NGUYEN TRAI UNIVERSITYBTEC HND IN BUSINESS (MANAGEMENT)

ASSIGNMENT COVER SHEET

NAME OF STUDENT Đại Hồng NgọcREGISTRATION NO. 1050001001UNIT TITLE Unit 7: Business StrategyASSIGNMENT TITLE LG Strategy Evaluation, Selection and Implementation

ASSIGNMENT NO 2 of 2NAME OF ASSESSOR Nguyen Dang TueSUBMISSION DEADLINE 28/12/2012

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Unit Outcomes

Outcome Evidence for the criteria

Feedback Assessor’s decisionInternal

Verification

First attempt

Rework

Understand approaches to strategy evaluation

and selection

LO3

Analyse possible

alternative strategies relating to

substantive growth, limited

growth or retrenchment

3.1

Select an appropriate

future strategy for a given

organisation

3.2

Understand how to

implement a chosen strategy

LO4

Compare the roles and

responsibilities for strategy

implementation

4.1

Evaluate resource

requirements to implement a

new strategy for a given

organisation

4.2

Discuss targets and timescales for achievement

in a given organisation to monitor a given

strategy

4.3

Merit grades awarded M1 M2 M3

Outcome Evidence for the criteria

Feedback Assessor’s decisionInternal

Verification

Distinction grades awarded D1 D2 D3

Assignment

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Overall, you’ve

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Introduction

Over 153,000 punters poured into the Las Vegas Convention Centre for January's Consumer Electronics Show to gauge the future of home entertainment. The overriding goal of exhibiting consumer electronics manufacturers was to promote the virtues of connecting an array of devices together via the cloud, Wi-Fi or home networks like DLNA.

"The average household has about 25 CE products — the next step is taking advantage of those devices with interconnectivity," said Shawn DuBravac, research director for the Consumer Electronics Association (CEA). "This means starting to capture the vast volume of digital assets we have created, whether professional or self-generated, and beginning to organise them for search and discovery."

Or as Boo-Kuen Yoon, president of Samsung's CE division, put it, "We must break down barriers that exist between devices."

3.1 Analyze possible alternative strategies relating to substantive growth, limited growth or retrenchment of LG Electronics.

3.1.1Substantive growth.

+ Related diversification: is the development beyond the present product market, but still within the broad confines the industry…therefore build on the asset or activities which the firm has developed (Johnson and Scholes 2002). It takes form of vertical or horizontal integration. Related diversification will make companies easier to consume its products by producing additional goods business.

- Horizontal integration: the development into activities which are competitive with or directly complementary to a company’s present activities. Advantage of using horizontal integration strategy is organization may appeal to different market segments. Therefore, the market will increase, economies of scale, international trade, dominating the market, the market will grow, and create synergy. Disadvantage of this strategy when the organization does not know on the company that they wish to purchase or merger will bring dangerous consequences such as debt incurred, sometimes companies fail to materialize the anticipated gain because they do not focus adequately on creating corporate synergy before integration.

- Vertical integration: the company becomes its own supplier or distributor. The advantage of vertical integration is to secure supplies at a lower cost than competitors. “Samsung's Media Hub has been augmented with MGO, a movie streaming app from Technicolor; Panasonic's Viera Connect platform will include MySpace TV and Flixter; while the Sony Entertainment Network (SEN) — an extension of the Playstation Network — streams on-demand video and music services for play back on Sony's own devices. Android-powered sets are being built by Sony, LG, Vizio and Samsung (though it did not demonstrate this). LG is hedging its bets by allowing users to switch between the LG Smart TV platform and the Google TV interface”. The acquisition of application software for LG products should be applied because it makes more reliability.

+ Unrelated diversification ; development beyond the present industry into product/ markets which, at face value, may bear no close relation to the present product/market. The advantage of

buying the company concerned is affected by the market, businesses affected by competition and ownership an unrelated businesses can offset the decline. 3.1.2 Limited growth:

+ Market penetration is to strengthen the commercial activities of the company's current products on the current market. It is often linked to an attempt to extend or prolong the product lifecycle. As product lifecycle contract and time becomes an increasingly important competitive issue, this strategy becomes more significations.

- The advantage of market penetration : The development of technology for the reputed companies in the market, market access quickly and easily to keep the market share of competitors that offer many benefits for customers, Market penetration is applied on Samsung to produce technology to meet the needs of clients, and is a clever product, a growth advantage. . “Getting smarter every year. Samsung promised the world's first future-proofed smart TV. Slots built into the back of select sets will be able to accommodate cards which will allow the TV to be upgraded with new features, boosts in computing power and picture performance. At stake is a growing world market for web TVs forecast to nearly double from $68 billion in 2011 to $122 billion in 2016 according to IMS Research”

The disadvantage of market penetration: Market penetration strategy uses low prices to generate demand for a product and increase market share. As demand for a product rises, the company in turn saves on production costs per unit by producing a greater volume of the product. Market penetration strategy doesn't work for all products, and market leaders frequently use other strategies. In other cases, If one company enters an industry in which prices are already low, when customers already trust a competitor with low prices, a new company should focus on carving out a nice for itself instead of beating that company's prices.

Market penetration:a) Maintain or increase its share of current markets with current products, eg through competitive pricing, advertising, sales promotionLG company should focus on increasing market share to compete with other companies such as Toshiba, Apple, Sony, ...with existing products such as: Liquid crystal display TVs, Plasma TVs, Pen touch TV, LED monitor, TV Upgrader, ...The company should have a strategy to reduce the productb) Secure dominance of growth markets LG company to improve product quality and service, in addition to LG company needs to come up with promotional strategies to secure market dominance of world economic growth is decreasing and income of people are being reducedc) Restructure a mature market by driving out competitorsd) Increase usage by existing customers LG company to maintain and improve service quality and to increase the use of products to existing customers. LG Electronics (LGE or ‘the company’) is one of the global leaders in consumer electronics, home appliances and mobile communications. Its

production network is spread across North America, South and Central America, Middle East, Africa, and Asia-Pacific. LGE to take advantage of their strengths to develop

Product developmenta) Product development forces competitors to innovate- Product development forces competitors to innovate- Newcomers to the market might be discouragedLG company will develop OLED technology because this is a new product that can compete are the products of other companies such as Toshiba, Sony… OLED technology (Organic light emitting diode) is considered one of the leading candidates in the field of lighting and screen production. Synthesized from the organic thin film with a thickness of about 200 to 500 nanometers (about 200 times smaller than the diameter of a human hair), an OLED product could create a very thin, light, easy to bend, very bright image and clarity but consume very little power. The research and practical work based on OLED technology is growing strongly, in which the application for display and lighting are gradually being replaced by OLED technology OLED TV, the screen computers, mobile phones, digital cameras, traffic signal lamp tables, lights and display are integrated on personal items such as handbags, clothing ...c) The drawbacks include the expensive and the risk.

- Advantage of product development- new to the market/ fresh opportunities - competitors may have reached a declining phase, giving LG's product an advantage - knowing the existing competitors and there over all market share and strategy's

- Disadvantage of product development- competitors- dominance in the market - risks on failing to achieve sales and the product being unsuccessful

- Market developmenta) New geographic areas and export markets (eg a ratio station building a new transmitter to reach a new audienceb) Difference package sizes for food and other domestic items so that both those who buy in bulf and those who buy in small quatities are catered forc) New distribution channels to attract new customers ( eg organic food sold in supermarket, not just specialist shops)d) Differential pricing policies to attract different types of customer and create new market segment. For example, travel companies have developed a market for cheap long-stay winter breaks in warmer countries for retired couples

- Advantage of market development- Disadvantage of market development- Greater ease of management/ Investor pressure

3.1.3Retrenchment

Retrenchment is a corporate level strategy that aims to reduce the size or diversity of an organization. Retrenchment is also reduction in expenditure to become financially stable. Retrenchment strategy is a strategy used by corporate in order to reduce the diversity or to cut the overall size of the operations of the company. This strategy is often used to cut down expenses with the goal of becoming more financially stable business. Typically the strategy involves withdrawing from certain markets or the discontinuation of selling certain products or services in order to make a beneficial turn around.Reason for exit: + Decline in attractiveness of the market + Change of competitive strategy + Buying or selling firms for profit

Exit barriers for divestment

+ Political: government attitude + Redundancy costs and the difficult of selling assets + Marketing consideration

These benefits can avoid a lot of costs for the company. But to reduce costs, shrinking capital reduces the risk of product development and cannot compete in the market. However, when implementation of this strategy, employee jobs is difficult because it affects to SNH social security, and employee benefits. Create jobs need a lot of time and cost.

3.2 Based on the above analysis, Select an appropriate future strategy for LG Electronics

LGE is one of the world's largest companies of consumer electronics with revenues of $ 50,178.4 million. Their products are diverse in categories such as Liquid crystal display TVs, Plasma TVs, Pen touch TVLED monitors, TV Upgrader, Home theater system ... LG is a long-standing and well-known company, so the product of them always ensure quality. It has high reputation in the consumer electronics market. LG brand strong enough to compete with companies such as Sony, Toshiba, Samsung ... LG's market is quite diverse, it stretches across North America, South America and Central America, the Middle East and Africa, Asia, and the Commonwealth of independent States. The company has a strong market share. LG LCD market is leading with 18% in 2010, they has sold worldwide about 2.92 million of 16.68 million LED LCD. In addition, in 3 years, refrigerators and washing machines from LGE always top in their respective categories in the 1000 Asia's leading brands. LGE air conditioning was also ranked number one for two consecutive years.

+ Suitability- Exploit strengths, rectify weakness, generate- Neutralize environmental threats, seize opportunity

- Satisfy the goals, fill the gap - Involve acceptable level of risk- Suit the polities and corporate, culture. This criterion appropriate with LGE strategy because it exploit the strengths and weaknesses. Appropriate planning to meet the objectives, and consistent with corporate culture. Analysis of appropriate strategies to maintain and create competitive advantage in the market. Therefore, this strategy is very important to assess an organization.

3.2.2 Feasibility

- The idea of social value

- Compelling idea

- Market for ideas

- Strengths and weaknesses of the idea

- Where willing to sacrifice for the idea

Implementation strategy, the implementation of all of the resources, the idea of social value, analysis of the ability to complete a project successfully, taking into account legal, economic, technological, scheduling and other factors. Rather than just diving into a project and hoping for the best. Feasibility is done to limit exposure to risk in the future organization. It related to the technical aspects, political factors and other environments associated with the success of the strategies.

3.2.3 Acceptability to stakeholder

Financial consideration: Customer, Banks, Government, The public shareholder.• Customer may object to a strategy if it means reducing service, but on the other hand they may have no choice.• Banks are interested in the implication for cash resources, debt levels and so on.• Government. A strategy involving a takeover may be prohibited under competition legislation.• The public shareholder. The environmental impact may cause key stakeholders to protest-out of town superstores are now frowned upon by nation and local government.

Acceptability is all concerned with the stakeholders, supplier. Suppliers can maintain comfort and customer satisfaction by continuously improving the product the organizational strategy success depends on the stakeholders and external factors, the benefits of responsive customers, expand the product line for new business opportunities. Locate the product on the market. Take risks, and interested staff to enhance the spirit the work. Companies need strategic objective to predict the possible risks of the stakeholdersAssessments the chosen strategy for LGE - Suitability

Strength: LG is one of the world's Weakness: LGE has secured weak credit

leading electronics companies. Strong infrastructure and spread around the world. They topped the LCD market in 2010. LG Air Conditioner has always been the world's top rating. LG has future orientation, typically system R & D (research and development). They constantly improve the products and recruiting talent across the global R & D system. In addition, they have strong alliance with Microsoft on standardization and new products. LG is focusing on developing products to follow social trends; they constantly improve and enhance the product. They constantly launching new products into the market and they have different style compare with available product in market such as refrigerators, mobile phones, TV ... Because the variety of product types, so, source LG's revenue comes from many directions. It can help LG expand facilities and to avoid

unexpected risks. LG also improve the quality and features of products through alliances with Microsoft, Best Buy, Prada, GE, Schneider, Nortel, Toyota, Qualcomm, Hitachi, Sun, Intel, Yahoo, Dolby, Adobe, Arcelik, and Symbian. As a result, sales of LG always up and they have a good development environment.

rating from international credit rating agencies in recent times. They need to improve this in the coming years. Because, this proves that the poor quality of assets and the financial instability of the company. It reduces the confidence of shareholders. LG had to recall one electron in the recent past. This is not good for a large company like LG. It reduces the growth rate of industry, fell reputable company, and reduced revenue. Typically, LG Electronics Canada, they had to recall large numbers of products for quality assurance.

Opportunities: LG have found reputable partners in the market to enhance the image and branding. With affiliated with Formula 1, they received the support of many Formula 1 fans. This help LG improving revenue, increase market share. In addition, the LG mobile phone products also more successful when linked to Microsoft. With the position of the two companies, LG also can develop stronger product line in the future.

Threats: The two biggest problems are threatening LG is fake goods and sanctions related to the environment. More and more fake goods on the market. It reduces the sales of LG, reduce brand image. In addition, LG also be subject to the sanction of the environment. They must ensure that waste treatment, the environment around the factory. If not a good deal, it will make LG the loss of unnecessary costs.

4.1 Compare the roles and responsibilities for strategy implementation+ Role: A role is similar to a job title, or job description, but much more useful because a person can carry as many roles as required of leadership. Another way to define a role is a collection of commonly related skill sets that are often represented by one individual, and sometimes suggests a skill level. A role defines a lot about someone at their work, and many people want to take pride in their role.+ Strategic implementation: The activity performed according to a plan in order to achieve an overall goal. For example, strategic implementation within a business context might involve developing and then executing a new marketing plan to help increase sales of the company's products to consumers.+ Strategic planning implementation is how to make change of what happen in your organization. Successful strategic planning implementation requires a large commitment from executives and senior managers, whether the strategic planning is occurring in a department or in a complete organization. Executives must lead, support, follow-up, and live the results of the strategic planning implementation process.+ Establish a clear vision for the strategic planning implementation process. Create a picture of where the organization will end up and the anticipated Outcomes after the mass production of products in the kitchen hood.

Organisation chart:

LG’s Director

LG’s Management

Marketing department

Financial department

Technical department

HR departmentProduction department

Board of inspector

Technical manager

Vice Technical manager

Design / technical

staff

Marketing manager

Vice marketing manager

Business staff

Financial manager

Vice Financial manager

Financial staff

HR managerProduction manager

Vice HR manager

Vice production manager

Leader of worker

Responsibility:

Project organization Management role and responsibility

LG’s Director Responsibilities of directors’ and managers of LGE Company are to ensure accounting records and other documents related to the transaction and financial position of the Company are properly record and to enable production of true and fair view of profit and loss accounts, balance sheets and other necessary document.For company with subsidiaries the directors’ must make sure that the financial year of each of its subsidiaries coincide the holding company’s financial year within two years after any corporation becomes subsidiaries unless application is made to SSM to have the subsidiaries with different financial year.At every annual general meeting of the company, the directors’ requested to present before the company once in every calendar year an audited accounts made for the period since the proceeding accounts made up to a date not more than 6 months before the date of the meeting.To prepare a report in accordance with a resolution of the directors’ to be attached to every balance sheet laid before the company in general meeting.

Board of Directors The LG BOD are directly accountable to the shareholders and each year the company will hold an annual general meeting (AGM) at which the directors must provide a report to

Statistical / analysis staff

Warehouse management

Bookkeeper

Worker

Treasurer

Training Staff

General administrative

office

HR Staff

Transportation staff

Production control staff

shareholders on the performance of the company, what its future plans and strategies are and also submit themselves for re-election to the board.

The objects of the company are defined in the Memorandum of Association and regulations are laid out in the Articles of Association.

The board of directors' key purpose is to ensure the company's prosperity by collectively directing the company's affairs, whilst meeting the appropriate interests of its shareholders and stakeholders. In addition to business and financial issues, boards of directors must deal with challenges and issues relating to corporate governance, corporate social responsibility and corporate ethics.

Marketing department - Manage Customer Relationships: One of the most important functions of a marketing department is to keep current customers happy. Because it is easier and less expensive for a company to keep an existing customer than it is to find new customers, marketing professionals must focus on relationship management. This may include giving customers regular interaction with LGE company, letting them know about new products, and providing value after the first sale.- Support Strategic Plan: An effective marketing department develops their promotional efforts to support the goals that the LGE company lays out in its strategic plan. Those goals include increased sales, targeting new audience groups, or launching new products or services.- Develop Promotions: A marketing department's main responsibility is to promote the products, services, mission and brand identity of a company. They must identify marketing goals and develop promotional activities that will help the business move in that direction. Marketing efforts are a way to increase awareness, create brand recognition and build a strong customer base. Promotional materials often include a website, sales collateral, email campaigns, printed marketing pieces and a social media campaign. Marketing departments may also run seasonal or special event promotions.- Boost Sales: Often, a marketing department is responsible for supporting the efforts of the sales department. The marketing department must meet with the sales staff and develop materials that will assist in selling the LGE company's products and services. By consulting with salespeople, the marketing department is able to develop more effective materials and promotions. In response to feedback, they may update brochures and spec sheets, target different audience groups, or

design new campaigns that support the sales staff's duties.- Stay Informed: Because trends in marketing can appear quickly, a marketing department is responsible for staying on top of them. Staff members in the marketing department must read trade publications, watch new technologies that appear for communication purposes, and follow developments in the industries they serve.

Financial department - Finance department shall submit to the director of planning and work program of the units are specified of LGE, ensure correct regulations, quality and effectiveness of staff work- To ensure compliance with the provisions of the Company and the laws of the Government of Vietnam in the work process- Regularly report to the Director of LGE implementation of assigned tasks- To preserve, store, manage documents, ... the work of LGE company in accordance with the regulations, facilities management, property unit assigned by the company- Finance department is responsible to the Director and to the law on the implementation of the above tasks

Technical department - Design department and testing department the main function of this department is that It created new product for LG strategy and new product make sure that it is suitable with strategy of LG company. Tracking multiple projects and exploring competing brands through market research is a major job function as well- In addition, this department also create demo products . After demo products will try a long time or sort time. The time to try a new product really depends on the characteristic of product. Testing department will be taken on all product such as new product, trial product and so on. Testing department is responsible for all product

HR department - Research and human resource planning for LGE company, they will assess the human resources needs of the company LGE, and consider the recruitment of internal and external from LGE companies that offer solutions to good human resource recruitment- Recruitment, training and human resource development for LGE company, the HR department will provide the requirements and methods for the selection of suitable candidates to the needs of LGE company. In addition, the HR department will be involved in the training for new employees to learn can do a good job of LGE company-  Administration salary for new hires is an important job, salary offer should be consistent with employees and the financial ability of the company LGE. Also LGE company will proceed to raise the salaries to make the employees have motivated for

work- Labor relations, welfare services, health and safety. These are the minimum needs for employees working for a company LGE. HR department will maintain these factors for employee retention

Production department Production managers have a wide range of responsibilities to tackle. The nature and volume of these responsibilities depends primarily on the field that they are employed in., the production manager of LGE will have an entirely different charge of duties as compared to someone working in the food and beverages sector of a hotel. But what remains consistent is the fact that these people have to maintain the quality of the output for their organization.Quality of goods, production schedulingA production manager is a person who undertakes the task of monitoring and ensuring smooth functioning of the production process, preparing production plans after making detailed surveys, along with researching and ensuring consistent supply of raw materials and essentials to facilitate production of goods.

4.2 Evaluate resource requirements to implement a new strategy for LG Electronics

Detail cost Total 2012 2013 2014 2015 2016

Design Cost of design 5.700 1.200 700 1.300 800 1.700Material 7.500 1.300 1.700 1.400 1.600 1.500costs for testing 2.500 400 600 600 400 500

Marketing Leaflet 430 60 100 100 100 70Social media 3.150 500 700 600 550 800Workshop costs 2.500 600 500 400 400 600Costs for the charity event

1.300 300 250 400 150 200

General Shop Expenses

4.050 700 750 800 900 900

Promotion costs 1.700 200 350 250 500 400Money for staff 2.400 500 550 500 450 400

Production Cost for buying machine

5.500 2000 875 875 875 875

Motor Vehicle Expenses

2.000 400 400 400 450 350

Paying for production staff

3.000 600 600 600 600 600

Contingencies 1250 500 300 200 150 100

Total project cost 42.980 9260 8375 8025 7925 9035

Factors Weight MPV PDC MDE HIA CDO CDF CDS DIP DIF

To achieve growth 0.5 4 4 1 3 2 4 4 2 2

Reduce dependency on a single product

0.1 1 4 1 3 3 4 3 1 1

Reduce risks associated with property and financial investment

0.1 3 3 3 2 2 3 3 5 5

Core competency 0.1 5 5 3 5 2 2 3 1 1

Stable Environment 0.1 5 5 2 3 3 4 4 2 2

Risk 0.1 5 5 2 1 3 4 3 1 1

Weighted score

3.8 4.2 1.6 2.8 2.3 3.5 3.3 2 2

1- Not attractive , 5- AttractiveTable 4: Quantitative Strategy Planning Matrix

4.3 Discuss targets and timescales for achievement in a given organization to monitor a given strategy: - There are all task have to do for new product of LG (3DTV). It include duration, time for start and finishFigure 1: Demonstrate time for starting and finishing of project

ÝFigure 2: Tasks name, duration, time.

Conclusion

LGE has diversified operations in terms of products as well as geographies. The company manufactures a wide range of products ranging from cell phones to home appliances to business solutions. In FY2010, LGE generated revenues through five business segments: home entertainment (39%), mobile communications (25%), home appliance (19%), business solutions (9%), and air-conditioning (8%). The diversified revenue source enables the company to widen its revenue baseand also insulates it from segment-specific risks.

Moreover, the company's business is also geographically diversified, with the largest geographic segment, North America, accounting for 26% of the total revenues in FY2010. Other geographic division includes Europe (18%), Korea (13%), South and Central America (12%), Middle East and Africa (9%), Southeast Asia (6%), Southwest Asia (5%), China (5%), CIS (5%), and Japan (1%). The diverse revenue base enables the company to take advantages of opportunities within

several markets and geographies and widen its customer base. It also allows LGE to insulate itself from downturn in particular economies and product categories.

Reference list

(Business strategy, page 162)(Business strategy, page 163)(Business strategy, page 164)27/12/2012(http://www.businessdictionary.com/definition/market-penetration.html)27/12/2012 (http://www.businessdictionary.com/definition/market-development.html)27/12/2012 (http://www.businessdictionary.com/definition/product-development.html)26/12/2012( http://www.ehow.com/info_8532268_advantages-disadvantages-limited-growth-strategies.html)(Business strategy, page 166)(Business strategy, page 152)(Business strategy, page 153)28/12/2012 (http://www.businessdictionary.com/definition/financial-resources.html)28/12/2012 (http://www.businessdictionary.com/definition/human-resource.html)