ba & p a project report
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project on LG companyTRANSCRIPT
A PROJECT REPORT ON Market Analysis of LG Consumer Durables
Under the guidance of -
Mr. SAUD HUSSAIN Faculty Member
PREPARED BY-
Krishna pattnayak Rakesh Kumar Behura Anup Kumar Das Rakesh Das Shiv Narayan Acharya Amiya Kumar Rana
ACKNOWLEDGEMENT
This project has encouraged me to do an indepth field study on LG.
We express our heartfelt indebtedness and deep sense of
gratitude to our guide Mr. suad hussain Faculty Member, MBA for his guidance.
I am grateful to my department to give me this opportunity.
Finally I express my sincere to all others who helped me directly or indirectly
in bringing out this academic endeavour.
Place : Bhubaneswar
Date :
DECLARATION
We do hereby declare that this piece of project report titled LG is our own work,
to the best of our knowledge and belief. It contains
no material previously published or written by another person nor material
which to a substantial extent has been accepted for the award of any other
degree or diploma of any other institute, except where due acknowledge has
been made in the text.
Date :
Executive summaryIndian Consumer durables market used to be dominated by few domestic
players like godrej Voltas and kalvinater. But post liberalization much
foreign company have entered into Indian market dethroning the Indian
player and dominating Indian market the major categories in the market
CTV, Refrigerator, Air Conditioner and Washing machine.
India being the second largest growing economy with huge consumer
class has resulted in consumer durables as the fastest growing industries
in India LG, SAMSUNG the two Korean companies has been maintaining
the lead in the industries with LG being leader in almost all the categories.
The rural market is growing faster than the urban market, although the
penetration level is much lower .The CTV segment is expected to the
largest contributing segment to the overall growth the industry. The rising
income levels double-income families and consumer awareness are the
main growth drivers of the industries.
Consumer durables major LG Electronics India Pvt Ltd (LGEIL) will invest
nearly Rs 500 crore in India this year in research and development, brand-
building and other marketing initiatives.
The company, having a turnover of Rs 9,500 crore and market share of 26
per cent, is investing Rs 360 crore on brand-building and other marketing
initiatives and around Rs 140 crore on research and development, besides
launching new platforms in information technology and related areas, LG’s
innovative ‘211 campaign’ to provide quality after-sales service, will also be
expanded from the existing 22 to 40 cities by next month.
INTRODUCTION Before the liberalization of the Indian economy, only a few companies
like Kelvinator, Godrej and Voltas were the major players in the
consumer durables market, accounting for no less than 90% of the
market. Then, after the liberalization, foreign players like LG, Sony,
Samsung, Whirlpool and Aiwa came into the picture. Today, these
players control the major share of the consumer durables market.
Consumer durables market is expected to grow at 10-15% in 2012-
2013. It is growing very fast because of rise in living standards, easy
access to consumer finance, and wide range of choice, as many foreign
players are entering in the market
With the increase in income levels, easy availability of finance, increase
in consumer awareness, and introduction of new models, the demand
for consumer durables has increased significantly. Products like washing
machines, air conditioners, microwave ovens, color televisions (CTVs)
are no longer considered luxury items. However, there are still very few
players in categories like vacuum cleaners, and dishwashers.
Consumer durables sector is characterized by the emergence of MNCs,
exchange offers, discounts, and intense competition. The market share
of MNCs in consumer durables sector is 65%. MNC's major target is the
growing middle class of India. MNCs offer superior technology to the
consumers whereas the Indian companies compete on the basis of firm
grasp of the local market, their well-acknowledged brands, and hold over
wide distribution network. However, the penetration level of the
consumer durables is still low in India.
CHAPTER 1Industry analysis & enterprise history
and background.
BOARD OF DIRECTORS
DIRECTOR
Bon-Joon Koo
Representative Director / CEO, LG Electronics (Vice Chairman), Inside Director
David Jung
Representative Director / CFO, LG Electronics (President), Inside Director
Yu-Sig Kang
Vice Chairman of LG Management Development Institute, 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
ESTABLISHMENT OF LGThe company was originally established in 1958 as Gold Star, producing radios, 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 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 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.
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.
BRANDING STRATEGIES
1. Launch new technologies in consumer electronic and home appliances.
2. LG was the first brand to enter in cricket in big way a way, by sponsoring the
1999 world cup followed it up in 2003 as well.
3. LG brought in four captains of the Indian cricket team to endorse its products. LG
invested more then US$ 8 million on advertising and marketing in this sport.
4. LG has differentiated its product using technology and health benefits. CTV has
“Golden eye technology” Air conditioner has “Health air system” and
microwave ovens have the “Health wave system”.
PRICING POLICIESLG pricing strategy is cost + fixed mark up to cover their GP. Since they cater to upper
middle and upper class, therefore their 90% dealers are in big cities only. Product-wise
price list enclosed in appendix for reference. LG follows pricing policy in which their
normal formula is import cost + reasonable gross profit to cover their marketing
expenses and also give them reasonable profit.
PRODUCTS OF LG
Mobile communications
(a)CDMA Handsets,
(b)GSM Handsets,
(c) 3G Handsets,
(d)Cellular Phones
Digital appliance
a) Air Conditioners ,
b) Refrigerators ,
c) Microwave Ovens ,
d) Washing Machines ,
e) Vacuum Cleaners ,
f) Home Net,
g) Compressors for Air Conditioners and Refrigerators
Digital display
a) Plasma TVs ,
b) LCD TVs ,
c) Micro Display Panel TVs,
d) Monitors,
e) PDP Modules,
f) OLED Panels,
g) USB Memory,
h) Flat Panel Computer Monitors
Digital media
a) Home Theater Systems,
b) DVD Recorders ,
c) Super Multi DVD Rewriters,
d) CD±RW,
e) Notebook PCs,
f) Desktop PCs,
g) PDAs,
h) PDA Phones,
i) MP3 Players ,
j) New Karaoke Systems,
k) Car Infotainment
VISION
Global Top 3 by 2010
Global Top 3 Electronic/Telecommunication company
GROWTH STRATEGY
“Fast innovation, Fast growth”
CORE COMPETENCY
“Product leadership, Market leadership, People leadership”
CORPORATE CULTURE
No excuse, “we” not “I”, Fun workplace
SLOGAN
"Life's Good" represents LG's determination to provide delightfully
smart products that will make your life good.
STRATEGIC ALLIANCE
LG Electronics is making technical advances and identifying business
opportunities through various associative relationships with some of the
world's leading companies.
LG Electronics is striving to become number one in the world by mingling
in various business and technological fields and making strategic alliances with
world famous companies. "Strategic association between corporations," in which
companies with different infrastructures cooperate in the fast-developing 21st
century business field, is of key significance in terms of strengthening the existing
industry and creating a new one.
LG BRAND IDENTITY:-
The brand of LG is delightfully smart. LG strives to enhance the customer’s life
and lifestyle with intelligent features, institutive functionality and exceptional
performance.
CORE VALUES OF LG
a. Trust,
b. Innovation,
c. People
d. Passion
CULTURE AND PHILOSOPHY OF LG
LG practices four cultures
1. Learning Culture
2. Boundary less Environment
3. A Carrier
4. Growth
According to LG, the Learning Culture continuously helps the employee to learn
more and more to develop the habit of continuous learning.
Boundary less Environment means that there is no difference between the levels
of employees. There is transparency between the work and mutual understanding
between all the employees.
A carrier is highly growing in LG and one who is the employee can develop their
carrier largely. A new comer will feel fully comfortable in the company and for a
new comer the company is very helpful in the overall growth of personality.
Growth in LG is very high for those who are in the company and for those who
want to join in LG. The company is growing with fast innovation and the BLUE
Ocean strategy is one of the examples of growth.
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.
Code of conduct of LG:
1. Responsibility and obligations to customers :• Respect for Customers• Creating Value • Providing Value
2 Fair competition• Pursuit of Free Competition• Compliance with Laws and Regulations
3 Fair Transaction :• Equal Opportunity • Fair Transaction Procedure• Support and Aid for Business Partners
4 Basic Ethics for Employees• Basic Ethics• Completion of Duty • Self Development• Fairness in Performance• Avoidance of conflict with company interest
5 Corporate Responsibilities to employees• Respect for human dignity
6 Responsibilities to society and country
• Rational Business Development• Protection of stock holder interest• Contribution to social development• Environmental Conservation
LG INDIA:LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics,
South Korea was established in January 1997 after clearance from the Foreign
Investment Promotion Board (FIPB). LG set up a state-of-the art manufacturing
facility at Greater Noida, near Delhi, in 1998, with an investment of Rs 500
Crores.
LG corporate office is located at Plot no.51, Udyog Vihar, Kasna Road, Greater
Noida, India.
This facility manufactured Color Televisions, Washing Machines, Air-
Conditioners and Microwave Ovens.
''Company is setting up a chain of exclusive premium showrooms. LG plans to
launch 60 premium Brand Shoppes by the end of the first quarter of this year. At
present, LG has a total of 83 LG stores across the country, of which 45 are shoppes
and 38 are exclusive stores. Brand shoppes will be placed in the premium segment
and the target audience will comprise buyers interested in premium and high end
products.
LG Brand Shoppe goes beyond the concept of a normal exclusive store by having a
more interactive environment and additional lifestyle orientation on display so that
the customer can actually experience the LG products in his or her own home
settings.
LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market
share, is planning a brand new image. To attract inspirational and young
consumers across India, company will roll out a new marketing strategy. The
exercise will cost the company Rs 360 crore.
LG Electronics India is the fastest growing company in the consumer electronics,
home appliances, and computer peripherals industry today.
LG Electronics is continually providing, superior technology products & value for
money to more than 50 lakh households in India. LGEIL is celebrating the 11th
anniversary this year.
LG Soft India the innovation wing of LG Electronics in Bangalore is LG
Electronics' largest R&D centre outside Korea. We at LGSI focus on niche
technology areas such as mobile application development, digital video broadcast
and biometrics software and support LG Electronics with our expertise. Motivated
by a passion for technology, a strong work culture and loyalty to the organization,
we are determined to see LG become one of the top three brands globally.
Prominent consumer electronic company, LG Electronics Inc. has said that it
expects the sale of its products in India to up by 15 per cent in 2012. Moon Bum
Shin, managing director of LG Electronics India has said that the company has
earmarked 4.8 billion rupees for investment purpose in India this year. The said
money will be used to market as well as manufacture new products.
LG Electronics, which is originally a South Korean Company with branch in India,
informed that its sales of GSM mobile phones, color televisions, air conditioners
and other household goods in the Indian market was to the tune of 95 billion rupees
($2.4 billion) in 2010. As per Shin's estimate, the sales in 2012 would be around
110 billion rupees.
In order to achieve its target, Shin said LG Electronics will concentrate on catering
to the high-end consumer market which will help boost sales this year. India
churns out six (6) per cent of LG Electronics global revenues of $42 billion. The
Indian branch of LG exports to 40 countries.
India challengesThe challenges faced by LG when entered in Indian market
1. Low brand awareness about LG in India.
2. One of the last MNCs entered in India (Samsung, Panasonic entered in 1995
in India).
3. High import duty
4. Compitition from local market players and other MNCs in consumer durable
segment.
5. Price sensitiveness of the Indian consumer
LG overcomes these challenges to emerge as
Innovative marketing strategy
5. Launch new technologies in consumer electronic and home appliances.
6. LG was the first brand to enter in cricket in big way a way, by sponsoring
the 1999 world cup followed it up in 2003 as well.
7. LG brought in four captains of the Indian cricket team to endorse its
products. LG invested more then US$ 8 million on advertising and
marketing in this sport.
8. LG has differentiated its product using technology and health benefits. CTV
has “Golden eye technology” Air conditioner has “Health air system” and
microwave ovens have the “Health wave system”.
Local and efficient manufacturing to reduce the cost
To overcome high import duties LG manufactures TV refrigerator in India at
manufacturing facility at Noida and Pune. LGEI had already commissioned
contract manufacturing at Mohali Kolkata and Bhopal for CTVs. This has helped
LGEI to reduce cost.
LGEI implementing the “Digital manufacturing system” (DMS) as the cost cutting
innovation this system is follow-up to the six sigma exercise LGEI had initiate
earlier.
Strategies adopted by the organization
LG follows 10 commandments which are as follows.
1. Foster working environment-5S Environment
2. Fast execution is key to success
3. Transparent and fast communication-open communication
4. Update market -knowledge –Demographics
5. Win –Win relationship with the trade partners
6. Customer is the king
7. Even Billing –Road to ach supplier A
8. Be in touch with the market (70% Market, 30% Office).
9. Plan and Execute annual marketing Calendar-Time to market
10.Display share of 50% -to get 50% consumer share.
Distribution and Marketing
The company has number of dealers and warehouses. They have LG exclusive
shopee. For the marketing of the products a number of activities are followed
1. Exhibitions are conducted from time to time.
2. Society and college activities are conducted.
3. Hoarding, Posters, banners are used so as to grab the attention of the
costumers.
4. Day to day advertisement in leading newspaper.
5. Discount at festival time.
6. For dealer relationship they arrange dealer meting at several time in the year
7. LG divide dealer in gold silver etc. category to know the performance of the
dealers.
8. They have their sales persons at various sub dealer store and at mordent
trade store for particularly for the promotion of the LG product.
9. LG also uses the radio FM for the promotion activities.
10.Also provide capon and scratch card for festive season.
The logistics (Supply Chain Management)
Logistics is the art and science of managing and controlling the flow of goods,
energy, information, and other resources like products, services, and people, from
the source of production to the marketplace. It is difficult to accomplish any
marketing or manufacturing without logistical support. It involves the integration
of information, transportation, inventory, warehousing, material handling, and
packaging. The operating responsibility of logistics is the geographical
repositioning of raw materials, work in process, and finished inventories where
required at the lowest cost possible.
Logistics Management is that part of the supply chain, which plans, implements
and controls the efficient, effective forward and reverse flow and storage of goods,
services and related information between the point of origin and the point of
consumption in order to meet customers' requirements.
5R’s of Logistic followed by LG:
1. Right Time
2. Right Place
3. Right Condition
4. Right Cost
5. Right Handling
MARKET SHARE
LG announced few more products today at its Tech Show 2014, taking place in Delhi. The primary one is the LG G2 4G LTE variant, to which the company has also added two colour variants, and which the company says will hit the Indian market around mid-March. The pricing of the 4G LTE versions been revealed and the 16 GB variant will leave you lighter by Rs. 46,000, while the 32 GB will be priced at Rs. 49,000. This device is a sequel of the 3G variant of the LG G2, which was launched in India back in September last year.
LG also showcased its G Pro 2, the next in line to the G2, though it did not announce its India pricing and availability. The G pro 2 is a powerful device that comes with the Android Kitkat version, sports a 5.9 inch True IPS+ LCD capacitive touch screen rendering 1080 x 1920 pixels resolution, and is equipped with a 2.26 GHz quad core krait 400 processor and Qualcomm Snapdragon 800 chipset.
LG also announced its wearable device called the Lifeband Touch, and with that has entered the wearable computing device segment, in direct competition with Samsung which launched its Samsung Gear Fit at the recently concluded Mobile World Congress. LG has announced that the Lifeband Touch will be available in India in the second half of 2014. However, the company has not disclosed the price of this one.
Originally unveiled at CES 2014, Lifeband Touch is a water-resistant fitness tracker, which keeps track of the user's calorie consumption, steps walked and other fitness related stuff. The devices comes with a touchscreen OLED display, which features the fitness related details as well as incoming call details from the synced phone, time, and other information.
According to Kwon, LG Electronics India will be investing Rs. 800 crore in R&D and marketing activites this year. "We plan to invest Rs 800 crore this year. While Rs 300 crore would go into R&D and production, Rs 500 crore would be invested in marketing and branding during 2014," he said.
New Delhi, March 3: LG Electronics plans to invest Rs 800 crore this year on activities such as marketing and research, with an eye to lift its market share to 35 per cent by December.
The South Korean consumer durables giant, which is still to come out with its 2013 revenue numbers, is eyeing a turnover of Rs 22,000 crore in 2014.
“We plan to invest Rs 800 crore this year. While Rs 300 crore will go into research and development and production, Rs 500 crore will be invested in marketing and branding during 2014,” LG Electronics India managing director Soon Kwon said.
The company, which has a market share of 30 per cent in the consumer durables market, is looking at enhancing it by five per cent during the year, he said. “Our mobile and flat panel television business will lead the pack during the year,
The consumer durables industry in India is pegged at around Rs 50,000 crore, according to LG estimates. “India features among our top five priority markets and LG India will continue to employ its technological and design expertise to bring impressive products to the market,” Kwon said.
The company today showcased over 230 products across various categories, including washing machines and refrigerators in the LG Tech Show 2014.
“Around 85 per cent of the products being showcased in this year’s tech show are new. Some have been developed keeping in mind the Indian market,” Kwon said.
The company had earlier said it was eyeing a 25 per cent growth in turnover to Rs 2,500 crore from air conditioners. LG is also looking for a 10 per cent growth in its industrial cooling segment with demand coming from pharmaceutical, manufacturing and retail sectors and big residential and commercial projects.
“We expect sales revenue of Rs 2,500 crore from the domestic air conditioning segment this year. It will be a 20-25 per cent increase,” LG India business head (air conditioners) Saurabh Baishakhia had said earlier.
LG will launch its first smartwatch in 2014, the head of its mobile unit said Monday, tapping into the nascent market for wearable devices seen as the mobile industry's new source of growth. The announcement from the South Korean smartphone maker came after industry leader Samsung on Sunday launched the second generation of its own Internet-enabled smartwatch, the Gear 2. "We are working on the developmenSouth Korean consumer durables maker.
LG Electronics is targeting a turnover of Rs 6,000 crore in the refrigeration segment by the end of this year with 20 per cent growth in volume. LG, which is also market leader in the segment, plans to acquire 40 per cent market share in the home appliances category by the end of 2014. "We would grow 20 per cent by volume and 10 per cent by value by the end of this year with a turnover of Rs 6,000 crore," LG...
LG Electronics Inc , the world's No.2 TV maker, reported a 9 percent fall in quarterly profit on Wednesday, beating forecasts as weak TV sales and tight margins offset a solid recovery in its smartphone business. April-June operating profit fell to 479 billion won ($428.8 million), above a consensus forecast of 457 billion won by Thomson Reuters I/B/E/S. The profit compares with 526.7 billion won a year ago and 349.
CHAPTER 2 Organisation
Organization structure of L.G
Hierarchical structure of L.G
Geographical location of LG
ASIA & PACIFIC
Australia
LG Electronics Australia Pty, Ltd.
Marketing
2 Wonderland Drive Eastern Creek NSW 2766, Australia
61 2 8805 4000
61 2 8805 4201
India
LG Electronics India Pvt. Ltd.
Marketing & Production
Plot No. 51, Udyog Vihar, Surajpur-Kasna Road, Greater Noida - 201 306 (U.P.)
91 120 2560 900 / 940
91 120 2560 956
Indonesia
P.T. LG Electronics Indonesia
Marketing & Production
(i) Factory 1 (Mail Receipt) : Block -G , MM2100 Industrial Town, Cikarang Barat, Bekasi 17520 , Jawa Barat - Indonesia
62 21 2930 4000
62 21 5797 3103
Japan
LG Electroics Japan co., LTD
Marketing
Hon-Kan9F, Akasaka Twin Tower2-17-22 Akasak,Minato-Ku, Tokyo 107-8512-,Japan
81 3 3588 1911
81 3 3586 3984
Korea
LG Electroics
Headquarters
Twin Tower 128, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea
82-2-3777-1114
Korea
LG Electroics Anyang Institute
77, Heungan-daero 81beon-gil, Dongan-gu, Anyang-si, Gyeonggi-do, Korea
82-31-450-7083
Korea
LG Electroics Changwon Plant
[1st Plant] 170, Seongsanpaechong-ro, Seongsan-gu, Changwon-si, Gyeongsangnam-do, Korea / [2nd Plant] 84, Wanam-ro, Seongsan-gu, Changwon-si, Gyeongsangnam-do, Korea
82-55-260-3112
Korea
LG Electroics Cheongju Plant
93, 2sunhwan-ro 971beon-gil, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do, Korea
82-43-279-3114
Korea
LG Electroics Digital Park
222, LG-ro, Jinwi-myeon, Pyeongtaek-si, Gyeonggi-do, Korea
82-31-610-5114
Korea
LG Electroics Gangnam R&D Center
2621, Nambusunhwan-ro, Gangnam-gu, Seoul, Korea
82-2-6971-0114
Korea
LG Electroics Gangseo Building
50, Seonyuseo-ro, Yeongdeungpo-gu, Seoul, Korea
82-2-2630-3114
Korea
LG Electroics Gasan R&D Campus
51, Gasan digital 1-ro, Geumcheon-gu, Seoul, Korea
82-2-6915-1000
Korea
LG Electroics Gumi Plant
[Solar Plant] 168, Suchul-daero, Gumi-si, Gyeongsangbuk-do, Korea / [TV Plant] 77, Sanho-daero, Gumi-si, Gyeongsangbuk-do, Korea
[Solar Plant] 82-54-469-0401
[TV Plant] 82-54-460-7110
Korea
LG Electroics Incheon Campus
322beon-gil, kyeongmyeong-daero, Seo-gu, Incheon, Korea
82-32-723-1813 / 82-32-723-111
Korea
LG Electroics Seocho R&D Campus
19, Yangjae-daero 11-gil, Seocho-gu, Seoul, Korea
82-2-6912-6114
Korea
LG Electroics Seoul Square
416, Hangang-daero, Jung-gu, Seoul, Korea
82-2-6456-0114
Korea
LG Electroics Seoul University Institute
56-39, Nakseongdae-ro 15-gil, Gwanak-gu, Seoul, Kore
82-2-2102-0380
Korea
LG Electroics Umyeon R&D Campus
38, Baumoe-ro, Seocho-gu, Seoul, Korea
82-2-526-4114
Malaysia
LG Electronics (M) Sdn. Bhd. (505660-U)
Marketing
Block A, PJ8, No.23, Jalan Barat, Seksyen 8,46050, Petaling Jaya, Selangor Darul Ehsan,Malaysia
60 3 7962 7777
60 3 7962 7700
Philippines
LG Electronics Philippines Inc.
Marketing
15 Francisco Legaspi Street Maybunga, Pasig City, Philippines
63 2 641 4181
63 2 641 2656
Singapore LG Electronics Singapore PTE LTD
(i) LGESL Office : 8 Temasek Boulevard,# 27-01 Suntec Tower 3, Singapore,
Marketing
038988
65 6512 0522
65 6337 6151
Taiwan
LG Electronics Taiwan Taipei Co.,Ltd.
Marketing
7F, No. 47,Lane 3, Jihu Road, NeiHu District,Taipei City,Taiwan, R.O.C.
886 2 2627 2788
886 2 2627 4977
Thailand
LG Electronics Thailand Co., Ltd.
Marketing & Production
(i) Bangkok Office : 75/81 Richmond Bldg. 22nd FL. Sukhumvit 26 Road, Klongton, Klongtoey, Bangkok 10110
66 2 204 8888-89
66 02 204 2412
Vietnam
LG Electronics Vietnam co.,Ltd
Marketing & Production
Km 17.5, Highway 5A, Nhu Qunh town, Van Lam District, Hung Yen Province
84 31 3749941
84 31 3850902
EUROPE
Austria
LG Electronics Austria GmbH
Marketing
Office Campus Gasometer Guglgasse 15/4A (Grd Flr, 5th & 6th Flr),A-1110, Vienna, Austria
43 1 74015 4015
43 1 74015 2020
Czech Republic
LG ELECTRONICS CZ, s.r.o.
Marketing
Zlaty Andel, Nadrazni 23/344, 151 34 Praha 5, Czech Republic
42 0234 094 600
42 0234 094611
France
LG Electronics France S.A.S
Marketing
Paris NordⅡ-117 Avenue des Nations BP 59372 Villepinte 95942 Roissy CDG Cedex
33 1 4989 8949
33 1 4989 8809
Germany
LG Electronics Deutschland GmbH
Marketing
Berliner Str 93, 40880 Ratingen, Germany
49 210 2700 80
49 210 2700 8777
Greece
LG Electronics Hellas S.A.
Marketing
1. Ethnarhou Makariou str., Delta Palaio Faliro, PO Box 77331, 175-01, Faleo Paliro, Athens, Greece
30 210 4800 500
30 210 4800 510
Hungary
LG Electronics Magyar KFT
Marketing
H-1097, Budapest Konyves Kalman krt 3/a Hungary
36 1 455 6060
36 1 455 6066
Italy
LG Electronics Italia S.p.A.
Marketing
Via Dell'Unione Europea, 6 20097 San Donato Milanese (MI), Italia
39 02 51801 1
39 02 51801 500
Netherlands
LG Electronics Benelux Sales BV
Marketing
Krijgsman 1, 1186 DM Amstelveen , The Netherlands
31 20 456 3100
31 20 456 3299
Netherlands
LG Electronics European Shared Service Center B.V.
Shared Service Center
Krijgsman 1, 1186 DM Amstelveen , The Netherlands
31 (0) 20 456 3100
31 (0) 20 456 3292
Norway
LG Electronics Norway AS
Marketing
Lilleakerveien 8, 0283 Oslo, Norway
47 67 11 10 90
47 67 11 10 99
Poland
LG Electronics Mlawa Sp. z o.o.
Production
ul. LG Electronics 7, 06-500 Mlawa, Poland
23 6547 417
48 23 654 3259
Poland
LG Electronics Polska Sp. z o.o.
Marketing
LG Electronics Polska Sp. z o. o., Mokotow Nova, ul.Woloska 22, 02-675 Warsaw, Poland
48 22 481 7100
48 22 481 7888
Poland
LG Electronics Wroclaw Sp.z.o.o.
Production
ul LG Electronics 1-2 Biskupice Podgorne, 55-040 Kobierzyce, Poland
48 71 792 9400
48 71 792 9405
Portugal
LG Electronics Portugal S.A.
Marketing
Quinta da Fonte - Edificio D. Amelia Rua Vitor Camara, No. 2, Piso 2 2770-229 Paco d'Arcos (Oeiras), Portugal
351 21 120 2200
351 21 120 2240
Romania
LG Electronics Romania S.R.L.
Marketing
17-21 Bucuresti-Ploiesti Baneasa Center, 5th Floor, Bucharest, Romania
40 21 233 2491
40 21 233 2478
Spain
LG Electronics Espana S.A
Marketing
C/ Chile 1, 28290 Las Rozas - Madrid, Spain
34 91 211 2200
34 91 211 2209
Sweden
LG Electronics Nordic AB
Marketing
Esbogatan 18 Akalla P.O.Box 83 SE-164 94 KISTA, Sweden
46 8 5664 1500
46 8 5664 1599
The Netherlands
LG Electronics European Holdings B.V.
Holdings
(i) Legal Address : Krijgsman 1, 1186 DM Amstelveen , The Netherlands
31 (0) 20 456 3100
31 (0) 20 456 3292
Turkey
Arcelik-LG Klima Sanayi ve Ticaret A.S.
Production
Gebze Organize Sanayi Bölgesi Ihsan Dede Cad. No :139 41480 Gebze / Kocaeli, Turkey
90 262 678 7703
90 262 678 7879
United Kingdom
LG Electronics United Kingdom Ltd.
Marketing
LG House, 250~ 252 Bath Road, Slough, Berkshire SL1 4DX, United Kingdom
44 1753 491 500
44 1753 491 500
MIDDLE EAST & AFRICA
the United Arab Emilates
LG Electronics Dubai FZE
Marketing
P.O. Box No. 263041, Jebel Ali Dubai U.A.E.
971 4 887 1900
971 4 887 2771
the United Arab Emilates
LG Electronics Gulf FZE
Marketing
P.O. Box 61445, Al-Nasr Plaza Office Building 4, Oud Metha (next to Al-Nasr Football Club), Dubai, U.A.E.
971 4 357 3466
971 4 357 3460
the United Arab Emirates
LG Electronics Middle East Co., Ltd.
SVC
P.O. Box 16782, Jebel Ali, Dubai, U.A.E.
971 4 881 3663
971 4 881 3818
Algeria
LG Electronics Algeria SARL
Marketing
98, Rue Mohamed Boudiaf , Chéraga , Algiers, Algeria
213 21 37 5050
213 21 37 3232
Angola
LG Electonics Angola Limitada (Limited)
Marketing
Rua Comandante Stone N119, Alvalade, Maianga, Luanda, Angola
Egypt
LG Electronics Egypt S.A.E.
Marketing & Production
67 Ninety St., The Primary Sector, The City Center Fifth Avenue, Address Building, Katameya
20 2 2613 1050
20 2 2613 1051
Jordan
LG Electronics (Levant) Jordan
Marketing
Issam AlKhatib complex, 3rd Floor, Princess Basmah street, Abduon, P.O. Box 930254, Amman 11193, Jordan
962 6 565 2861~2
962 6 565 2863
Kenya
LG Electronics Service Kenya Limited, Inc.
SVC
Piedmont Plaza, First Floor, 671 Ngong Road, P. O. Box 31921-00600, Nairobi,Kenya
254-791-085-200 (301)
Morocco
LG Electronics Morocco S.A.R.L.
Marketing
Zenith Millenium, Building No. 3 & 4, 5th floor, Attaoufuk Lotissement Sidi Maarouf, Casablanca, Morocco
212 52 297 3232
212 52 297 3288~89
Nigeria
LG Electronics Nigeria Limited
Marketing
65, Opebi Road, Ikeja, Lagos, Nigeria
VOIP 888-2243-101
234-1-793-6511
Saudi Arabia LG Electronics Saudi Arabia Limited.
SVC
Jeddah 101 Building, 5th Floor, Sary Street, Al Khaledya Dist., P O Box 10876, Jeddah 21443, Saudi Arabia
966 2616 6627
966 2616 6717
Saudi Arabia
LG-Shaker Company Ltd.
Production
P.O. Box 911, Riyadh 11383, Kingdom of Saudi Arabia
966 1 499 7650
966 1 499 7649
The Republic Of South Africa
LG Electronics S.A. (Pty) Ltd.
Marketing & Production
Raceway Industrial Park, Monte Carlo Drive,Gosforth Park, Rand Airport Road, Germiston,Johannesburg, South Africa
27 11 323 8000
27 11 323 8508
Tunisia
LG Electronics North Africa
Marketing
Rue Lac Annecy Les Berges Du Lac, Tunis, Tunisia. ZIP code: 1053
216 71 861 059
Turkey
LG Electronics Ticaret A.S.
Marketing
Kaptanpasa Mah. Piyalepasa Bulvari No. 73 Ortadogu Plaza Kat :7 34384 Okmeydani Sisli – Istanbul, Turkey
90 212 314 5252
90 212 222 6144
UAE
LG Electronics Africa Logistic FZE
Marketing
P.O. Box 261893, Jebel Ali Free Zone, Dubai, U.A.E.
971 4 8051 499
971 4 887 0900
UAE
LG Electronics Russia and Ukraine
Marketing
Office No LB16620 P.O. BOX 261561 dubai U.A.E.
04-8810701
CIS
Kazakstan
LG Electronics Almaty Kazakstan
Marketing & Production
Molodezhnaya 2"A", Almaty, Kazakstan, 480080
7 3272 665757
7 3272 665848
Latvia
LG Electronics Latvia, LLC
Marketing
4a, Gredu Str., Riga, LV-1019, Latvia
371 6731 1337
371 6731 1338
Russia LG Alina Electronics
SVC
Beregovoy pr-d, 4/6, bld.2, 121087, Moscow, Russia
7 495 933 6090
7 495 232 6656
Russia
LG Electronics RUS, LLC
Marketing & Production
Building 9, 86 km of Minskoe highway, Rural Village Dorokhovskoe, Ruza District, Moscow Region,Russian Federation, 143160
7 495 785 1313
7 495 785 1302
Russia
LG Electronics RUS-Marketing, LLC
Other
Capital Plaza 6th Floor, 4, 4th Lesnoy Pereulok,Moscow, 125047, Russia
7 095 933 6565 / 6566
7 095 933 6566 / 6567
Ukraine
LG Electronics Ukraine Inc.
Service
6th floor, str. Baseyna 4 (Litera A),01004, Kiev, Ukraine
38 44 201 4350
38 44 201 4373
NORTH AMERICA
Canada
LG Electronics Canada, Inc.
Marketing
20 Norelco Drive, North York, Ontario M9L 2X6 Canada
647-253-6300
647-253-6399
Mexico
LG Electronics Mexicalli S.A.DE C.V.
Production
Calle Orbita #36, Parque Industrial Mexicali Ⅱ,Mexicali, B.C.C.P. 21600 MEXICO
52 686 561 1339
Mexico
LG Electronics Mexico S.A.DE C.V.
Marketing
Sor Juana Ines De La Cruz No. 555 Co. San Lorenzo Tlanepantla Estado De Mexico, C.P. 54033
52 55 5321 1900
52 55 5321 1960
Mexico
LG Electronics Monterrey Mexico S.A. de C.V
Production
Av. Industrias 180, Parque Industrial Pimsa, Apodaca Nuevo Leon
8196 5500
Mexico
LG Electronics Reynosa S.A.DE C.V.
Production
CARRETERA A MATAMOROS BRECHA E-99 PARQUE INDUSTRIAL REYNOSA, REYNOSA, TAMAULIPAS, CP 88780
52 899 921 6200
USA LG Electronics Mobile Research. U.S.A., L.L.C 10225 Willow Creek Road, San Diego CA 92131,
R&D
U.S.A.
858 635 5300
1 858 805 6668
USA
Zenith Electronics Corporation of Pennsylvania
Production
USA
Zenith Electronics LLC
R&D
2000 Millbrook Drive, Lincolnshire, IL 60069, U.S.A.
1 847 941 8000
1 847 941 8877
United States
LG Electronics Alabama Inc.
SVC
P.O.Box 240007, 201 James Record Road, Huntsville, Alabama 35824, U.S.A.
256-772-8860
256-772-6129
United States
LG Electronics Mobilecomm U.S.A.,Inc.
Marketing
1000 Sylvan Avenue Englewood Cliffs, New Jersey, U.S.A. 07632, U.S.A.
201 816 2000
201 816 0742
United States
LG Electronics U.S.A., Inc.
Marketing
1000 Sylvan Avenue Englewood Cliffs, New Jersey, U.S.A. 07632, U.S.A.
201 816 2000
201 816 0742
CENTRAL & SOUTH AMERICA
Argentina
LG Electronics Argentina S.A.
Marketing
Juana Manso 999, Piso 5, Torre Norte, Puerto Madero (C1107CBS), Bs As, Argentina
54 11 5352 5454
54 11 5352 5450
Brazil
LG Electronics do Brasil Ltda.
Marketing & Production
(i) Sao Paulo Head Office : Av Chucri Zaidan, No 940-3th AndarCEP 04583-110 Vila Cordeiro, Sao Paulo-SP <br>(ii) Taubate Factory : Dom Pedro Primerio, W7777, Piracangagua,Taubate-SP, CEP 12091-000
55 11 2162 5400
55 11 2162 5415
Chile
LG Electronics Inc. Chile Ltda
Marketing
Isidora Goyenechea 2800, Piso 10 edificio, Las Condes, Santiago, Chile
56 2 941 9200
56 2 941 9201
Colombia
LG Electronics Colombia Ltda
Marketing
Autopista Medellin Kilometro 1.8 Costado Sur. Soko Industrial - Torre B, Colombia
57 1 587 5454
57 1 587 6240
Panama
LG Electronics Panama, S.A.
Marketing
Edif. Torre Global Bank Piso # 20, Calle 50, Panama, Rep. De Panama
507 210 6000
507 264 0725
Peru
LG Electronics Peru S.A.
Marketing
Av. Republica de Colombia No. 791 Piso 12 , San Isidro , Lima , Peru
51 1 415 0000
51 1 415 0084
Venezuela
LG Electronics Venezuela S.A
Marketing
Ed Parque Avila Torre HP Torre B piso 10 Ave Francisco Miranda / Palos Grandes Chacao Miranda, Caracas, Venezuela
58 212 208 1200
58 212 285 4814
Corporate office location of LG in India:
LG Electronics India Pvt. Ltd.Plot No. 51, Surajpur - Kasna RoadUdyog Vihar, Greater Noida, U.P. India (201306)Tel: 0120-2560900/40
Contact Person: Ms. Neeta LinzE-mail: [email protected]
LG Electronics India Pvt Ltd (Regional Office)4th Floor, A Wing, Trade Star, Andheri Kurla Road, J B Nagar-Andheri East, Mumbai - 400059
Website: www.lg.com
LG global:
Headquaters : yeouido-dong, seoul, south korea
Marketing StrategyThe marketing objective of LGEI, aims to focus on the premium segment of the market that fetches greater margin opposed to volumes. LG aims to utilize their core capabilities of product leadership, market leadership and people leadership and enhance their corporate culture of team work and fun workplace to achieve their mission of becoming " 2 by 10" that is, double our sales volume and profit by year 2012. The company wants to capture 50% market share, by the end of 2012.LGEI, aims is targeting a turnover of Rs.15,000 crore by this year and proposes to close the current calendar year with a turnover of Rs.7,000 crore. The company has recorded a 119 per cent volume growth in the flat TV segment during the period, 61 per cent in refrigerators, 21 per cent in washing machines, 45 per cent in microwaves and 75 per cent in air conditioners. The company wants 13% sales growth in each segment in this year as compared to last year.
The Marketing Background Worksheet
SegmentationPEST AnalysisPolitical Factor: - High Import Duty Plants in tax- incentive areas like Greater Noida and Pune. Export promotion schemes of the Indian Government like EPCG (Export Promotion Capital Goods scheme) and EOU (Export Oriented Unit) status.Economic factor: - Increase in per capita income Growing GDP High disposable income Increase in spending power.Socio-cultural factor: - They are manufacturing eco-friendly product. Increasing life style.Technological factor: - Improvement in technology made the electronic product cheaper. Quality of product has been increased.
LG has segmented its market on the basis of following: Demographic
Income Occupation
Geographic Tier 1 cities Tier 2 cities
Psychographic Life style Personality
Behavioral Value Benefit sought·
TargetingLG has targeted its market on the basis of the product that they are offering to the consumer. They are targeting: Upper class segment Upper end they are targeting to those consumer who are more concern of life style product. Their product is more of upper mid class and premium segment, so their target audiences are those consumers, who want quality product as the best price.They have LCD and Plasma Television and TV DIOS refrigerator for premium segment. They are also targeting those consumers, who are more concern of safety and health issues. LG is now going to shift over to mid class segment and want to mass market their product.
PositioningWith the tagline Life’s Good; LG positioning is to differentiate their products on the basis of technology which appealed to the consumer on the basis of health benefits. With the tagline ‘Life’s good’ its corporate philosophy to make people lives better, convenient and healthier. Their positioning strategies are technologically intelligent and futuristic. As they are in upper and premium segment, so they are featuring that their brand is young, vibrant and premium. LG has differentiated its product using technology and health benefits. The CTV range has ‘Golden Eye Technology’ air-conditioners have the ‘Health Air System’ and Microwave ovens have the ‘Health Wave System’. They are talking about the value and changing lifestyles in their positioning strategy.
.
CHAPTER 3
Financial Highlights
Parent Consolidated2011 2012 2013 2011 2012 2013KRW bn
KRW bn
KRW bn
KRW bn
KRW bn
KRW bn
Sales 28,097
25,427
28,079
57,740
55,123
58,140
Operating Profit (Loss) -264 46 -214 332 1,217 1,285
Net Profit (Loss) -278 -352 -189 -479 103 223
FINANCIAL DATA
Total Assets 24,199
23,832
24,971
35,519
34,766
35,528
Total Liabilities 13,704
13,809
15,138
22,363
22,060
22,839
sTotal Shareholder's Equity
10,495
10,023 9,833 13,15
612,70
612,68
9
Income Statement
Balance Sheet
Income Statement
Parent Consolidated2011 2012 2013 2011 2012 2013KRW bn
KRW bn
KRW bn
KRW bn
KRW bn
KRW bn
Sales 28,097
25,427
28,079
57,740
55,123
58,140
Cost of goods sold 23,053
19,986
22,650
45,151
42,252
44,721
Gross profit 5,044 5,411 5,429 12,589
12,870
13,420
SG&A 5,308 5,395 5,643 12,258
11,654
12,135
Operating income (Loss) -264 46 -214 332 1,217 1,285
Non operationg income (Loss) -138 -286 -33 -803 -668 -708
Net profit (Loss) before tax -402 -240 -247 -472 549 577
Tax -124 113 -58 7 446 354Net profit (Loss) -278 -352 -189 -479 103 223
Financial Ratios
Financial RatiosParent Consolidated
2011 2012 2013 2011 2012 2013
Operating Profit MarginNet Profit MarginROAROE
-0.9%-1.0%-1.2%-2.7%
0.2%-1.4%-1.5%-3.4%
-0.8%-0.7%-0.8%-1.9%
0.6%-0.8%
nana
2.2%0.2%0.3%0.8%
2.2%0.4%0.6%1.8%
Liabilities -to- Equity RatioDebt -to- Equity RatioNet Debt- to- Equity Ratio
130.6%55.5%42.5%
137.8%52.5%41.4%
154.0%
60.4%47.2%
170.0%
73.6%52.4%
173.6%
68.0%50.8%
180.0%
72.6%51.7%
Sales GrowthOperating Profit Growth
-3.9%nm
-9.5%nm
10.4%nm
nana
-4.5%266.9
5.5%5.6%
Balance Sheet
Parent Consolidated2011 2012 2013 2011 2012 2013KRW bn
KRW bn
KRW bn
KRW bn
KRW bn
KRW bn
AssetsCurrent Assets
24,199
8,150
23,832
7,548
24,971
7,853
35,519
17,280
34,766
16,308
35,528
16,325
Cash and cash equivalentsAccounts receivableInventoryOther
1,3645,077
886823
1,1144,693
922819
1,2984,697
917941
2,7817,3395,3221,838
2,1857,3335,0751,716
2,6457,1174,8391,724
Non-current Assets 16,046
16,282
16,282
18,240
18,458
19,203
InvestmentPP&EIntangible assetsOther
7,9655,191
9161,974
7,9505,437
9621,933
8,0066,0451,0861,145
4,2529,5931,1683,226
4,1839,8891,2223,163
4,33010,34
21,3643,168
Liabilities 13,704
13,809
15,138
22,363
22,060
22,839
Accounts payableDebtOther
3,8545,8264,025
3,9965,2644,549
4,3275,9424,869
5,7519,6806,932
5,6278,6387,795
5,6919,2117,937
Equity 10,495
10,023 9,833 13,15
612,70
612,68
9
Net Proft GrowthTotal Assets Turnover
nm1.2
nm1.1
nm1.2
nmna
%nm1.6
nm1.7
Fiscal year is October-September. All values USD millions.
Sales/Revenue 1.9B 1.74B 1.6B 1.1B 1.02BCost of Goods Sold (COGS) incl. D&A 1.53B 1.4B 1.25B 783.38M 834.25MCOGS excluding D&A 1.49B 1.36B 1.21B 742.04M 784.97MDepreciation & Amortization Expense 37.04M 37.91M 39.76M 41.34M 49.28MDepreciation - - - - -Gross Income 367.35M 339.5M 350.81M 316.12M 183.63M
2009 2010 2011 2012 2013SG&A Expense - - - 0 -Research & Development 0 0 0 0 -Other SG&A - - - 0 -Other Operating Expense 243M 230.65M 234.16M 221.02M 60.08MUnusual Expense (735,000) (270,000) (1.63M) (11.65M) 29.23MEBIT after Unusual Expense 735,000 270,000 1.63M 11.65M (29.23M)Non Operating Income/Expense (1.54M) (2.88M) (996,000) 5.83M 1.63MNon-Operating Interest Income 2.97M 1.74M 1.14M 1.31M 1.09MEquity in Affiliates (Pretax) 0 0 0 0 0Interest Expense 29.75M 26.85M 25.42M 24.95M 26.7MGross Interest Expense 29.75M 26.85M 25.42M 24.95M 26.7MInterest Capitalized - 0 0 0 0Pretax Income 96.77M 81.13M 93.01M 88.93M 70.34MIncome Tax 32.51M 27.09M 29.18M 26.29M 17.58MIncome Tax - Current Domestic 14.57M (5.66M) 5.3M - (4.17M)Income Tax - Current Foreign 0 0 0 - (301,000)Income Tax - Deferred Domestic 18.16M 32.97M 24.1M - 19.93MIncome Tax - Deferred Foreign 0 0 0 - 2.34MIncome Tax Credits 219,000 216,000 213,000 - 213,000Equity in Affiliates 0 0 0 0 0Other After Tax Income (Expense) 0 - 0 (340,000) (245,000)Consolidated Net Income 64.26M 54.04M 63.83M 62.3M 52.51MMinority Interest Expense 0 0 0 0 0
2009 2010 2011 2012 2013
5 YEARS REVENUE
2009 2010 2011 2012 2013Net Income 64.26M 54.04M 63.83M 62.3M 52.51MExtraordinaries & Discontinued Operations 0 0 0 0 0Extra Items & Gain/Loss Sale Of Assets 0 0 0 0 0Cumulative Effect - Accounting Chg 0 0 0 0 0Discontinued Operations 0 0 0 0 0Net Income After Extraordinaries 64.26M 54.04M 63.83M 62.3M 52.51MPreferred Dividends 15,000 0 0 0 0Net Income Available to Common 64.25M 54.04M 63.83M 62.3M 52.51MEPS (Basic) 2.93 2.43 2.89 2.80 2.03Basic Shares Outstanding 21.89M 21.99M 22.1M 22.26M 25.88MEPS (Diluted) 2.92 2.43 2.88 2.79 2.02Diluted Shares Outstanding 22.02M 22.04M 22.17M 22.34M 25.95MEBITDA 161.39M 146.76M 156.42M 136.43M 172.83M
AWARDS & RECOGNITION
ASIAYear
Received
Awards & Recognition Organizer
2008. 04. The Vietnam Labor Medal Government of Vietnam
2008. 10.
Selected as the Most admired Multi-National Company in India 4Ps(Indian Magazine), India
2008. 12. Brands of Year Award 2008 Standards & Quality Control
Authority, Pakistan
2008. 12.
Investment Award 2008(Selected as the top foreign enterprise) Government of Indonesia
2009. 01.
Presidential Award for the Best Design in Indonesia Government of Indonesia
2009. 10.
LG air-conditioners were selected as the Best But Product inAustralia
Australia Consumer Association
2010. 04.
Indonesia CIC, Best call Center 2010 Award
Center for Customer Satisfaction and Loyalty
2010. 08.
Thailand Subsidiary, Trusted Brand Award 2010
The Reader’s Digest Trusted Brand Award
2010. 09.
Selected as the most trusted brand in Indonesia The Economic Times
2010. India subsidiary, National Energy India Ministry of Power
12. Conservation 2010
2011. 10.
Named by Consumers as the Best Brand - India Subsidiary CNBC, India
Crisil upgrades LG ratings to (AA+)
MUMBAI: Rating agency Crisil has upgraded its ratings on LG Electronics India to "AA+/Stable" from "AA/Positive" to reflect its strengthening leadership position across most consumer durable segments in its diversified product portfolio and improving operating efficiencies.
The agency has also reaffirmed the ratings on Samsung India (P1+), Whirlpool India (AAA(fso)/Stable /P1+), Sony India (P1+) and Philips India (AA/Stable), Crisil said in a release here on Thursday.
These ratings reflect strong brand equity and the management, financial, product and technical support that the companies receive from their respective parents, it said.
The consumer durable industry continues to witness increasing competition and overcapacity, leading to continuous price erosion, and, thereby pressure on margins and profitability.
However, Crisil-rated consumer durable companies have initiated measures like new product launches, targeting niche segments and improving operating efficiencies to counter the pressure on margins, the agency added.
CSR 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, help those 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.
EXTERNAL ENVIRONMENTEnvironmental IssueLG Electronics constantly researches and introduces a full range of innovative, greener products and services, and continue to be a leader in developing green innovations. We are always looking for innovative ideas and technologies which will support our efforts as, a leading company in practicing environmental management
Environmental VisionLG Electronics’ Environmental Vision
LG Electronics will realize Global Top Company in the EESH area through corporate level EESH management system operation, energy efficiency optimization, eco-friendly process & product development, business site safety & health, and employee health improvement activities. Also, by providing differentiated customer value, LG Electronics will pursue earth environment preservation, sustainable social advancement, and improve the quality of life for stakeholders.
LG Electronics constantly researches and introduces a full range of innovative, greener products and services, and continue to be a leader in developing green innovations. We are always looking for innovative ideas and technologies which will support our efforts as, a leading company in practicing environmental management. Since it first announced its environmental vision in 1994, LG Electronics has been practicing environmental management throughout the life-cycle from development and purchasing through production and use to disposal, and reducing the environmental impacts that occur during business activities. Furthermore, LG Electronics make every effort to provide better quality to consumers and to contribute to more sustainable communities.
Low Carbon Green Management
LG Electronics has established a low carbon green management system to provide low carbon value to customers through voluntary greenhouse gas (GHG) reduction. Throughout its activities, LG Electronics is endeavoring to pursue the coexistence of the two major values: creating value for customers and stakeholders, and protecting the natural environment.
LG Electronics' Position on Climate Change
LG Electronics has a social responsibility as a global leading company to actively tackle the environmental issues including climate change that arise from greenhouse gas (GHG) emissions. LG Electronics is implementing various strategies to develop technologies that will reduce GHG emissions from its factories. LG Electronics will also work towards minimizing indirect GHG emitted from using our products by continuously raising the energy efficiency of their products.LG Electronics is fully committed to the proposal set by the UN and other accountable organizations to "reduce CO2 emissions by at least 50% below 1990 levels by 2050 in order to relieve global warming", and upholds this requirement. And LG Electronics supports that global GHG emissions are to peak by 2015 and supports mandatory cuts in domestic emissions in industrialized countries (Annex I countries of Kyoto Protocol) of at least 30% by 2020. LG Electronics devising a plan to relieve global warming that will involve the company's entire business value chain. As part of this plan, LG Electronics has set up the GHG inventory from 2008 and analyzed its products' overall CO2 reduction based on the production of energy efficient products.
ACTIVITIES OF PRODUCTION SITES
- EnergyLG Electronics has integrated various energy consumption indicators into GHG emissions and reductions and manages them accordingly. Also it has obtained the ISO 50001 (Energy Management Systems) certification for all production sites in Korea and key R&D facilities to facilitate the enterprise-wide reduction of energy consumption.In 2011, LGE reduced 102,000 tons (7%) of GHG emissions associated with production compared to 2008 through such activities as production process innovation, facility/operation efficiency improvement, renewable energy use, etc.
Major activities for reducing energy consumption include: expansion of renewable energy facilities and investments (solar power generation systems at production sites, waste heat recovery systems); adoption of high efficiency equipment (high efficiency cooler and cooling towers for Plasma Display Panel production); implementation of the building management system (BdMS); and improvement of energy consumption and utility equipment efficiency.
- EnvironmentGOAL (Waste & Toxic)
Waste Management
In compliance with the EESH policy, LGE has been making commitment to zero waste society, minimizing waste and maximizing recycle of resources.In 2011, we had undertaken initiatives such as improving production processes, reducing product wrappings, and cutting waste to reduce the total amount of waste. As a result, we had succeeded in reducing waste by
more than 10% compared to the year before. From 2012, we have set a target to reduce the release by 5% every year with a comprehensive management system.
Pollutant Release and Transfer Registers (PRTR)
As a dedication to minimizing environmental pollution caused by our business, we are monitoring the amount of harmful chemicals released during production or use of products and striving for reducing the amount.In 2011, we had carried out a number of activities to reduce pollutant release, including reusing waste acid in wastewater treatment, changing wastewater treatment chemicals into eco-friendly ones, and improving the process to cut chemical usage. From 2012, we have been aiming at cutting discharging amount by 5% every year.
WASTE
LGE is making its best effort to minimize the environmental impacts from its production sites by continuously innovating production process and investing in environmental equipment/facilities.
At Gumi Ⅲ Plant, odor control facilities and aeration tank covers were installed to address odors from the waste water treatment plant and also prevent electricity leaks and corrosion of measuring instruments and building structures.Additionally, LGE is making diverse efforts, including improvements for air pollutants and waste management process, to prevent environmental pollution.
* Mexico (Reynosa, TV Factory) * KOREA (Pyeongtaek, TV R&D center)
TOXIC1) (to land, water, air)−No toxic chemical releases to land, water, air−No toxic chemicals listed in EPA TRI1) Mexico (Reynosa, TV Factory), KOREA (Pyeongtaek, TV R&D center)
- SafetyLG Electronics takes worksite safety very seriously and pursues every possible precaution to prevent accidents from occurring at its production sites and diligently prepares to handle emergency situations. At ChangwonⅡPlant, LGE introduced a Behavior-Based Safety (BBS) program to prevent accidents caused by human error.This safety program detects human error in advance and prevents any accidents from happening, and will be implemented at all LGE production sites in Korea.
- Fire preventionLG has adopted history card and management manual systems for fire prevention facilities to manage facilities in an optimal way. LGE also issues a Non-Conformance Report card to ensure the proper operation of the Standard Operating Procedure(SOP) monitoring system. All employees are trained on the usage of the fire extinguisher which is specially designed for training. In addition, employees at the Fire Prevention Center are dispatched to 119 Emergency Rescue Centers for
training on fire extinguishing, emergency rescues and evacuation activities. Moreover, headquarters conducts unannounced drills so that employees can be always prepared for accidents and be aware of response measures. Every worksite has established a cooperative relationship with the local fire department for the safety of local community. For example, the Gumi site has provided direct support such as dispatch of fire engines for five times in 2010. In addition, LGE also conducts regular training to prepare against leakage of hazardous substances at each worksite. Through such activities, LGE is enhancing employees’ awareness on characteristics of hazardous substances and training them for urgent cases.
REGULATORY POLICIESAT THE STATE AND NATIONAL LEVEL AND THEIR IMPACT ON THE INDUSTRY
1. External Environmental Analysis LG- Televisions 2. PEST Analysis Political The factors that affect LG include taxation policies,
foreign trade regulations, and trade policies. LG must follow the compliances given by the government like the Environmental Protection Agency. By following these policies in South Korea, the Korean government has made it possible for LG to grow into one of the major players in the industry. Economic LG biggest economic factor is price wars in the saturated market. LG has used competitive strategies like localization. They have begun to adapt to different markets. Making it easier to grab consumers attention with products that are easier for their everyday living. In India, LG opened an manufacturing facility that begun with the R&D looking at what competitors have already brought to the market and made their product unique and geared towards the consumers needs.
3. PEST Analysis Social LG works with UN World Food Program, providing meals and teaching facilities for 24,000 people LG has opened school called LG Hope The have equipped 15,000 households in 12 LG Hope Villages in Ethiopia Provide aid to survivors of National Disasters Provides relief funds to people affected by the Haitian Earthquake, Pakistani flood, and the Russian wildfires. Technological This is LG most important factor Has always been a leader in innovation from the 1980s LG is expanding in 3G Network technology In India, Reliance in corporation with LG has 3G plans made for smartphones LG introduced it LG Optimus 3D to the market in India
4. Porter’s 5 Forces Analysis- 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 (Porter-Five Forces Model, 2009)
Rivalry Among Competitive FirmsRivalry among competing firms is the most powerful of the five competitive forces.The ongoing war between firms competing in the same industry for gaining customer share to increase revenues and profits. The competition is more intense if firm pursue strategies that gives competitive advantage over the strategies pursued by rivals.Developing new strategies is more easier than retaining the uniqueness of the strategies to gain competitive edge over rivals in the industry. Changes in strategy by one firm may be met with retaliatory countermoves, such as lowering the prices, enhancing quality,adding features,providing services, extending warranties and increasing advertising.Examples,- In telecommunication industry firms are lowering their prices to increase consumer call ratio by minimize per minute profit margin but increasing overall company revenues.- In the past few years number of new features were added in the mobiles now it not only give the functionality of cell phone but able to take pictures, make videos, watch streaming and use Internet. The firms like Nokia, Siemens, Samsung and other are following each other strategies to minimize the differentiation in the product so customer can easily switch brands.
- In the past television companies offer maximum one year warranty but now competition is tough other market player Samsung, LG, Haier, Philips and others enter in the market with their high quality products to compete Sony, that’s the reason customer is getting more services in the form of extended warranty periods.- Pepsi Vs Coca Cola are competing by increasing advertising and offering new beverages in the market.We discuss about offline business when it comes to online business on Internet the competition is more fierce, consumer get more control over its purchasing by sitting at home on computer and comparing the similar and substitute products on bases of features and prices.Amazon.com is the best selling online book store offering huge library containing millions of books on variety of subjects. People come to amazon because they enjoy user friendly design, products, books and search capability of the site but when it come to purchase the product customer move to other site such as buy.com for purchase on discounts. Buy.com CEO says, ” The Internet is going to shrink retailers margins to the point where they will not survive.”Examples,- Dell.com offer computers and laptops of high quality at low prices as compared to the competitors.- EBay.com is a place where people like to go to purchase products online at low price.The rivalry among competing firm increase as the number of competitors increases, as competitors more equal in size and capability, as demand for the company products decline, products are undifferentiated, product prices decline,consumer brand switching cost is less, number of supplier available for raw material, low price substitute products are available and entry into market is easy due to less constraints.As rivalry among competing firms intensifies, industry profits decline, in some cases to the point where an industry becomes inherently unattractive.
Potential Entry of New CompetitorsPotential entry of new competitors is also the factor to intense the competition in the industry. Larger the pool of new entrants result in more changes of intense competition. Barriers to entry, however can restrict the firms from entering the market, more number of entry barriers will make it difficult for the new entrants to exploit the opportunity of new market.
Barrier to entry, however, can include the need to gain economies to scale quickly, strong customer loyalty, strong brand preferences, large capital requirements, lack of adequate distribution channels, government regulatory policies, tariffs,lack of raw access to raw material,possession of patents, undesirable locations, counterattack by entrenched firms and potential saturation of the market.If existing firms producing at economies to scale then new entrants must ensure to makes it entry into the market with large production scale capability to lower it fixed and variable cost per unit to compete with the competitors product otherwise new entrants will face exceeding cost problems. Government policy creates hurdles for new entrants by heavy taxes and interest rates. New firms must get to know the Government regulations and policies before making entry decision into the country.Despite numerous barriers to entry, new firms sometimes enter industries with higher-quality products, lower prices and substantial marketing resources. The strategist’s job, therefore, is to identify potential new firms entering the market, to monitor the new rival firms strategies to counterattack as needed and to capitalize on existing strengths and opportunities.
Potential Development of Substitute ProductsFirms mostly monitoring the trends within the industry to track the strategies but competition not only arise within the similar industry but also in different industry. Companies in other industry offer products with similar features and functionality or even better act as substitute for the products. For Instance, the producers of eyeglasses and contact lenses are facing mounting competitive pressures from growing consumer interest in laser surgery. Newspaper are feeling competitive force of the general public turning to cable news channels for late-breaking news and using Internet sources to get information about sports results, stock quotes, and job opportunities.The firm face intense competition by substitute products producers firms when the customer cost of switching is lower, substitute product is better in quality and functionality , end user grow more comfortable with using substitutes. The competitive strength can be determine by market share, sales pattern, producers adding capacity for more production, rise in profits.
Bargaining Power of SuppliersSuppliers and producers relation always matter specially in manufacturing industries. Suppliers play have an important role in production of good and services, better the raw material better the final product. Bargaining power of supplier effect the intensity of competition especially if there are huge
number of supplier, less availability of raw material and the cost of switching supplier or raw material is high. These attributes in the industry gives power to the supplier to enforce term and conditions on manufacturers and charge high cost of raw material.
For Examples,The bargaining power of Microsoft and Intel in more because they are the huge suppliers of software and hardware.Microsoft enforce computer manufacturers to load Windows in their computers and place their logo on laptops,desktops and server machines. Intel on the other hand also demands computer manufacturers to place their logo on machines using Intel processor. Intel and Microsoft enforcing their terms and conditions also charging high cost from the computer manufacturing companies.Manufacturer needs to build relationship with the supplier to improve the quality and reduce the prices of the product by working together for improvement in processes and reduce time to market by implementing just-in-time inventory.
For Example,Dell computer known for low cost and best quality computer,laptop and server manufacturer in the industry. The key behind dell success is maintaining better relationship and collaboration with the supplier of computer hardware and software.To gain control or ownership over its suppler backward integration strategy is adopted by most of the companies.This strategy will help both suppliers and companies to work together for improvement in product quality, reduce cost, reduce time to market and earn good reputation in the industry. Bargaining Power of ConsumersConsumers are the final user of the products, performance of the companies totally depend upon the consumers. Bargaining power of consumers is more especially when they are huge in number and consumers purchase in large quantity. Rivals firms offer discounts, warranty and services to switch the consumer from one brand to another in same industry.The bargaining power of consumers is also more when products are undifferentiated and widely available. In this case consumer can ask for more discounts, extended warranty and services. As the satisfaction level of consumer goes up more the intensity level of competition increases. Firms should monitor the competitors strategies and also take care of the consumer like and dislike by maintaining good relation by implementing CRM processes in the company.
5. Threats of New Entrants (Low) Expensive high fixed cost Well known existing competitors in the market Constant evolving technology Threats of Substitutes (Low) Products are constantly developing Increase in switching costs Technology advancement results in the decline of substitutes
6. Bargaining Power of Suppliers (Low) Product is standardized Uses components supplied by various suppliers Bargaining Power of Buyers (Moderate) Many competitors Uses differentiation to make products more technologically advanced Quality of products stand out in the market
7. Competitive Rivalry (High) Many companies competing for the consumer’s dollar LG is one of the top 3 competitors in the telecommunications industry Competitive Rivalry
8. SWOT Analysis Strengths LG’s products are all over the world and well recognized. LG’s products have good quality and have good design LG focus on developing new products and satisfy their loyal customers Weaknesses LG’s products have some electronic issues Most of LG’s products are designed by people from other countries and LG does not have their own training system to cultivate new people
9. SWOT Analysis Opportunities Improve the quality of their products Keep invest on the technology and training’s development in order to satisfy its customers Start meeting the low-income customers group Threats LG’s products are short of innovation Price is not attractive to people LG does not have enough talented people to develop their products
10. Two Implications that the Environmental Variable could have on Sales Volume Political Any change in policies or foreign trade regulations will have a very negative impact on sales volumes. It will cause consumers to pay more for products There is a possibility that the change of government can have an effect from the support of LG’s Research and Development. Economic Things that my affect sales volume from a economic stand point is a sudden change in consumers income. If there was a recession, LG would have to look into how they can make products more affordable for consumers, especially if there may not be a change. Any new competitors entering the market will make a difference also.
11. Two Implications that the Environmental Variable could have on Sales Volume Social LG went into the market in India with all the right tools. They
adapted to the market and immediately began to be the innovators of that market. Bringing products that shaped their market. They also built manufacturing plants, which increased employment and gave back to their society. Technological LG is a leader in it industry. In both electronics and telecommunications all over the world. Using 3G networks as a stepping stool in countries that have not been exposed to the world of Smartphones. They are now working on the speed of technology transfer. Using modems in Hope Villages and allowing countries that do not have this technology the way to explore.
12. To Enhance Sales Volume Politcial LG can build manufacturing companies in areas where they have noticed their profits are steady. By doing this they will not have to ship their products to countries that are far, therefore avoiding certain trade barriers. Economic LG can construct a cost competitive advantage. By doing this they can be a low-cost competitor in an industry while keeping their profit margins satisfactory, in order to keep their sales volumes from dropping.
13. To Enhance Sales Volume Social Within the social factor, LG has been able to achieve a higher sales volume in foreign countries such as India. In order to enhance their volume to a higher potential they should continue the same pattern across the globe. Technological LG should continue being a leader in the electronics and telecommunications industry. By constantly upgrading their technology and being the first to enter the market with it, they are able to maximize their sales volume.
14. 1 – Electronic industries LG Electronics LG Display LG Innotek LG Micron LG Hiplaza 2 – Chemical industries LG Chem LG DOW Polycarbonate LG Household & Health Care 3- Telecommunications and services LG Telecom LG Leader LG Dacom LG Powercom Company Market Segments
15. LG plays a price card in the television industry with its competitors like Philips and Samsung. The price war doesn’t seem like a good strategy for a company to win their customers. We think LG should focus on new technology’s development and pay attention to its customers’ feeling base on its products. Internet TV is a good example to explain that why developing the technology is so important, it will significantly increase the sales. LG’s Competitive Strategy
KEY INITIATIVE FOR PROMOTION OF THE INDUSTRY
LG Electronics Invests In Youth And Future Student Athletes As Part Of 2014 NCAA® March Madness® Initiatives LG Coaches Cook-Off™ to Benefit Local Schools During NCAA Final Four® Weekend; Competition to Feature Fan-Favorite NCAA Coaches Drew and Kennedy
ENGLEWOOD CLIFFS, N.J., March 17, 2014 /PRNewswire/ -- LG Electronics USA, an official NCAA Corporate Partner, will be back at the Men's Final Four (April 5-7 in North Texas) to host its annual fan-favorite LG Coaches Cook-Off™ competition. This year's participants include Baylor University head coach Scott Drew and Texas A&M head coach Billy Kennedy, who will be helping North Texas elementary school coaches compete for a grant for their school to promote fitness.Giving back to the local community, LG collaborated with Project Fit America, an organization dedicated to helping schools create opportunities for children and young adults to be active, fit and healthy through a unique physical education grant program. Project Fit America issued an open call to North Texas schools to apply to participate in the cooking competition for a chance to receive support from LG for new indoor and outdoor physical fitness facilities and a curriculum to help physical education teachers incorporate them in their lessons. "LG's March Madness focus this year is 'Do Game Day Right.' To us, that has many meanings, whether it's investing in future student-athletes or delivering the ultimate game day experience through our products," said William Cho, president and CEO of LG Electronics USA. "We wanted to ensure our presence at the Final Four lasts beyond just a few days, so helping local student athletes have access to fitness facilities and education for years to come is a natural fit." Numerous schools made inquiries to apply prior to the closing date. By March 19, Project Fit America will identify the four finalists from the submissions and invite their coaches to participate in LG's signature event – the LG Coaches Cook-Off on April 5 – which will be a key part of LG's on-site activities at this year's Men's Final Four. While the winning coach's school will receive the LG Project Fit grant, each finalist school will receive a variety of LG products, including ENERGY STAR certified computer monitors, HDTVs and refrigerators."At Project Fit America, we're passionate about the positive impact physical fitness can have in fostering healthy living and building important life skills," said Stacey Cook, executive director at Project Fit America. "LG shares our passion, and we're honored to work with them to help North Texas students
have access to the proper fitness facilities to build the skills needed for a bright future."As with previous LG Coaches Cook-Off competitions, distinguished NCAA coaches have agreed to put their culinary skills to the test for a good cause. With both Drew and Kennedy currently coaching at Texas schools, their competitive drive will be at an ultra-high level.Each team will have 30 minutes to cook a selection of tasty game day treats using a full suite of high-performance appliances in the LG Kitchen at the Tip-Off Tailgate presented by Infiniti at AT&T Stadium. LG appliances at each team's disposal include:
LG's French-Door refrigerator with its innovative Door-in-Door™ feature, which allows easy access to commonly used items without opening the main refrigerator door, and its ENERGY STAR® certification meaning it helps save energy and money.
LG's single-oven electric range with quicker preheating using an infrared heating element and LG's EasyClean™ technology, which allows cleaning in as little as 20 minutes using only water*.
LG's high-performance five-burner, 30-inch radiant cooktop as well as an LG microwave with convection technology for optimal cooking performance.
LG's ENERGY STAR® certified Steam Dishwasher with EasyRack™ for simple loading and TrueStream™ technology, which features cleaning performance that virtually eliminates the need to prewash dishes. Fans attending the Tip-Off Tailgate will be able to watch the coaches' progress during the culinary showdown on LG's 55-inch class (54.6-inches measured diagonally) LED Smart TVs in high-definition picture quality as the contestants scramble to combine ingredients
Salil Kapoor is LG Electronics' marketing headTNN Jul 2, 2004, 01.29am IST
NEW DELHI: LG Electronics has effected yet another change in its head of marketing portfolio.Salil Kapoor, who was heading the air-conditioner division in LG, has been promoted as the head of marketing, and the incumbent Anil Arora has been "repositioned" as the head of the refrigerator business. Concurrently, the company has also decided to have a separate team to handle its premium products and is splicing up its ad account for these products.
Mr Kapoor comes with a strong track record in the AC business. The AC division was among the first in LG to become number one in its segment in the Indian market in a short span of time, and has maintained its grip.
Incidentally, this is the sixth time LG has changed its marketing post, since it made a re-entry in the Indian market in 1997. Anil Arora had taken over as the marketing head from Ganesh Mahalingam — who headed both sales and marketing — in June last year.
As reported by ET then, the post of sales and marketing head was split up and Mr Mahalingam was made the sales head. Eventually, he quit the company and was replaced by Girish Rao, who was roped in from BPL. Given LG's history, the change was expected since the last few months.