCTION The company was originally established in 1958 as GoldStar, producing radios, TVs, refrigerators, washing machines, and air conditioners. 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 a backronym. Before the corporate name change to LG, household products were sold under the brand name of Lucky, while electronic products were sold under the brand name of GoldStar. LG Electronics, Inc. is one of the global leaders and technology innovators in consumer electronics, mobile communications and home appliances. With 117 operations around the world, LG achieved global sales of KRW 54.26 trillion (USD 49 billion) in 2011. LG is comprised of four business units – Home Entertainment, Mobile Communications, Home Appliance, and Air Conditioning & Energy Solutions – and is one of the world’s leading producers of flat panel TVs, mobile devices, air conditioners, washing machines and refrigerators. LGE's business portfolio is geographically well-diversified. In 2011, LGE made about 83% of its total revenues in overseas markets--22% from North America, 13% from Europe, 8% from China, 21% from Asia (excluding Korea and China) and Africa, and 14% from Central and South America. Together with its strong positions in relatively stable businesses, such as washing machines and refrigerators, Standard & Poor's believes this good geographic diversity should partially offset volatile demand in the electronics industry (Reuters, 2012). 2012 Motto: “Put progressive thinking first, prepare for the future in advance, and create a culture where we do things the right way.” MISSION/VISION STATEMENT LG Electronics does not hold an official mission statement. LG Electronics (LGE) vision statement, taken from its