TERM PAPER

OF

STRATEGIC

MANAGEMENGT Submitted to:

(LOVELY INSTITUTE OF MANAGEMENT)

MBA –B (3rd Sem.)

(Session 2009-2011)

Date- 13 Nov 2010

Submitted to: Submitted By:

Miss Anumeha Jha Suman Tiwari

(Lecturer in Management) Roll No. RT1902A-22

Reg. No.10904478

Contents

ACKNOWLEDGEMENT..........................................................................................................................3

REVIEW OF LITERATURE.....................................................................................................................4

COMPANY: LG.........................................................................................................................................5

QUALITY INNOVATION.........................................................................................................................9

STRATEGIES ADOPTED BY THE COMPANY.................................................................................10

KEY STEPS TOWARDS STRATEGIC PLANNING...........................................................................10

PRODUCT OF LG..................................................................................................................................12

BCG MATRIX..........................................................................................................................................13

BCG MATRIX OF LG COMPANY IN COMPARISON TO OTHER ELECTRONIC COMPANIES..................................................................................................................................................................15

BCG MATRIX OF LG COMPANY ACCORDING TO ITS PRODUCTS.........................................16

SWOT ANALYSIS OF LG COMPANY................................................................................................16

PRODUCT LIFE CYCLE OF LG...........................................................................................................19

CONCLUSION........................................................................................................................................20

BIBLIOGRAPHY.....................................................................................................................................21

ACKNOWLEDGEMENT

I would like to confer my heartiest thanks to my coordinator of Strategic

Management, Miss Anumeha Jha for giving me the opportunity to excel and

work in the field of Strategic Management, and especially its practical

applications like different strategies adopted by companies at different

situations. While preparing my term paper I got to have an in depth

knowledge of practical applications of the theoretical concepts and definitely

the things which I have learned will undoubtedly help me in future, to

analyze many processes going on in our economy.

I would also like to thank all those people who directly or indirectly helped

me in accomplishing this project.

REVIEW OF LITERATURE

Kim. R, “Setting cost targets”(2008),With LG's cell phones, cost targets are set by the LG's mobile communication business procurement team after meeting with the product planning division and with R&D. There are target costs for the baseband processors, memory chips and other semiconductors in the phone. "We want to meet the targets or do better than the target costs," says Tae Woo Kim, vice president, development procurement team for mobile communication. "At the end of the day we want to reduce cost," he says. Kim says much of what procurement engineers do in new product development with mobile phones concerns semiconductors. That's because 80–85% of LG's spend in the mobile communications business is for semiconductors. LG makes a variety of smart phones and other cell phones such as the Chocolate, Incite and Shine.

Kim. R, v” Mapping technologies” He says procurement's involvement in product development begins with the technology roadmap meetings. LG procurement engineers have with suppliers to discuss what technologies suppliers may have in the works that might be used in future LG phones. Kim says buyers have technical meetings to discuss new technologies and compare technology roadmaps to see how they match up. Besides new technology that suppliers may be working on, procurement engineers also talk to suppliers about technology issues such as packaging changes that may be coming for semiconductors, migration of chips to higher densities and power consumption issues.

COMPANY: LG

History of company

The 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 acronym. Before the

corporate Name change to LG, household products were sold under the Brand name of Lucky,

while electronic products were sold under the brand name of Gold Star. The Gold Star brand is

still perceived as a discount brand.

In 1995, Gold Star was renamed LG Electronics, and acquired Zenith Electronics of the United

States.

Global Operation

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

policy. As a result, LG Electronics controls 110 local subsidiaries in the world with around

82,000 executive and employees.

LG Group

1. LG.Philips LCD

2. LG Chemical

3. LG Telecom

4. LG Powercom

5. LG Twins

6. LG Dacom

Business areas and main products

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

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.

The brand platform:-

The LG brand is composed of four basic elements –

o Value

o Promise

o Benefits

o Personality

The Brands core Value that never changes.

Trust,

Innovation,

People

Passion

The benefits that are consistently delivered to the customer includes

Reliable products

Simple design

Ease of use

Extraordinary Experience

Personality describes the human characteristic that are expressed to the

customer through

Trustworthy,

Considerate

Practical,

Friendly

The Internal Culture of LG:

LG practices four cultures

Learning Culture

Boundary less Environment

A Carrier

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.

Product Leadership

We are focusing on six development areas to become the product leader.

1. New Machine

2. Reliability

3. Conventional Installation

4. Environment Friendly Product

5. Low Noise & Vibration

6. Energy Saving

QUALITY INNOVATION

The policy of quality assurance is to provide customers with utmost satisfaction by supplying

zero defects.

LG proceeds in a hierarchal manner. It is named as “LG WAY”.

From top to bottom:

No.1 LG – is the VISION

“Jeong-DO” Management is LG’s unique application to ethics. LG will succeed through fair

management practices and constantly developing our business skill.

a) Honest with our customer

b) Providing great values to customer through constant innovation & and development.

c) Equal opportunities

d) Equal Treatment

Management Principle - Creating value for customer

STRATEGIES ADOPTED BY THE COMPANY

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.

KEY STEPS TOWARDS STRATEGIC PLANNING

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.”

VISION

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

better and easier—happier, even—through increased functionality and fun.

GOAL

To deliver on our promise to keep ‘Accelerating Opportunity’ by providing the best

communication products to enrich the human experience.

PRODUCT OF LG

Business areas Products

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

Home Theatre System, Music system, DVD Recorder/Player,

MP3 & MP4 Player

Home Appliances Room Air Conditioner, Commercial Air Conditioner ,

Refrigerator, Washing Machine, Dishwasher, Microwave,

Vacuum Cleaner

Computer Products Laptop, Personal Computer, LCD monitor, CRT monitor,

Optical Storage Devices

Mobile Phone Premium trend setter phone , Camera Phone , Music Phone ,

Color Screen GSM Handset

BCG MATRIX

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

BCG Matrix can use for resource allocation. The Matrix can be explained are as follows:

STARS (high growth, high market share)

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

they should also generate large amounts of cash.

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

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

will be Cash Cows if market share is kept.

CASH COWS (low growth, high market share)

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

investments which are needed should be low.

o Cash Cows are often the stars of yesterday and they are the foundation of a

company.

DOGS (low growth, low market share)

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

o Watch out for expensive ‘rescue plans’.

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

QUESTION MARKS (high growth, low market share)

o Question Marks have the worst cash characteristics of all, because they have

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

o If the market share remains unchanged, Question Marks will simply absorb

great amounts of cash.

o Either invests heavily, or sells off, or invests nothing and generates any cash

that you can. Increase market share or deliver cash.

BCG MATRIX OF LG COMPANY IN COMPARISON TO OTHER ELECTRONIC

COMPANIES

BCG MATRIX OF LG COMPANY ACCORDING TO ITS PRODUCTS

BCG Matrix

STARS QUESTION MARKS

(Appliances) (LCD)

CASH COWS DOGS

(Mobile Phones (Oil & Gas Division) & Telecommunications)

SWOT ANALYSIS OF LG COMPANY

STRENGTH

Market leader in home appliances segment

Manufacturing unit in tax incentives areas.

Wide range of product categories to tap the consumer of middle class, upper middle class and high class.

LG having the widest distribution network in the industry (47 branches,175 area offices and over 10,000 trade partners).

Shifting to the rural market.

WEAKNESS

Consumer compares LG products only with Samsung and not with any other brand.

OPPORTUNITIES

o Shifting to rural market

o Control over the white goods market, as we know the highest market share in home

appliance market.

THREAT

o The closet competitor of LG ,Samsung is also from South Korea and consumers

LG product with Samsung products

o Price war with its closest competitors, Samsung

o Competitors from Indian brands and from new entrants

The SWOT analysis is explained with help of following diagram:-

PRODUCT LIFE CYCLE OF LG

LG LCD AT INTRODUCTION STAGE (Question Mark).

LG APPLIANCES IS AT STAR STAGE

LG MOBILE PHONES & TELECOMMUNICATION SERVICES IS AT CASH COW

STAGE

LG OIL & GAS DIVISION IS AT DOGS STAGE

CONCLUSION

LG is an industrial conglomerate with interests all over the world and based in India. The group

has 17 manufacturing sites in India and plants in China, Poland, Italy and Mexico. It is also the

third largest picture tube manufacturer in the world.

Today the group operates through key sectors:

Consumer electronics

Mobile Phones

Telecommunication

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

BCG Matrix can use for resource allocation.

STARS (high growth, high market share)

CASH COWS (low growth, high market share)

DOGS (low growth, low market share)

QUESTION MARKS (high growth, low market share)

LG mobile is increasing its market share but that is only due to the sale of low end products. At this point market is flooded with counterfeiting phones coming from china. So they must explore new market or re visit their strategy in their existing markets. It is about time LG focus on its advertising strategy for high end products and has more sophisticated approach. This would improve the brand image of LG mobile in the market. If LG is able to change the perception of the consumers about the brand it will for sure see a growth that is sustainable in the long run as well.

BIBLIOGRAPHY

http://www.lg.com/in/index.jsp

http://www.faqs.org/abstracts/Business-international/LG-HITS-THE-HINTERLAND-

THE-PICTURE-GETS-SHARPER-AT-PHILIPS.html#ixzz0mh9ItA5G

http://www.faqs.org/abstracts/Business-international/LG-TO-EXTEND-REACH-IN-

WEST-ASIA-RIDING-ON-SALES-LG-H1-NET-UP-AT-Rs6897-

CRORE.html#ixzz0mhGjUyOC

http://www.articlealley.com/article_1199524_45.html

http://www.bpotiger.com/2007/11/shahrukh_khan_and_ms_dhoni_tog_1.html

www.highbeam.com/doc/1G1-149628585.html

www.liebertonline.com/doi/abs/10.1089/153056201750279584

www.article.wn.com/...LG_launches_nine_mobile_handsets_eyes_1_mn_sale_monthl