A MINI PROJECT ON STRATEGIC ANALYSIS (BCG MATRIX) OF LG

Submitted towards the partial fulfilment for the requirement of

STATEGIC MANAGEMENT subject in MBA program

Submitted By:
BRAGADEES.A
RA1552001010505
Session: 20152017
Submitted To:
Prof. Pradeep. E
Faculty of Management
SRM UNIVERSITY

SRM UNIVERSITY
SRM Nagar, Potheri.

1.1 STRATEGIC MANAGEMENT OVERVIEW

Strategic Management is all about identification and description of the strategies
that managers can carry so as to achieve better performance and a competitive advantage
for their organization. An organization is said to have competitive advantage if its
profitability is higher than the average profitability for all companies in its industry.
Strategic management can also be defined as a bundle of decisions and acts
which a manager undertakes and which decides the result of the firms performance. The
manager must have a thorough knowledge and analysis of the general and competitive
organizational environment so as to take right decisions. They should conduct a SWOT
Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best
possible utilization of strengths, minimize the organizational weaknesses, make use of
arising opportunities from the business environment and shouldnt ignore the threats.
Strategic management is nothing but planning for both predictable as well as unfeasible
contingencies. It is applicable to both small as well as large organizations as even the
smallest organization face competition and, by formulating and implementing appropriate
strategies, they can attain sustainable competitive advantage.
Strategic Management is a way in which strategists set the objectives and
proceed about attaining them. It deals with making and implementing decisions about
future direction of an organization. It helps us to identify the direction in which an
organization is moving.
Strategic management is a continuous process that evaluates and controls the
business and the industries in which an organization is involved; evaluates its competitors
and sets goals and strategies to meet all existing and potential competitors; and then
reevaluates strategies on a regular basis to determine how it has been implemented and
whether it was successful or does it needs replacement.
2

1.2 EXECUTIVE SUMMARY

Strategic Management is a way in which strategists set the objectives and
proceed about attaining them. Strategic management is a continuous process that evaluates
and controls the business and the industries.
The consumer electronics industry is consolidated as the top 10 players
contribute approximately 52% of total market size. The industry, which is capital intensive
and price sensitive, is a highly dynamic and fast-changing industry. Existing players
includes Panasonic, Sony, Samsung, LG Electronics, Videocon etc
I have done a study on LGElectronics. This conglomerate is a global leader and
technology innovator in consumer electronics, mobile communications and home
appliances, employing 87,000 people working in 113 locations around the world.
The company was originally established in 1958 as Gold Star, producing radio, TVs,
refrigerators, washing machines, and air conditioners. The LG Group was a merger of two
Korean companies, Lucky and Gold Star,
LG has a good brand image. And it has wide distribution network. Sony and
Samsung is its biggest competitor. They pose a threat in the way of LG becoming the
market leader. LG mobile phones at introduction stage (question mark).LG Appliances is
at star stage and LG LCD are at cash cow stage.
LG Mobile has recently launched a new mobile which looks very promising and
innovative i.e. LG GZ. LG are using advertisements to improve their brand image. LG
Electronics received a special award as Global Technology Innovator 2013 on 7th June
2013. One of the best thing about LG is that it is environmental-friendly and focus on the
health of the consumers. They still need to work on the after sale service though.

1.3 RELEVANCE OF THE STUDY

To improve our knowledge about strategic management.

To have an understanding about the LG company, their mission and vision.
To make analysis using BCG Matrix.
To know about their strengths and weakness.
To develop our skill by providing recommendation and conclusion.
To provide brief information about our analysis

1.4 RATIONALE OF THE STUDY

The rationale of the study is to acquire the practical knowledge of BCG matrix analysis
followed by The LG Electronics Company and which of their products are performing
well.

1.5 SCOPE OF THE STUDY

The scope of the study is limited to BCG matrix and SWOT analysis of one company i.e.
LG Electronics Company. This paper includes, history of the company, global operation
and the strategic analysis, structure of the company has been shown.

1.6 SOURCE OF STUDY

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

2.1 THEORY OF STRATEGIC MANAGEMENT

STRATEGIC MANAGEMENT -MEANING
Strategic Management is all about identification and description of the strategies
that managers can carry so as to achieve better performance and a competitive advantage
for their organization. An organization is said to have competitive advantage if its
profitability is higher than the average profitability for all companies in its industry
The word strategy is derived from the Greek word stratgos; stratus
(meaning army) and ago (meaning leading/moving).
Strategy is an action that managers take to attain one or more of the
organizations goals. Strategy can also be defined as A general direction set for the
company and its various components to achieve a desired state in the future. Strategy
results from the detailed strategic planning process. Strategy can also be defined as
knowledge of the goals, the uncertainty of events.

2.2 COMPONENTS OF STRATEGIC STATEMENT

The strategy statement of a firm sets the firms long-term strategic direction and
broad policy directions. It gives the firm a clear sense of direction and a blueprint for the
firms activities for the upcoming years. The main constituents of a strategic statement are
as follows:
1. Strategic Intent: An organizations strategic intent is the purpose that it exists and
why it will continue to exist, providing it maintains a competitive advantage.
2. Mission Statement: Mission statement is the statement of the role by which an
organization intends to serve its stakeholders. It describes why an organization is
operating and thus provides a framework within which strategies are formulated. It
describes what the organization does (i.e., present capabilities), who all it serves
(i.e., stakeholders) and what makes an organization unique (i.e., reason for
existence)
5

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

in future or where it should be to best meet the needs of the stakeholders. It
describes dreams and aspirations for future.
4. Goals and Objectives: A goal is a desired future state or objective that an
organization tries to achieve. Goals specify in particular what must be done if an
organization is to attain mission or vision. Objectives are defined as goals that
organization wants to achieve over a period of time.

2.3 STRATEGIC MANAGEMENT PROCESS - MEANING, STEPS AND

COMPONENTS
The strategic management process means defining the organizations strategy. It
is also defined as the process by which managers make a choice of a set of strategies for
the organization that will enable it to achieve better performance. Strategic management is
a continuous process that appraises the business and industries in which the organization is
involved; appraises its competitors; and fixes goals to meet the entire present and future
competitors and then reassesses each strategy.
Strategic management process has following four steps:
1. Environmental Scanning- Environmental scanning refers to a process of collecting,
scrutinizing and providing information for strategic purposes. It helps in analyzing the
internal and external factors influencing an organization. After executing the
environmental analysis process, management should evaluate it on a continuous basis and
strive to improve it.
2. Strategy Formulation- Strategy formulation is the process of deciding best course of
action for accomplishing organizational objectives and hence achieving organizational
purpose. After conducting environment scanning, managers formulate corporate, business
and functional strategies. Strategy formulation is the process of establishing the
6

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

strategy formulation is called "strategic planning."
3. Strategy Implementation- Strategy implementation implies making the strategy work
as intended or putting the organizations chosen strategy into action. His basic strategy implementation activities are establishing annual objectives, devising policies, and
allocated resources. Strategy implementation also includes the making of decisions with
regard to matching strategy and organizational structure; developing budgets, and
motivational systems.
4. Strategy Evaluation- Strategy evaluation is the final step of strategy management
process. The fundamental strategy evaluation and control activities are: reviewing internal
and external factors that are the bases for current strategies, measuring performance, and
taking corrective actions. Evaluation makes sure that the organizational strategy as well as
its implementation meets the organizational objectives.
These components are steps that are carried, in chronological order, when creating a new
strategic management plan. Present businesses that have already created a strategic
management plan will revert to these steps as per the situations requirement, so as to
make essential changes.

Components of Strategic Management Process

2.4 LEVELS OF STRATEGY

7

Corporate strategythis strategy seeks to determine what businesses a company should

be in or wants to be in. Corporate strategy determines the direction that the organization is
going and the roles that each business unit in the organization will plan in pursuing that
direction.
Business strategythis strategy seeks to determine how an organization should compete
in each of its businesses. For a small organization in only one line of business or the large
organization that has not diversified into different products or markets, the business
strategy typically overlaps with the organizations corporate strategy. For organizations
with multiple businesses, however, each division will have its own strategy that defines the
products or services it will offer and the customers it wants to reach.
Functional strategythis strategy seeks to determine how to support the business
strategy. For organizations that have traditional functional departments such as
manufacturing, marketing, human resources, research and development, and finance, these
strategies need to support the business strategy.

2.5 FORMS OF ORGANIZATION

In simple words, organizing means arranging the ways and means for the
execution of business plan. It is the creation of administrative set-up for the execution of
the plan. Internal Organization structure constitutes the arteries and veins through which
the blood of work flows in the body of Organization. Internal Organization structures can
be broadly classified into the following types/forms:
Line Organization structure:
Line Organisation (also called Military/Scalar Organisation) is the oldest and the simplest
form of internal Organisation structure. N the line Organisation, the line of authority
moves directly from the top level to the lowest level in a step-by-step manner. It is straight

and vertical. The top-level management takes all major decisions and issues directions for
actual execution.
Line and Staff Organisation Structure
In the line and staff Organisation, line executives and staff (specialists) are combined
together. The line executives are 'doers' whereas staff refers to experts and act as 'thinkers'.
The line executives are concerned with the execution of plans and Policies. They do their
best to achieve the organizational objectives. The staff concentrates their attention on
research and planning activities. They are experts and conduct advisory functions.
Matrix Organization:
It is a combination of two or more organization structures. For e.g., Functional
Organization and Project Organization.
The organization is divided into different functions, e.g. Purchase, Production, R & D, etc.
Each function has a Functional (Departmental) Manager, e.g. Purchase Manager,
Production Manager, etc. The organization is also divided on the basis of projects e.g.
Project A, Project B, etc. Each project has a Project Manager e.g. Project A Manager,
Project B Manager, etc.
The employee has to work fewer than two authorities (bosses). The authority of the
Functional Manager flows downwards while the authority of the Project Manager flows
across (side wards). So, the authority flows downwards and across. Therefore, it is called
"Matrix Organization"

2.6 PESTLE ANALYSES

The PESTLE analysis should be used to provide a context for the
organizations/individuals role in relation to the external environment. It covers Political,
Economic, Social, Technological, Legal and Environmental factors.
POLITICAL What are the key political drivers of relevance?
Worldwide, European and Government directives, funding council policies, national and
local organizations requirements, institutional policy
ECONOMIC What are the important economic factors?
Funding mechanisms and streams, business and enterprise directives, internal funding
models, budgetary restrictions, income generation targets
SOCIAL What are the main societal and cultural aspects?
Societal attitudes relates to education particularly in relation to government directives and
employment opportunities. Also general lifestyle changes, changes in populations,
distributions and demographics and the impact of different mixes of cultures
Technological What are current technology imperatives, changes and innovations?
Major current and emerging technologies of relevance for teaching, research or
administration
Legal Current and impending legislation affecting the role European and national
proposed and passed legislation
Environmental What are the environmental considerations, locally and further afield?
Local, national and international environmental impacts, outcomes of political and social
factor

10

2.7 SWOT ANALYSES

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

Strengths
Weaknesses
Opportunities
Threats

3.1 INDUSTRY OVERVIEW

11

The consumer electronics industry is consolidated as the top 10 players

contribute approximately 52% of total market size. The industry, which is capital intensive
and price sensitive, is a highly dynamic and fast-changing industry. Costs of raw materials
such as steel and copper have increased, which had a significant effect on the price of the
finished goods. A combination of factors such as rising income and consumer spending
affect the market dynamics significantly. The industry has essentially recovered from the
recent recessionary condition globally and is in the growing phase
The consumer electronics industry manufactures and distributes everything from
telephones, stereo components, televisions, alarm clocks, and calculators to digital
cameras, video cameras, VCRs, and DVD and MP3 players-basically, everything you see
when you go into a Best Buy or Circuit City store. (Some industry observers also include
desktop and laptop PC manufacturers as part of the industry.) Needless to say, consumer
electronics is big business. In 2005, in the U.S. alone, consumers spent more than $75
billion on consumer electronics products, 8 percent more than in 2004.
WHO CONTROLS THE DIGITAL HOME
Televisions, stereos, cameras, and other consumer electronics products grow
more useful and powerful when they are tied together wirelessly and can reach out to the
Internet. For the digital home to take shape and for sales to soar as consumers see its
advantages, companies need to figure out how to get all their gadgets talking to each other
and to a central hub that will store the many megabytes of media files that entertain us.
Microsoft wants the computer in the middle and is pushing its Media Center software;
Sony is selling a portable LCD television that can grab video from the Internet, a personal
video recorder, or a DVD player; and Sharp will launch technology for sending HDTV
signals through a home's existing electrical wiring. No matter which arrangement proves
popular, there should be plenty of work in turning today's homes into tomorrow's
networked entertainment centers.
The consumer electronics industry includes manufacturers of all shapes and
sizes. The largest are multinational conglomerates with more than 100,000 employees and
12

interests in many different industries. The smallest often have only one office with fewer
than 50 employees focused on one product. In the middle are manufacturers that offer a
range of products within a certain category, such as speakers and audio accessories.
Because companies of all sizes can make similar products, industry observers usually
break down the market by product category rather than company size.

3.2 COMPETITORS PROFILE- Existing players in the Indian market in

consumer electronics
The main electronic manufacturers in the Indian market are Sony, Videocon
Industries, LG Electronics, Samsung, Onida, Panasonic India, Bose India, BPL, etc. The
upcoming players are D-Link, Samte, WeP and Tyco followed by Nokia and Motorola
SONY ELECTRONICS
Sony is a Japanese company and key players in consumer electronics especially
television. The brand for Sonys television is BRAVIATM. It is a leader in product
innovation. Sony has an ability to identify imagination and enhance peoples life. The
company has been at the cutting edge of technology for more than 50 years. Now, Sony
develops its business with sales innovative products as well as Sonys convergence
strategy. For example, Sony has Hi-Scan flat screen TV which can deliver near HDTV
picture quality through Digital Reality Creation (DRC) circuitry. Sony conducts an
advertisement campaigns to secure consumer attention and utilizes world class public
relations to enhance Sonys value, reputation and brand image
PANASONIC CORPORATION
Panasonic

has

been

one

of

the

world's most

prolific

electronics

manufacturers since 1919. It operates worldwide through about 600 companies

under brands Panasonic, Quasar, Technics, and others. The company spans multiple fields:
Its consumer business consists of AVC (audio, video, and communications) equipment,
along with hardware and software for linking it together, and home appliances (washing
13

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

devices

Panasonic

covers

equipment, industrial electronic components,

multimedia
and

batteries.

and
The

eco-car
company's

solutions equipment targets environmentally conscience businesses, manufacturers, and

health care firms
SAMSUNG ELECTRONICS CO., LTD.
Samsung Electronics is an electronics Samson. One of the world's largest
semiconductor manufacturers, Samsung Electronics is also South Korea's top electronics
company. It makes many kinds of consumer devices, including DVD players, digital TVs,
and digital still cameras; computers, color monitors, LCD panels, and printers;
semiconductors such as DRAMs, static RAMs, flash memory, and display drivers; and
communications devices ranging from wireless handsets and smart phones to networking
gear. The company, which is the flagship member of Samsung Group, also makes
microwave ovens, refrigerators, air conditioners, and washing machines. Nearly half of
sales come from the Asia/Pacific region.
VIDEOCON APPLIANCES LTD
It is one of Indias ingrown companies, Videocon boasts of an annual turnover
of the tune of US$4.1billion. It has 17 sites in India, and is known to be the third biggest
manufacturer of picture tubes in the world. It also has global presence, with plants in
Mexico, Italy, Poland, China and the Middle East... These are some of the tuff players in
the world in consumer electronic industry. I have taken as LG , a known brand throughout
the world as the subject of my study to find assess its BCG Matrix and various strengths,
weaknesses, opportunities and threats.

4.1 LG - COMPANY OVERVIEW

14

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

electronics, mobile communications and home appliances, employing 87,000 people
working in 113 locations around the world. With 2012 global sales of USD 45.22 billion
(KRW 50.96 trillion), LG comprises five business units - Home Entertainment, Mobile
Communications, Home Appliance, Air Conditioning & Energy Solutions and Vehicle
Components - and is one of the worlds leading producers of flat panel TVs, mobile
devices, air conditioners, washing machines and refrigerators. LG Electronics is a 2013
ENERGY STAR Partner of the Year
VISION:
LGs vision is to deliver innovative digital products and services that make our
customers lives better, easier and happier through increased functionality and fun.
MISSION:
The mission of LG is to provide the
customers with utmost satisfaction
through

leadership.

The

fundamental policy of development is

to secure product leadership that the
Customers may have the utmost
satisfaction.
LG WAY
"Jeong-do

Management

"Management by Principle" is the

ethical code LG abides by in all its
affairs-aiming to succeed through fair
management practices, and constantly

15

striving to better our business skills" is LG's unique application of ethics. LG will succeed
through fair management practices and constantly developing our business skills.
LG LOGO
LG

is

the

brand

that

is

Delightfully Smart. "Life's good" slogan,

and futuristic logo are a great representation
of what they stand for. The symbol mark
stands for their resolve to establish a lasting
relationship with, and to achieve the highest
satisfaction for their customers.
The letters "L" and "G" in a circle symbolize the world, future, youth, humanity,
and technology. Their philosophy is based on Humanity. Also, it represents LG's efforts to
keep close relationships with our customers around the world. The symbol mark consists
of two elements: the LG logo in LG Grey and the stylized image of a human face in the
unique LG Red color. Red, the main color, represents our friendliness, and also gives a
strong impression of LG's commitment to deliver the best. Therefore, the shape or the
color of this symbol mark must never be changed.
It expresses the quality and sophistication that is the hallmark of our products.
It is simple, modern and distinctive. Consistent and proper usage of the logo is absolutely
essential. The logo is symbolic of our steadfast reputation for excellence; therefore, any
variation of the logo diminishes the visual identity of LG Electronics and its products they
have two versions of our logo: Corporate Logo and 3D Logo. The updated 3D Logo
retains the heritage and equity of the Corporate Logo, while aligning with our new
positioning. It was redrawn to strengthen the visual impact of our symbol mark and help
communicate our attributes.

16

4.2 LG ELECTRONICS 50-YEAR HISTORY

The history of LG Electronics has always been surrounded by the company's
desire to create a happier, better life.
The company was originally established in 1958 as Gold Star, producing radio,
TVs, refrigerators, washing machines, and air conditioners. The LG Group was a merger
of two Korean companies, Lucky and Gold Star, from which the abbreviation of LG was
derived. The current "Life's good" slogan is an acronym.
Before the corporate Name change to LG, household products were sold under
the Brand name of Lucky, while electronic products were sold under the brand name
of Gold Star. The Gold Star brand is still perceived as a discount brand. In 1995, Gold
Star was renamed LG Electronics, and acquired Zenith Electronics of the United States
HOW LG GREW:Pioneering Technology and Innovation
1947 -1958: Foundation
1947: Establishment of LUK HUI Chemical Industrial Corp. (now LG Chem.)
1958: Establishment of Goldstar (now LG Electronics)
1959-1969: AN INNOVATION START
1959: Koreans first Radios.
1965: Koreans first Refrigerators.
1966: Koreans first TVs.
1968: Koreans first Air Conditioners.
1969: Korans first washing Machines.
17

1970- 1979: GROWTH

1977: Koreans first TVs
1978: Achievement of USD100 Million In exports.
1980- 1989: GLOBALIZATION
1982:
Established Koreas first production subsidiary Gold Star American in USA.
Established local sales and promotion subsidiary in Germany, Canada.
1985: Establishment of product testing laboratory in Korea.
1990- 1999: FACE OF THE FUTURE.
1995: Change of company name to LG Electronics, Acquires US based- Zenith.
1996: Establishment of LG Telecom (now LG U+)
1997:
World's first CDMA digital mobile handsets supplied to Ameritech and GTE in U.S.
Achieves UL certification in U.S. Develops world's first IC set for DTV
1998: Develops world's first 60-inch plasma TV
1999: Establishes LG Philips LCD, a joint venture with Philips
2000-2009: GLOBAL BRAND LG
2000:
Launches world's first Internet refrigerator Exports synchronous IMT-2000 to
Marconi Wireless of Italy Significant exports to Verizon Wireless in U.S.
2001:

18

 GSM mobile handset Exports to Russia, Italy, and Indonesia Establishes market
leadership in Australian CDMA market Launches world's first Internet washing
machine, air conditioner, and microwave oven.
2002:
Under LG Holding Company system separates into LG Electronics and LG
Corporation Full-scale export of GPRS color mobile phones to Europe
Establishes CDMA handset production line and R&D center in China
2003:
Enters Northern European and Middle East GSM handset market Achieves
monthly export volume above 2.5 million units (July) Top global CDMA produce
2004:
Led global CMDA mobile phone market for the first time
Commercialized world's first 55" all-in-one LCD TV.
2005:
Launched LG Chocolate, the first phone in the Black Label Series.
Establishes LG-Nortel, a network solution joint venture with Nortel
Becomes fourth-largest supplier of the mobile handsets market worldwide.
Develops world's first 3G UMTS DMB handset, 3G-based DVB-Hand Media FLO
DMB Phone with time-shift function and DMB notebook computer

2006:
Develops the first single-scan 60" HD PDP module and 100-inch LCD TV.
19

 Establishes strategic partnership with UL Acquires the world's first IPv6 Gold
Ready logo
2007:
Led US drum washing machine market modem chip.
Launches the industry's first dual-format, high-definition disc player and drive.
Launches 120Hz Full HD LCD TV.
Demonstrated the world-first MIMO 4G-Enabled technologies with 3G LTE.
2008:
Introduces new global brand identity: "Stylish design and smart technology, in
products that fit our consumer's lives."
Posted No.1 spot in US frontloading washers in 5 consecutive quarters Unveiled
the world's first Bluetooth headset combined mobile phone
Unveiled the world's first Blue-ray network storage
Developed the world's first LTE mobile modem chip. Recorded over 100 million
units of LG air conditioners in accumulated sales
2009:
Become the second-largest LCD TV provider worldwide.
Became third-largest supplier of mobile handsets market worldwide.
Became Global Partner and Technology Partner of Formula One

2010- PRESENT: FATER AND SMARTER

20

2010:
Unveiled the worlds first and fastest dual-core Smartphone, LG OPTIMUS 2X
Unveiled the worlds first full LED 3D TV.
2011:
Launched water treatment business
Introduced CINEMAX 3D, LGs answer to cumbersome shutter-glasses 3D TVs
Launched Smart Refrigerator first in a of smart-grid enabled appliances.
2012:
First to market worlds first 84-inch ULTRA HD TV
Unveils Optimus G, first LTE Snapdragon S4 Pro Quad-Core Smartphone
Introduced world-leading smart appliances with enhanced connectivity and greater
convenience.
GLOBAL OPERATION
LG Electronics is playing an active role in the world market with its assertive
global business policy. As a result, LG Electronics controls 110 local subsidiaries in the
world with around 82,000 executive and employees.
LG GROUP
1.
2.
3.
4.
5.
6.

LG.Philips LCD
LG Chemical
LG Telecom
LG Powercom
LG Twins
LG Dacom

4.3 ORGANIZATIONAL CHART OF LG ELECTRONICS

21

4.4 CORPORATE SOCIAL RESPONSIBILITY

VISION & STRATEGY
Our CSR activities are an inseparable part of our strategies for sustainable
growth and the accomplishment of our vision: World Best at Enriching Lives through
Innovation. To this end, LGE has laid out the following strategic imperatives: Ensure
that every management activity is carried out with a CSR-oriented mindset; Create
differentiated value for stakeholders through innovation; Nurture win-win partnerships
with all stakeholders in a spirit of mutual trust.
CSR MANAGEMENT
In order for LG Electronics to earn the trust of stakeholders and achieve
sustainable growth, it first must become a healthy organism in the market ecosystem and
assume a proactive role in making the system healthier throughout its business activities,
including products and services. Additionally, we need to take care of our communities,
help that in need become self-reliant, interface and communicate with a variety of
22

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.

4.5 PRODUCTs OF LG
23

BUSINESS AREAS

PRODUCT

HOME

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

ENTERTAINMENT

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

Memory, Flat Panel Computer Monitors, Home Theatre
System, Music system, DVD Recorder/Player,
MP3 & MP4 Player, Laptop, Personal Computer, LCD
monitor, CRT monitor, Optical Storage Devices, Desktop PCs,

HOME

PDAs, PDA Phones, New Karaoke Systems, Car Infotainment

Refrigerator, Washing Machine, Dishwasher, Microwave,

APPLIANCES

Vacuum Cleaner.

AIR

Room Air Conditioner, Commercial Air Conditioner,

CONDITIONING &

Compressors

ENERGY
SOLUTIONS
MOBILE PHONE

Premium trend setter phone , Camera Phone , Music Phone ,

Color Screen GSM Handset, 3G Handsets, Cellular Phones

5.1 SWOT ANALYSIS OF LG

24

STRENGTHS

WEAKNESS

Market leader in home appliances.

Has got manufacturing unit in tax

Higher overall costs than its rivals

Samsung being its competitor

incentive.
Wide range of products to serve all

provides similar products.

Consumers compare L.G

categories.
Widest distribution network in the
industry (47branches, 10000 trade

Samsung its Korean rival not with

other global companies.
Lack of expert operators for complex
machines due to illiteracy and lack of

partners).
Good after sales service offered.
Shifting to the rural market

training in India

OPPORTUNITY
Wide product portfolio
Healthy resource generation.
Alliance or joint venture

THREATS

with

companies that have established a

brand for themselves in the market.
The consumer electronic services are
expected to grow in Singapore.
Fast growth of the home appliances
market
Shifting to rural areas

with

Way behind market leader.

War with North Korea
Nothing unique about strategy.
Highly competitive market
Samsung and Sony are

their

aggressive competitors.
Matured and saturated industry: they
need to protect their market position
and competitive advantage

5.2 LGS PORTER FIVE FORCES MODEL OF LG

Porters 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
25

exists in the industry keeps varying. According to Michael Porter, the nature of
competitiveness in an industry is based on the following five forces.
Rivalry among Competitive Firms
The enduring conflict with Sony and Samsung for the purpose of gaining customer
share is too high. The competition is more intense as these firms pursue strategies that give
competitive advantage over the strategies pursued by its rivals
Potential Entrants
Potential entry of new competitors is an important factor to intensify competition in
the industry. Larger the band of new entrants, more intense will be the competition.
Considering the trait of product differentiation,
Development of Substitute Products
LG faces stiff competition by substitute products producers firms especially when
the switching cost of the customer is lower, and when the functionality and quality of the
substitute product is better. On account of this reason, LG has to monitor its trend for the
purpose of tracking those strategies as it may face competition not only from similar
industry but also from different industry. But LG, Sony and Samsung have penetrated into
the industry for a long time and they have created economies of scale, product
differentiation, strong familiar brands, that will make it difficult for new brands to enter
the industry.
Bargaining Power of Suppliers
The bargaining powers of suppliers affect the intensity of competition for LG on
account of a large number of suppliers, and less availability of raw materials. Based on
these attributes, the suppliers of LG have the power to enforce certain terms and
conditions on manufacturers by charging a high cost of raw material.
Bargaining Power of Buyers
26

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

consumers of LG is more, as products are not differentiated and widely available. In
this case consumers of LG can ask for more discounts, extended warranty and services. As
the satisfaction level of consumer goes up, the intensity level of competition increases. As
a result, LG has to monitor the strategies of its competitors by taking into consideration the
likes and dislikes of its customers.

5.3 BCG MATRIX OF LG COMPANY ACCORDING TO ITS

PRODUCTS
In BCG Matrix product or business unit are identified as Stars, Cash Cow, Dogs, Question
mark.BCG Matrix can use for resource allocation.
STARS (high growth, high market share)
1. Stars are using large amounts of cash. Stars are leaders in the business. Therefore
they should also generate large amounts of cash.
2. Stars are frequently roughly in balance on net cash flow. However if needed any
attempt should be made to hold your market share in Stars, because the rewards will
be Cash Cows if market share is kept.
CASH COWS (low growth, high market share)
1. Profits and cash generation should be high. Because of the low growth, investments
which are needed should be low.
2. Cash Cows are often the stars of yesterday and they are the foundation of

1.
2.
3.

accompany.
DOGS (low growth, low market share)
Avoid and minimize the number of Dogs in a company.
Watch out for expensive rescue plans.
Dogs must deliver cash, otherwise they must be liquidated.

QUESTION MARKS (high growth, low market share)

1. Question Marks have the worst cash characteristics of all, because they have high
cash demands and generate low returns, because of their low market share.
27

2. If the market share remains unchanged, Question Marks will simply absorb great
amounts of cash.
3. Either invests heavily, or sells off, or invests nothing and generates any cash that
you can. Increase market share or deliver cash

INDUSTRY SALES GROWTH RATE

BCG MATRIX OF LG

RELATIVE MARKET SHARE POSITION

HIGH
HIGH

STARS
LG Home Appliances Division
e.g. Refrigerators- Market Growth
8.7%, Market Share 36.6%

LOW
QUESTION MARKS
LG Mobile divisions
Market growth 35.8%,
Market Share 3.8%

LG Home Entertainment Division

e.g. TVs- Market Growth 4.2%,
Market share 15.2%
LOW

CASH COWS

DOGS

6.1 RECOMMENDATION AND CONCLUSION

RECOMMENDATION:
1. LG focus on its advertising strategy for high end products and has more
sophisticated approach. This would improve the brand image of LG mobile in the
market.
2. If LG is able to change the perception of the consumers about the brand it will
for sure see a growth that is sustainable in the long run as well.
3. LG should try by providing lower rates to certain users or high end users
28

4. LG must try to come out with some specific plans and offers so that people get
motivated and buy the product because of that specific offer.
5. More proportional schemes should be launched to incorporate the perfect blend
of push and pull. So LG should provide dealers and distributor more perks and
incentives.
6. LG should incorporate further innovations

to outsmart

the most

potential

competitors like Samsung, Whirlpool.

7. And last not the least, the company would try to invest more in corporate
governance to improve their image.
CONCLUSION
The result of success in todays highly charged competitive market depends not
only in product innovation and level of productivity but also in hands of efficient service
network with technological advancements and more adaptability towards environments. In
order to multiply sales volume, only an efficient dealer and retail network can widen the
geographical reach of a companys products. Assessment of environmental information
and determining the relative significance of threats and opportunities is an important
aspect carried by all the major players. The consumer perception of LG has widened
dramatically from being a television company to a being a fully fledged consumer durable
company.

LG mobile phones at introduction stage (question mark).

LG Appliances is at star stage.
LG LCD is at cash cow stage.
Currently none of its products are at dogs stag. But recently sales of LCD have
dipped in the 1st quarter financial reports.

LG mobile is increasing its market share but that is only due to the sale of low end
products. At this point market is flooded with counterfeiting phones coming from china.
So they must explore new market or re visit their strategy in their existing markets.

29

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

innovative, greener products and services, and continues to be a leader in developing green
innovations and looking for innovative ideas and technologies which will support our
efforts as, a leading company in practicing environmental management.
As a leading corporate citizen, under the slogan Hope for Lifes Good, LG has
been playing an active role in global efforts to provide sustainable solutions and help
achieve the UN Millennium Development Goals (MDGs). By engaging with diverse
stakeholders such as governments, academic institutions, NGOs and its employees, LG is
helping to create and share common values based on creativity, sustainability and more
fulfilling lives
Recent developments:
LG Electronics received a special award as Global Technology Innovator 2013 on 7th
June 2013 at the Plus X Award Night in Cologne, Germany. The Plus X Award is one of
the most significant European innovation prizes for technology, sport and lifestyle and
serves as a seal of approval for high-quality brands. It was the first time in the Plus X
Awards ten-year history that awards went to 17 products from a single manufacturer. The
LG products, including the flagship smart phone Optimus G and the first ULTRA HD TV,
were consistent winners in the categories of Innovation, High Quality, Design, Ecology
and Ease of Use

30

LG Electronics launched on Tuesday its new flagship smart phone which will have to
compete against a flurry of new products from rivals Apple and Samsung who currently
dominate the global market. The South Korean electronics giant said the new gadget is
called Optimus G,
There was plenty of buzz that LG would be producing the next Nexus device, just like it
was manufacturing the Google Nexus 4.
LG must compete for attention for its Optimus brand, which has yet to build as strong a
reputation as Samsung's Galaxy or Apple's iPhone.
LG Electronics Inc has become the world's No. 3 Smartphone maker behind Apple Inc and
Samsung Electronics Co Ltd for the first time in the $223 billion market, industry data
showed, as solid sales of high-end models helped it win customers.

6.1 BIBLIOGRAPHY
WEBSITES:
31

1. http://www.lg.com/in/corporate-information/leadership/management-by-principles
2. Http://www.scribd.com/doc/109700920/lg-prjct
3. Http://www.scribd.com/doc/52404688/1053-brand-preference-and-competitiveanalysis-of-lg-new-ppt
4. Http://www.scribd.com/doc/42327740/bcg-matrix-of-lg
5. Http://www.ukessays.com/essays/marketing/analyis-of-the-marketing-strategy-oflg-marketing-essay.php
6. Http://www.scribd.com/doc/153172397/bcg-matrix-of-lg-doc
7. Http://www.slideshare.net/search/slideshow?
searchfrom=header&q=bcg+of+lg+electronic
8. Http://www.pwc.com/gx/en/technology/scorecard/consumer-electronics.jhtml
9. Http://visiblebusiness.blogspot.in/2012/02/organizational-chart-of-lgelectronics.html
10.http://www.ndtv.com/topic/lg-electronics/news
11.Source: http://www.lg.com/sg/img/about/assets/20090210191407688h.jpg
12.Http://www.koreatimes.co.kr/www/news/img/biz/081020_p5_lgtwo.j
13.http://www.koreatimes.co.kr/www/news/biz/2010/04/263_33015.html

REPORTS AND NEWSPAPER

1. The Economic Times
2. Business Standard
3. New Research Report On Companies And Markets, 2008
4. LG Electronic 2012 presentation.

32