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Global Business Environment of LG Electronics and Contemporary Theories in

Effective Global Strategic Management

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25 May 2021
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Global Business Environment of LG Electronics and Contemporary Theories in

Effective Global Strategic Management

COMPANY SITUATIONAL ANALYSIS

Company – TOWS Matrix

LG (1958) LG Electronics. Electronics company. Its headquarters are in Seoul, South

Korea. It basically develops technological advances in electronics, mobile communications

and household appliances. It currently has approximately 84,000 employees. LG owns 75

subsidiaries around the world. LG Corporation is a manufacturer of electronic products,

smartphones and petrochemical products. It is one of the largest electronic conglomerates in

the world, the company has 75 subsidiaries worldwide that design and manufacture

televisions, telecommunications devices, among many other consumers electronic equipment

(Park et al, 2010).

Customers

LG brings out each of their products into various markets, since it is very clear that

consumers are increasingly aware of the aesthetics of their appliances, as well as performance

and reliability. LG emphasizes on the provision of personalized and segmented services in the

long run, to steer the trend of consumers, adding that it believes it will be able to generate

profits in all areas of business, beyond the television sector. Acquisition in their major area of

operations also helps the company to better target consumers (Bhatt, 2003).

Competitors

Sony

 Sony is a leading electronic devices manufacturer in the commercial and professional

industries.
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 Its diversified business is primarily focused on the electronics, games, entertainment

and financial services sectors.

 Sony is ranked 94th on the Fortune Global 500 list, but Sony is one of the Top 20 in

the world of leading semiconductor sales and the third-largest television manufacturer in the

world, after Samsung Electronics and LG Electronics (Glowik, 2016).

Samsung

 With its humble beginnings the great company evolved into a great global

competition for many others on the subject of modern technology.

 Samsung Electronics is the largest member of the Samsung Group, which is also one

of the world's largest electrical appliance companies, operates in around 58 countries and has

more than 208,000 employees.

 Samsung Electronics is recognized as one of the 10 largest manufacturer brands in the

world.

 It is specifically the second largest producer in the world.

 It has become one of the most valuable electronics companies in the global market

(Glowik, 2016).

Panasonic

 It is an MNC that has expanded into one of Japan's largest electronics producers.

 It provides non-electronic goods and facilities, including home refurbishment services

as well as electronics.

 Panasonic became the world's fourth-largest TV company in 2012 (Glowik, 2016).

Collaborators

Stakeholders %
LG Corp. 33.7%
National Pension Service of Korea 9.56%
BlackRock Fund Advisors 1.71%
The Vanguard Group, Inc. 1.65%
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Dimensional Fund Advisors LP 1.57%

Norges Bank Investment Management 1.13%
APG Asset Management NV 0.93%
Mirae Asset Global Investments Co., Ltd. 0.57%
BlackRock Advisors (UK) Ltd. 0.53%
Samsung Asset Management Co., Ltd. 0.53%
Climate - PESTLE

Political

In the 21st century, importance of the political factors has increased. Government and

corporate politics have profound impact on business and profitability. Further, country's

political climate has direct links with the country's economic environment and hence

influences market trust among enterprises. In Asia, a significant proportion of consumer

electronics firms like the supply chain of LG are particularly important (Audu et al, 2021).

Economic

Economic conditions will still have a direct effect on multinational enterprises'

profitability. In the last ten to 15 years, besides the slowdown, we have seen significant

changes in the global economy. If economic decline impacts consumer sentiment and

decreases expenditure, it may also affect market competitiveness and profitability. During the

slump, several thousand firms have had their earnings severely impacted. Millions of people

were deposited and, in all, the situation for major foreign companies was very bad. The

condition has become stronger over time and economic growth on the way (Bhatt, 2003).

Socio-cultural

In market contexts, socio-cultural factors are also significant. The market and

sustainability of brands affect social trends. The demand for such products will rise or

decrease as patterns change. For this reason, most brands rely on creativity in order to stay

competitive and get the most out of emerging trends. Recent developments have led to a rise
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in smart and flat television purchases, all of which are useful to LG. Besides that, socio-

cultural movements often have a marketing significance (Lee, 2016).

Technological

For business success in the 21st century, technological advancement became

necessary. Technology has been crucial anywhere, from advertisement and advertising to

customer care, to all facets of industry, in order to stay successful. In other aspects,

technological transition still affects companies, and the technology is evolving quite quickly.

New inventions arrive to obsolete the existing ones. Each brand is in a battle to

technologically advance its rivals. Innovation has already been invested by LG, which means

it is ahead of most others in several areas.

Legal

Law is also an important aspect that affects companies worldwide. There are many

that can impact companies, from taxation and other corporate and labour regulations to

environmental laws. Compliance is a critical area of focus for all big world brands, including

LG, which can contribute to higher operating costs. Any law dispute can be expensive, as

some technical leaders in the EU have done. Although the regulatory climate in the United

States is largely positive, there are also places in which brands do not want to face law. Big

brands, such as LG, concentrate in particular on conformity in order to prevent legal disputes

(Audu et al, 2021).

Environment

Sustainability is not only a fad that passes, it's something related to brand and brand

picture. Sustainability and sustainable growth brands have been able to achieve faster growth

and a better image. In addition, as part of its sustainability and CSR initiative, LG has

engaged in environmental consciousness. The brand has engaged in fostering sustainable

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economic development of the cities as well as sustainable business operations. Sustainable

business practices often provide their workforce with instruction (Lee, 2016).

RISK ANALYSIS IN NORTH AMERICA

Political assessment

Political disruption in North America will disturb the supply chain and activities of

the companies as their main countries of activity on this sector. Geopolitical developments

and other challenges such as extremism raise great dangers for a multinational organization

such as LG. Political ties and trade agreements also have a significant impact among

multinational firms between North American and other nations. It is cheaper for LG to

operate in countries with good ties or a trading deal with North America. The policy

considerations may also have a profound effect and pose a global challenge for the viability

of LG electronics (Audu et al, 2021).

Labour benefits legislation

The labour benefits legislation applicable for LG electronics in North America

comprises federal and state laws, as well as case laws in the chosen country of operations.

There is no federal labor code, as well as a criminal and civil one. These codes are adopted by

state legislatures. An important source of labor law is the Supreme Court's rulings have

repeatedly ruled in disputes over the illegal dismissal of workers. It indicates that the various

forms of harassment and discrimination that were the actual reason for the dismissal are in

violation the Civil Rights Act applicable to LG electronics (Lajos et al, 2008).

Recent forms of violent and impact on business

Currently, there are no forms of violence affecting the business operations in North

America. However, any direct rivalry can be a cause of vandalism or violence as it occurred
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in Seoul (Headquarters of LG). The dispute between LG and Samsung has led to a power

struggle between the subsidiaries of the two tech giants. It also includes allegations of

technology leaks, illegal technology acquisition and patent lawsuits (Lajos et al, 2007).

Civil wars and impact on business

The civil war in the country is over however, several claim that civil war in the New

Deal America is not over yet. It may affect the business operations of LG electronics if it

gains momentum at a later period of time as it emphasizes on regulating the banking industry,

re-inflation of the prices in economy, etc (Huang, & Kim, 2013).

Inflation and impact on business

Government practices a policy of fiscal incentives for basic industries, hence the

expansion of the money supply, the increase in the budget deficit, the growing inefficiency of

investments, the acceleration of inflation and the loss of international competitiveness. It will

affect the LG electronics operations with varying inflation rates.

Increased taxation and impact on business

Despite good economic health, business investment remains weak and the revival of

public spending results in a deficit equal to 1% of GNP in the absence of tax increases. The

taxation increases to strengthen business investment can cause tax burden on LG electronics

(Lee, 2016).

COVID-19 and impact on business

LG Electronics was forced to temporarily close their respective facilities, and the

impact that such a measure will have on the supply of smartphones and components. They are

taking precautionary measures against the pandemic and continuing operations are reduced

scale but maintaining near regular pace.

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OVERALL ASSESSMENT – NORTH AMERICA

Web of Culture

Strategic drift – cultural influence

Strategic drift depicts that LG’s R & D team has worked very well and complete their

tasks to help the production based on deep understanding of North America’s cultural

influence and diversity (Hong, 2020).

Ethics, and sustainability

LG Electronics North America considers that ethics is more than generating a

favorable image. It has become a fundamental part of the modern business world, since

companies are aware that they must implement technologies that minimize damage to the

environment or improve the lives of people in the community (Kim, 2016). The objective of a

company's CSR must be focused on activities of social and environmental projection. “Life's

Good” is more than just a slogan, it is LG's commitment to engaging local communities to

improve the quality of life around the world, participating in a series of campaigns to make

their slogan come true (Kim, 2016).

Balanced scorecard

GOALS MEASURES INDICATORS ACTIONS AND

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INITIATIVES
Perspective Finance: Increase Increase sales by 15% and Financial state Negotiate with

sales and reduce costs reduce operating costs by 10% suppliers

Customer Perspective: Be a Increase the launch of new Number of new Create an

benchmark in terms of product products by 15% each quarter products innovation and

diversity launched per development

quarter committee
Internal Process Launch at least 5 product Innovation Acquire specific

Perspective: being able to development projects each projects report software for

constantly deploy new month product

products development

management
Organizational Learning Have at least two professionals Number of Grant a bonus to

Perspective: Having an specialized in this field professionals in one of these

extremely competent team in the company professionals and

product development with a diploma hire a second

in this field

Entry strategies

In the midst of the economic slowdown that affects public finances, industry,

commerce and consumer spending, the entry of LG strategy is differential to stay safe while

the turbulence passes. This entry strategy is attributed to new alliances, opening more niches,

innovating, knowing the client and training promoters as the route that LG Electronics, North

America to be one of the most prominent subsidiaries among others. The strategy is to attack

different market niches, with product and price differentiation. It is not just sign up for the

promotion rather look for different consumers. Thus, we find that in the traditional channel

sales increase with help of deepening credit to the consumer (Glowik, 2016).

Overall research findings

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LG Electronics plays the most important role for the firm's survival, since it is not

only the only division of the company to have a global presence. It also represents close to

60% of the corporate's worldwide sales. Although the company has not stopped betting on the

development and sale of smartphones or screens, the company seeks to shore up its

permanence in the market through the development of the next generation of home

appliances powered by artificial intelligence and assistive robotics (Frynas, & Mellahi, 2015).

To maintain global growth in its strongest divisions, in the coming months the company plans

to start selling its signature product line comprising screens, refrigerators, kitchens, air

purifiers, and audio systems. and more expensive and premium washers the company offers.

Their key strategic advantage in the global environment is that new businesses is not only

innovation but the ability of the company to survive and last in the market. In five years,

many of the companies that operate today will cease to exist because they do not have the

scalability or stability that LG has.

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References

Audu, A. A., Hassan, D., & Hassan, M. S. (2021). The Impact of Businesses in the World

Development. A Strategically review of LG Electronics Company Internalization from

South Korea.

Bhatt, P. R. (2003). Market innovative Strategy a Case of LG Electronics. Vision, 7(2), 87-96.

Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press,

USA.

Glowik, M. (2016). Market Entry Strategies: Internationalization Theories, Concepts and

Cases of Asian High-Technology Firms: Haier, Hon Hai Precision, Lenovo, LG

Electronics, Panasonic, Samsung, Sharp, Sony, TCL, Xiaomi. Walter de Gruyter

GmbH & Co KG.

Hong, S. (2020). Asian Financial Crisis and LG Electronics Paradigm Shift. In Cultural

Translation of Management Philosophy in Asian Companies (pp. 137-152). Springer,

Singapore.

Huang, J., & Kim, H. J. (2013). Conceptualizing structural ambidexterity into the innovation

of human resource management architecture: The case of LG Electronics. The

International Journal of Human Resource Management, 24(5), 922-943.

Kim, S. G. (2016). The Study on the CSR-Focused on LG Electronics. Journal of digital

convergence, 14(6), 69-83.

Lajos, J., Chattopadhyay, A., & Park, E. J. (2008). LG Electronics Inc.: Making Waves in the

North American Market (No. hal-00580985).

Lajos, J., Chattopadhyay, A., & Park, E. J. (2007). LG Electronics Inc.: Breaking the Ice in

the North American Market (No. hal-00582660).

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Lee, W. C. (2016). An Assessment of Consumer Perception and Marketing Strategies of

Major Korean Brands in Mali: The Case of Hyundai, Kia, Samsung and LG. Journal

of International Trade & Commerce, 12(4), 195-210.

Marketscreener. (2021). LG Electronics Inc. Retrieved from

https://www.marketscreener.com/quote/stock/LG-ELECTRONICS-INC-

6491575/company

Park, Y., Shintaku, J., & Amano, T. (2010). Korean firm’s competitive advantage: localization

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