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1.1 STRATEGIC MANAGEMENT OVERVIEW

Strategic Management is all about identification and description of the strategies

that managers can carry so as to achieve better performance and a competitive advantage

for their organization. An organization is said to have competitive advantage if its

profitability is higher than the average profitability for all companies in its industry.

Strategic management can also be defined as a bundle of decisions and acts

which a manager undertakes and which decides the result of the firm‟s performance. The

manager must have a thorough knowledge and analysis of the general and competitive

organizational environment so as to take right decisions. They should conduct a SWOT

Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best

possible utilization of strengths, minimize the organizational weaknesses, make use of

arising opportunities from the business environment and shouldn‟t ignore the threats.

Strategic management is nothing but planning for both predictable as well as unfeasible

contingencies. It is applicable to both small as well as large organizations as even the

smallest organization face competition and, by formulating and implementing appropriate

strategies, they can attain sustainable competitive advantage.

Strategic Management is a way in which strategists set the objectives and

proceed about attaining them. It deals with making and implementing decisions about

future direction of an organization. It helps us to identify the direction in which an

organization is moving.

Strategic management is a continuous process that evaluates and controls the

business and the industries in which an organization is involved; evaluates its competitors

and sets goals and strategies to meet all existing and potential competitors; and then

reevaluates strategies on a regular basis to determine how it has been implemented and

whether it was successful or does it needs replacement.

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1.2 EXECUTIVE SUMMARY

Strategic Management is a way in which strategists set the objectives and

proceed about attaining them. Strategic management is a continuous process that evaluates

and controls the business and the industries.

The consumer electronics industry is consolidated as the top 10 players

contribute approximately 52% of total market size. The industry, which is capital intensive

and price sensitive, is a highly dynamic and fast-changing industry. Existing players

includes Panasonic, Sony, Samsung, LG Electronics, Videocon etc

I have done a study on LGElectronics. This conglomerate is a global leader and

technology innovator in consumer electronics, mobile communications and home

appliances, employing 87,000 people working in 113 locations around the world.

The company was originally established in 1958 as Gold Star, producing radio, TVs,

refrigerators, washing machines, and air conditioners. The LG Group was a merger of two

Korean companies, Lucky and Gold Star,

LG has a good brand image. And it has wide distribution network. Sony and

Samsung is its biggest competitor. They pose a threat in the way of LG becoming the

market leader. LG mobile phones at introduction stage (question mark).LG Appliances is

at star stage and LG LCD are at cash cow stage.

LG Mobile has recently launched a new mobile which looks very promising and

innovative i.e. LG GZ. LG are using advertisements to improve their brand image. LG

Electronics received a special award as Global Technology Innovator 2013 on 7th June

2013. One of the best thing about LG is that it is environmental-friendly and focus on the

health of the consumers. They still need to work on the after sale service though.

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1.3 RELEVANCE OF THE STUDY

To improve our knowledge about strategic management.

To have an understanding about the LG company, their mission and vision.

To make analysis using BCG Matrix.

To know about their strengths and weakness.

To develop our skill by providing recommendation and conclusion.

To provide brief information about our analysis

1.4 RATIONALE OF THE STUDY

The rationale of the study is to acquire the practical knowledge of BCG matrix analysis

followed by The LG Electronics Company and which of their products are performing

well.

1.5 SCOPE OF THE STUDY

The scope of the study is limited to BCG matrix and SWOT analysis of one company i.e.

LG Electronics Company. This paper includes, history of the company, global operation

and the strategic analysis, structure of the company has been shown.

1.6 SOURCE OF STUDY

1. PRIMARY: -

2. SECONDARY: websites ,journals, annual reports, newspaper etc

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2.1 THEORY OF STRATEGIC MANAGEMENT

STRATEGIC MANAGEMENT -MEANING

Strategic Management is all about identification and description of the strategies

that managers can carry so as to achieve better performance and a competitive advantage

for their organization. An organization is said to have competitive advantage if its

profitability is higher than the average profitability for all companies in its industry

The word “strategy” is derived from the Greek word “stratçgos”; stratus

(meaning army) and “ago” (meaning leading/moving).

Strategy is an action that managers take to attain one or more of the

organization‟s goals. Strategy can also be defined as “A general direction set for the

company and its various components to achieve a desired state in the future. Strategy

results from the detailed strategic planning process”. Strategy can also be defined as

knowledge of the goals, the uncertainty of events.

2.2 COMPONENTS OF STRATEGIC STATEMENT

The strategy statement of a firm sets the firm‟s long-term strategic direction and

broad policy directions. It gives the firm a clear sense of direction and a blueprint for the

firm‟s activities for the upcoming years. The main constituents of a strategic statement are

as follows:

1. Strategic Intent: An organization‟s strategic intent is the purpose that it exists and

why it will continue to exist, providing it maintains a competitive advantage.

2. Mission Statement: Mission statement is the statement of the role by which an

organization intends to serve its stakeholders. It describes why an organization is

operating and thus provides a framework within which strategies are formulated. It

describes what the organization does (i.e., present capabilities), who all it serves

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(i.e., stakeholders) and what makes an organization unique (i.e., reason for

existence)

3. Vision: A vision statement identifies where the organization wants or intends to be

in future or where it should be to best meet the needs of the stakeholders. It

describes dreams and aspirations for future.

4. Goals and Objectives: A goal is a desired future state or objective that an

organization tries to achieve. Goals specify in particular what must be done if an

organization is to attain mission or vision. Objectives are defined as goals that

organization wants to achieve over a period of time.

2.3 STRATEGIC MANAGEMENT PROCESS - MEANING, STEPS AND

COMPONENTS

The strategic management process means defining the organization‟s strategy. It

is also defined as the process by which managers make a choice of a set of strategies for

the organization that will enable it to achieve better performance. Strategic management is

a continuous process that appraises the business and industries in which the organization is

involved; appraises its competitors; and fixes goals to meet the entire present and future

competitor‟s and then reassesses each strategy.

Strategic management process has following four steps:

1. Environmental Scanning- Environmental scanning refers to a process of collecting,

scrutinizing and providing information for strategic purposes. It helps in analyzing the

internal and external factors influencing an organization. After executing the

environmental analysis process, management should evaluate it on a continuous basis and

strive to improve it.

2. Strategy Formulation- Strategy formulation is the process of deciding best course of

action for accomplishing organizational objectives and hence achieving organizational

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purpose. After conducting environment scanning, managers formulate corporate, business

and functional strategies. Strategy formulation is the process of establishing the

organization's mission, objectives, and choosing among alternative strategies. Sometimes

strategy formulation is called "strategic planning."

3. Strategy Implementation- Strategy implementation implies making the strategy work

as intended or putting the organization‟s chosen strategy into action. His basic strategy -

implementation activities are establishing annual objectives, devising policies, and

allocated resources. Strategy implementation also includes the making of decisions with

regard to matching strategy and organizational structure; developing budgets, and

motivational systems.

4. Strategy Evaluation- Strategy evaluation is the final step of strategy management

process. The fundamental strategy evaluation and control activities are: reviewing internal

and external factors that are the bases for current strategies, measuring performance, and

taking corrective actions. Evaluation makes sure that the organizational strategy as well as

its implementation meets the organizational objectives.

These components are steps that are carried, in chronological order, when creating a new

strategic management plan. Present businesses that have already created a strategic

management plan will revert to these steps as per the situation‟s requirement, so as to make

essential changes.

Components of Strategic Management Process

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2.4 LEVELS OF STRATEGY

Corporate strategy—this strategy seeks to determine what businesses a company should

be in or wants to be in. Corporate strategy determines the direction that the organization is

going and the roles that each business unit in the organization will plan in pursuing that

direction.

Business strategy—this strategy seeks to determine how an organization should compete

in each of its businesses. For a small organization in only one line of business or the large

organization that has not diversified into different products or markets, the business

strategy typically overlaps with the organization‟s corporate strategy. For organizations

with multiple businesses, however, each division will have its own strategy that defines the

products or services it will offer and the customers it wants to reach.

Functional strategy—this strategy seeks to determine how to support the business

strategy. For organizations that have traditional functional departments such as

manufacturing, marketing, human resources, research and development, and finance, these

strategies need to support the business strategy.

2.5 FORMS OF ORGANIZATION

In simple words, organizing means arranging the ways and means for the

execution of business plan. It is the creation of administrative set-up for the execution of

the plan. Internal Organization structure constitutes the arteries and veins through which

the blood of work flows in the body of Organization. Internal Organization structures can

be broadly classified into the following types/forms:

Line Organization structure:

Line Organisation (also called Military/Scalar Organisation) is the oldest and the simplest

form of internal Organisation structure. N the line Organisation, the line of authority moves

directly from the top level to the lowest level in a step-by-step manner. It is straight and

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vertical. The top-level management takes all major decisions and issues directions for

actual execution.

Line and Staff Organisation Structure

In the line and staff Organisation, line executives and staff (specialists) are combined

together. The line executives are 'doers' whereas staff refers to experts and act as 'thinkers'.

The line executives are concerned with the execution of plans and Policies. They do their

best to achieve the organizational objectives. The staff concentrates their attention on

research and planning activities. They are experts and conduct advisory functions.

Matrix Organization:

It is a combination of two or more organization structures. For e.g., Functional

Organization and Project Organization.

The organization is divided into different functions, e.g. Purchase, Production, R & D, etc.

Each function has a Functional (Departmental) Manager, e.g. Purchase Manager,

Production Manager, etc. The organization is also divided on the basis of projects e.g.

Project A, Project B, etc. Each project has a Project Manager e.g. Project A Manager,

Project B Manager, etc.

The employee has to work fewer than two authorities (bosses). The authority of the

Functional Manager flows downwards while the authority of the Project Manager flows

across (side wards). So, the authority flows downwards and across. Therefore, it is called

"Matrix Organization"

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2.6 PESTLE ANALYSES

The PESTLE analysis should be used to provide a context for the

organization‟s/individual‟s role in relation to the external environment. It covers Political,

Economic, Social, Technological, Legal and Environmental factors.

POLITICAL What are the key political drivers of relevance?

Worldwide, European and Government directives, funding council policies, national and

local organization‟s requirements, institutional policy

ECONOMIC What are the important economic factors?

Funding mechanisms and streams, business and enterprise directives, internal funding

models, budgetary restrictions, income generation targets

SOCIAL What are the main societal and cultural aspects?

Societal attitudes relates to education particularly in relation to government directives and

employment opportunities. Also general lifestyle changes, changes in populations,

distributions and demographics and the impact of different mixes of cultures

Technological What are current technology imperatives, changes and innovations?

Major current and emerging technologies of relevance for teaching, research or

administration

Legal Current and impending legislation affecting the role European and national proposed

and passed legislation

Environmental What are the environmental considerations, locally and further afield?

Local, national and international environmental impacts, outcomes of political and social

factor

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2.7 SWOT ANALYSES

Now you have the PESTLE context you can use this output to map out a SWOT analysis.

SWOT stands for:-

Strengths

Weaknesses

Opportunities

Threats

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3.1 INDUSTRY OVERVIEW

The consumer electronics industry is consolidated as the top 10 players

contribute approximately 52% of total market size. The industry, which is capital intensive

and price sensitive, is a highly dynamic and fast-changing industry. Costs of raw materials

such as steel and copper have increased, which had a significant effect on the price of the

finished goods. A combination of factors such as rising income and consumer spending

affect the market dynamics significantly. The industry has essentially recovered from the

recent recessionary condition globally and is in the growing phase

The consumer electronics industry manufactures and distributes everything from

telephones, stereo components, televisions, alarm clocks, and calculators to digital

cameras, video cameras, VCRs, and DVD and MP3 players-basically, everything you see

when you go into a Best Buy or Circuit City store. (Some industry observers also include

desktop and laptop PC manufacturers as part of the industry.) Needless to say, consumer

electronics is big business. In 2005, in the U.S. alone, consumers spent more than $75

billion on consumer electronics products, 8 percent more than in 2004.

WHO CONTROLS THE DIGITAL HOME

Televisions, stereos, cameras, and other consumer electronics products grow

more useful and powerful when they are tied together wirelessly and can reach out to the

Internet. For the digital home to take shape and for sales to soar as consumers see its

advantages, companies need to figure out how to get all their gadgets talking to each other

and to a central hub that will store the many megabytes of media files that entertain us.

Microsoft wants the computer in the middle and is pushing its Media Center software;

Sony is selling a portable LCD television that can grab video from the Internet, a personal

video recorder, or a DVD player; and Sharp will launch technology for sending HDTV

signals through a home's existing electrical wiring. No matter which arrangement proves

popular, there should be plenty of work in turning today's homes into tomorrow's

networked entertainment centers.

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The consumer electronics industry includes manufacturers of all shapes and

sizes. The largest are multinational conglomerates with more than 100,000 employees and

interests in many different industries. The smallest often have only one office with fewer

than 50 employees focused on one product. In the middle are manufacturers that offer a

range of products within a certain category, such as speakers and audio accessories.

Because companies of all sizes can make similar products, industry observers usually break

down the market by product category rather than company size.

3.2 COMPETITOR’S PROFILE- Existing players in the Indian market in

consumer electronics

The main electronic manufacturers in the Indian market are Sony, Videocon

Industries, LG Electronics, Samsung, Onida, Panasonic India, Bose India, BPL, etc. The

upcoming players are D-Link, Samte, WeP and Tyco followed by Nokia and Motorola

SONY ELECTRONICS

Sony is a Japanese company and key players in consumer electronics especially

television. The brand for Sony‟s television is BRAVIATM. It is a leader in product

innovation. Sony has an ability to identify imagination and enhance people‟s life. The

company has been at the cutting edge of technology for more than 50 years. Now, Sony

develops its business with sales innovative products as well as Sony‟s convergence

strategy. For example, Sony has Hi-Scan flat screen TV which can deliver near HDTV

picture quality through Digital Reality Creation (DRC) circuitry. Sony conducts an

advertisement campaigns to secure consumer attention and utilizes world class public

relations to enhance Sony‟s value, reputation and brand image

PANASONIC CORPORATION

Panasonic has been one of the world's most prolific electronics

manufacturers since 1919. It operates worldwide through about 600 companies

under brands Panasonic, Quasar, Technics, and others. The company spans multiple fields:

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Its consumer business consists of AVC (audio, video, and communications) equipment,

along with hardware and software for linking it together, and home appliances (washing

machines, vacuum cleaners, personal grooming aids, and commercial HVAC). In the field

of devices Panasonic covers multimedia and eco-car

equipment, industrial electronic components, and batteries. The company's

solutions equipment targets environmentally conscience businesses, manufacturers, and

health care firms

SAMSUNG ELECTRONICS CO., LTD.

Samsung Electronics is an electronics Samson. One of the world's largest

semiconductor manufacturers, Samsung Electronics is also South Korea's top electronics

company. It makes many kinds of consumer devices, including DVD players, digital TVs,

and digital still cameras; computers, color monitors, LCD panels, and printers;

semiconductors such as DRAMs, static RAMs, flash memory, and display drivers; and

communications devices ranging from wireless handsets and smart phones to networking

gear. The company, which is the flagship member of Samsung Group, also makes

microwave ovens, refrigerators, air conditioners, and washing machines. Nearly half of

sales come from the Asia/Pacific region.

VIDEOCON APPLIANCES LTD

It is one of India‟s ingrown companies, Videocon boasts of an annual turnover

of the tune of US$4.1billion. It has 17 sites in India, and is known to be the third biggest

manufacturer of picture tubes in the world. It also has global presence, with plants in

Mexico, Italy, Poland, China and the Middle East... These are some of the tuff players in

the world in consumer electronic industry. I have taken as LG , a known brand throughout

the world as the subject of my study to find assess its BCG Matrix and various strengths,

weaknesses, opportunities and threats.

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4.1 LG - COMPANY OVERVIEW

LG Electronics, Inc. is a global leader and technology innovator in consumer

electronics, mobile communications and home appliances, employing 87,000 people

working in 113 locations around the world. With 2012 global sales of USD 45.22 billion

(KRW 50.96 trillion), LG comprises five business units - Home Entertainment, Mobile

Communications, Home Appliance, Air Conditioning & Energy Solutions and Vehicle

Components - and is one of the world‟s leading producers of flat panel TVs, mobile

devices, air conditioners, washing machines and refrigerators. LG Electronics is a 2013

ENERGY STAR® Partner of the Year

VISION:

“LG’s vision is to deliver innovative digital products and services that make our

customers’ lives better, easier and happier through increased functionality and fun”.

MISSION:

“The mission of LG is to provide the

customers with utmost satisfaction

through leadership. The

fundamental policy of development is

to secure product leadership that the

Customers may have the utmost

satisfaction.”

LG WAY

"Jeong-do Management

"Management by Principle" is the

ethical code LG abides by in all its

affairs-aiming to succeed through fair

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management practices, and constantly striving to better our business skills" is LG's unique

application of ethics. LG will succeed through fair management practices and constantly

developing our business skills.

LG LOGO

LG is the brand that is

Delightfully Smart. "Life's good" slogan, and

futuristic logo are a great representation of

what they stand for. The symbol mark stands

for their resolve to establish a lasting

relationship with, and to achieve the highest satisfaction for their customers.

The letters "L" and "G" in a circle symbolize the world, future, youth, humanity,

and technology. Their philosophy is based on Humanity. Also, it represents LG's efforts to

keep close relationships with our customers around the world. The symbol mark consists of

two elements: the LG logo in LG Grey and the stylized image of a human face in the

unique LG Red color. Red, the main color, represents our friendliness, and also gives a

strong impression of LG's commitment to deliver the best. Therefore, the shape or the color

of this symbol mark must never be changed.

It expresses the quality and sophistication that is the hallmark of our products. It

is simple, modern and distinctive. Consistent and proper usage of the logo is absolutely

essential. The logo is symbolic of our steadfast reputation for excellence; therefore, any

variation of the logo diminishes the visual identity of LG Electronics and its products they

have two versions of our logo: Corporate Logo and 3D Logo. The updated 3D Logo retains

the heritage and equity of the Corporate Logo, while aligning with our new positioning. It

was redrawn to strengthen the visual impact of our symbol mark and help communicate

our attributes.

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4.2 LG ELECTRONICS 50-YEAR HISTORY

The history of LG Electronics has always been surrounded by the company's

desire to create a happier, better life.

The company was originally established in 1958 as Gold Star, producing radio,

TVs, refrigerators, washing machines, and air conditioners. The LG Group was a merger

of two Korean companies, Lucky and Gold Star, from which the abbreviation of LG was

derived. The current "Life's good" slogan is an acronym.

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 Gold Star. The Gold Star brand is still perceived as a discount brand. In 1995, Gold

Star was renamed LG Electronics, and acquired Zenith Electronics of the United States

HOW LG GREW:-

Pioneering Technology and Innovation

1947 -1958: Foundation

1947: Establishment of LUK HUI Chemical Industrial Corp. (now LG Chem.)

1958: Establishment of Goldstar (now LG Electronics)

1959-1969: AN INNOVATION START

1959: Korean‟s first Radios.

1965: Korean‟s first Refrigerators.

1966: Korean‟s first TVs.

1968: Korean‟s first Air Conditioners.

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1969: Koran‟s first washing Machines.

1970- 1979: GROWTH

1977: Korean‟s first TVs

1978: Achievement of USD100 Million In exports.

1980- 1989: GLOBALIZATION

1982:

Established Korea‟s first production subsidiary Gold Star American in USA.

Established local sales and promotion subsidiary in Germany, Canada.

1985: Establishment of product testing laboratory in Korea.

1990- 1999: FACE OF THE FUTURE.

1995: Change of company name to LG Electronics, Acquires US based- Zenith.

1996: Establishment of LG Telecom (now LG U+)

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

2000-2009: GLOBAL BRAND LG

2000:

Launches world's first Internet refrigerator Exports synchronous IMT-2000 to

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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 produce

2004:

Led global CMDA mobile phone market for the first time

Commercialized world's first 55" all-in-one LCD TV.

2005:

Launched LG Chocolate, the first phone in the Black Label Series.

Establishes LG-Nortel, a network solution joint venture with Nortel

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

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2006:

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:

Led US drum washing machine market modem chip.

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.

2008:

Introduces new global brand identity: "Stylish design and smart technology, in

products that fit our consumer's lives."

Posted No.1 spot in US frontloading washers in 5 consecutive quarters Unveiled

the world's first Bluetooth headset combined mobile phone

Unveiled the world's first Blue-ray network storage

Developed the world's first LTE mobile modem chip. Recorded over 100 million

units of LG air conditioners in accumulated sales

2009:

Become the second-largest LCD TV provider worldwide.

Became third-largest supplier of mobile handsets market worldwide.

Became Global Partner and Technology Partner of Formula One

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2010- PRESENT: FATER AND SMARTER

2010:

Unveiled the world‟s first and fastest dual-core Smartphone, LG OPTIMUS 2X

Unveiled the world‟s first full LED 3D TV.

2011:

Launched water treatment business

Introduced CINEMAX 3D, LG‟s answer to cumbersome shutter-glasses 3D TVs

Launched Smart Refrigerator‟ first in a of smart-grid enabled appliances.

2012:

First to market world‟s first 84-inch ULTRA HD TV

Unveils Optimus G, first LTE Snapdragon S4 Pro Quad-Core Smartphone

Introduced world-leading smart appliances with enhanced connectivity and greater

convenience.

GLOBAL OPERATION

LG Electronics is playing an active role in the world market with its assertive

global business policy. As a result, LG Electronics controls 110 local subsidiaries in the

world with around 82,000 executive and employees.

LG GROUP

1. LG.Philips LCD

2. LG Chemical

3. LG Telecom

4. LG Powercom

5. LG Twins

6. LG Dacom

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4.3 ORGANIZATIONAL CHART OF LG ELECTRONICS

4.4 CORPORATE SOCIAL RESPONSIBILITY

VISION & STRATEGY

Our CSR activities are an inseparable part of our strategies for sustainable

growth and the accomplishment of our vision: “World Best at Enriching Lives through

Innovation”. To this end, LGE has laid out the following strategic imperatives: Ensure that

every management activity is carried out with a CSR-oriented mindset; Create

differentiated value for stakeholders through innovation; Nurture win-win partnerships

with all stakeholders in a spirit of mutual trust.

CSR MANAGEMENT

In order for LG Electronics to earn the trust of stakeholders and achieve

sustainable growth, it first must become a healthy organism in the market ecosystem and

assume a proactive role in making the system healthier throughout its business activities,

including products and services. Additionally, we need to take care of our communities,

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help that in need become self-reliant, interface and communicate with a variety of

stakeholders throughout this process, and form a trust-based relationship with them. To

meet this goal, LGE established and is implementing four strategic tasks: CSR Change

Management, CSR Risk Management, Stakeholder Engagement and Strategic Social

Contribution. From product R&D through purchasing, production, sales and after sales

service, LGE is striving to improve its CSR execution while strengthening its efforts to

build consensus and partnership with stakeholders.

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4.5 PRODUCTs OF LG

BUSINESS AREAS PRODUCT

HOME

ENTERTAINMENT

LCD TV , Plasma Display , Display Panel, Color Television,

Micro Display Panel TVs, PDP Modules, OLED Panels, USB

Memory, Flat Panel Computer Monitors, Home Theatre

System, Music system, DVD Recorder/Player,

MP3 & MP4 Player, Laptop, Personal Computer, LCD

monitor, CRT monitor, Optical Storage Devices, Desktop PCs,

PDAs, PDA Phones, New Karaoke Systems, Car Infotainment

HOME

APPLIANCES

Refrigerator, Washing Machine, Dishwasher, Microwave,

Vacuum Cleaner.

AIR

CONDITIONING &

ENERGY

SOLUTIONS

Room Air Conditioner, Commercial Air Conditioner,

Compressors

MOBILE PHONE Premium trend setter phone , Camera Phone , Music Phone ,

Color Screen GSM Handset, 3G Handsets, Cellular Phones

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5.1 SWOT ANALYSIS OF LG

STRENGTHS

Market leader in home appliances.

Has got manufacturing unit in tax

incentive.

Wide range of products to serve all

categories.

Widest distribution network in the

industry (47branches, 10000 trade

partners).

Good after sales service offered.

Shifting to the rural market

WEAKNESS

Higher overall costs than its rivals

Samsung being its competitor

provides similar products.

Consumers compare L.G with

Samsung its Korean rival not with

other global companies.

Lack of expert operators for complex

machines due to illiteracy and lack of

training in India

OPPORTUNITY

Wide product portfolio

Healthy resource generation.

Alliance or joint venture with

companies that have established a

brand for themselves in the market.

The consumer electronic services are

expected to grow in Singapore.

Fast growth of the home appliances

market

Shifting to rural areas

THREATS

Way behind market leader.

War with North Korea

Nothing unique about strategy.

Highly competitive market

Samsung and Sony are their

aggressive competitors.

Matured and saturated industry: they

need to protect their market position

and competitive advantage

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5.2 LG’S PORTER FIVE FORCES MODEL OF LG

Porter‟s Five Forces is one of the models of competitive analysis for the purpose

of developing strategies in many industries. But the intensity with which competition exists

in the industry keeps varying. According to Michael Porter, the nature of competitiveness

in an industry is based on the following five forces.

Rivalry among Competitive Firms

The enduring conflict with Sony and Samsung for the purpose of gaining customer

share is too high. The competition is more intense as these firms pursue strategies that give

competitive advantage over the strategies pursued by its rivals

Potential Entrants

Potential entry of new competitors is an important factor to intensify competition in the

industry. Larger the band of new entrants, more intense will be the competition.

Considering the trait of product differentiation,

Development of Substitute Products

LG faces stiff competition by substitute products producers firms especially when

the switching cost of the customer is lower, and when the functionality and quality of the

substitute product is better. On account of this reason, LG has to monitor its trend for the

purpose of tracking those strategies as it may face competition not only from similar

industry but also from different industry. But LG, Sony and Samsung have penetrated into

the industry for a long time and they have created economies of scale, product

differentiation, strong familiar brands, that will make it difficult for new brands to enter the

industry.

Bargaining Power of Suppliers

The bargaining powers of suppliers affect the intensity of competition for LG on

account of a large number of suppliers, and less availability of raw materials. Based on

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these attributes, the suppliers of LG have the power to enforce certain terms and

conditions on manufacturers by charging a high cost of raw material.

Bargaining Power of Buyers

A buyer group is powerful if it purchases in large volumes. The bargaining power of

consumers of LG is more, as products are not differentiated and widely available. In

this case consumers of LG can ask for more discounts, extended warranty and services. As

the satisfaction level of consumer goes up, the intensity level of competition increases. As

a result, LG has to monitor the strategies of its competitors by taking into consideration the

likes and dislikes of its customers.

5.3 BCG MATRIX OF LG COMPANY ACCORDING TO ITS

PRODUCTS

In BCG Matrix product or business unit are identified as Stars, Cash Cow, Dogs, Question

mark.BCG Matrix can use for resource allocation.

STARS (high growth, high market share)

1. Stars are using large amounts of cash. Stars are leaders in the business. Therefore

they should also generate large amounts of cash.

2. Stars are frequently roughly in balance on net cash flow. However if needed any

attempt should be made to hold your market share in Stars, because the rewards will

be Cash Cows if market share is kept.

CASH COWS (low growth, high market share)

1. Profits and cash generation should be high. Because of the low growth, investments

which are needed should be low.

2. Cash Cows are often the stars of yesterday and they are the foundation of

accompany.

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DOGS (low growth, low market share)

1. Avoid and minimize the number of Dogs in a company.

2. Watch out for expensive „rescue plans‟.

3. Dogs must deliver cash, otherwise they must be liquidated.

QUESTION MARKS (high growth, low market share)

1. Question Marks have the worst cash characteristics of all, because they have high

cash demands and generate low returns, because of their low market share.

2. If the market share remains unchanged, Question Marks will simply absorb great

amounts of cash.

3. Either invests heavily, or sells off, or invests nothing and generates any cash that you

can. Increase market share or deliver cash

BCG MATRIX OF LG

IND

US

TR

Y S

AL

ES

G

RO

WT

H R

AT

E

RELATIVE MARKET SHARE POSITION

HIGH LOW

HIGH

LOW

STARS QUESTION MARKS

LG Home Appliances Division

e.g. Refrigerators- Market Growth

8.7%, Market Share 36.6%

LG Mobile divisions

Market growth 35.8%,

Market Share 3.8%

LG Home Entertainment Division

e.g. TVs- Market Growth 4.2%,

Market share 15.2%

CASH COWS DOGS

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6.1 RECOMMENDATION AND CONCLUSION

RECOMMENDATION:

1. LG focus on its advertising strategy for high end products and has more

sophisticated approach. This would improve the brand image of LG mobile in the

market.

2. If LG is able to change the perception of the consumers about the brand it will

for sure see a growth that is sustainable in the long run as well.

3. LG should try by providing lower rates to certain users or high end users

4. LG must try to come out with some specific plans and offers so that people get

motivated and buy the product because of that specific offer.

5. More proportional schemes should be launched to incorporate the perfect blend

of push and pull. So LG should provide dealers and distributor more perks and

incentives.

6. LG should incorporate further innovations to outsmart the most potential

competitors like Samsung, Whirlpool.

7. And last not the least, the company would try to invest more in corporate

governance to improve their image.

CONCLUSION

The result of success in today‟s highly charged competitive market depends not

only in product innovation and level of productivity but also in hands of efficient service

network with technological advancements and more adaptability towards environments. In

order to multiply sales volume, only an efficient dealer and retail network can widen the

geographical reach of a company‟s products. Assessment of environmental information

and determining the relative significance of threats and opportunities is an important aspect

carried by all the major players. The consumer perception of LG has widened dramatically

from being a television company to a being a fully fledged consumer durable company.

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LG mobile phones at introduction stage (question mark).

LG Appliances is at star stage.

LG LCD is at cash cow stage.

Currently none of its products are at dog‟s stag. But recently sales of LCD have

dipped in the 1st quarter financial reports.

LG mobile is increasing its market share but that is only due to the sale of low end

products. At this point market is flooded with counterfeiting phones coming from china. So

they must explore new market or re visit their strategy in their existing markets.

Currently, LG Electronics constantly researches and introduces a full range of

innovative, greener products and services, and continues to be a leader in developing green

innovations and looking for innovative ideas and technologies which will support our

efforts as, a leading company in practicing environmental management.

As a leading corporate citizen, under the slogan “Hope for Life‟s Good,” LG has

been playing an active role in global efforts to provide sustainable solutions and help

achieve the UN Millennium Development Goals (MDGs). By engaging with diverse

stakeholders such as governments, academic institutions, NGOs and its employees, LG is

helping to create and share common values based on creativity, sustainability and more

fulfilling lives

Recent developments:

LG Electronics received a special award as Global Technology Innovator 2013 on 7th

June 2013 at the Plus X Award Night in Cologne, Germany. The Plus X Award is one of

the most significant European innovation prizes for technology, sport and lifestyle and

serves as a seal of approval for high-quality brands. It was the first time in the Plus X

Award‟s ten-year history that awards went to 17 products from a single manufacturer. The

LG products, including the flagship smart phone Optimus G and the first ULTRA HD TV,

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were consistent winners in the categories of Innovation, High Quality, Design, Ecology

and Ease of Use

LG Electronics launched on Tuesday its new flagship smart phone which will have to

compete against a flurry of new products from rivals Apple and Samsung who currently

dominate the global market. The South Korean electronics giant said the new gadget is

called Optimus G,

There was plenty of buzz that LG would be producing the next Nexus device, just like it

was manufacturing the Google Nexus 4.

LG must compete for attention for its Optimus brand, which has yet to build as strong a

reputation as Samsung's Galaxy or Apple's iPhone.

LG Electronics Inc has become the world's No. 3 Smartphone maker behind Apple Inc and

Samsung Electronics Co Ltd for the first time in the $223 billion market, industry data

showed, as solid sales of high-end models helped it win customers.

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6.1 BIBLIOGRAPHY

WEBSITES:

1. http://www.lg.com/in/corporate-information/leadership/management-by-principles

2. Http://www.scribd.com/doc/109700920/lg-prjct

3. Http://www.scribd.com/doc/52404688/1053-brand-preference-and-competitive-

analysis-of-lg-new-ppt

4. Http://www.scribd.com/doc/42327740/bcg-matrix-of-lg

5. Http://www.ukessays.com/essays/marketing/analyis-of-the-marketing-strategy-of-lg-

marketing-essay.php

6. Http://www.scribd.com/doc/153172397/bcg-matrix-of-lg-doc

7. Http://www.slideshare.net/search/slideshow?searchfrom=header&q=bcg+of+lg+elec

tronic

8. Http://www.pwc.com/gx/en/technology/scorecard/consumer-electronics.jhtml

9. Http://visiblebusiness.blogspot.in/2012/02/organizational-chart-of-lg-

electronics.html

10. http://www.ndtv.com/topic/lg-electronics/news

11. Source: http://www.lg.com/sg/img/about/assets/20090210191407688h.jpg

12. Http://www.koreatimes.co.kr/www/news/img/biz/081020_p5_lgtwo.j

13. http://www.koreatimes.co.kr/www/news/biz/2010/04/263_33015.html

REPORTS AND NEWSPAPER

1. The Economic Times

2. Business Standard

3. New Research Report On Companies And Markets, 2008

4. LG Electronic 2012 presentation.