LG Corporation formerly known as Lucky-Goldstar is an international electronics company based in Seoul, South Korea. The corporation comes fourth in South Korea in terms of its size and market share. The corporate headquarters is based in Twin Towers building found in Yeouindo-dong, Yeongdeungpo district, Seoul (Lee, 2010). The organization deals in electronics and telecommunication products, and it controls various subsidiaries such as LG Electronics, Zenith, LG Innotek, LG Display, LG Uplus and LG Chem in more than 80 countries across the globe. Founded in 1958, the company has extended its market share becoming a giant in the electronics industry. It produces home entertainment systems, mobile phones, home appliances and vehicle components. In 2017, LG's market share was estimated to be 23% (Evans, 2017).
The corporation commanding market share has been brought about by its philosophy that is centered toward customer sincerity in its products specifications and sticking to the fundamentals. The corporation has ever since been understanding its customers by offering optimal solutions and new product experience through innovation, thus helping it to have a steady market share hence making it to survive and prosper in the industry for a foreseeable future (Lee, 2010).
Every company has competitors and LG is not an exception. The five big significant competitors of LG are Samsung, Sony, Panasonic, Toshiba and Whirlpool (Evans, 2017). With the heightened competition among this other competitors, the corporation has been responding promptly by adopting competitive positioning of its products in order not to be faced out in the market. The competitive positioning has been all about creating value in the market and how the corporation products are differentiated. This has enabled LG to conquer the mindshare of different electronic users across the entire globe.
Changing lifestyle - With more people shifting towards technological products, this will act as LG's driving force for home appliances and electronic products.
Competitors are helping populations to adopt new technologies - LG faces stiff competition from its competitors, the trend that is making the society to accept LG's products. Therefore, LG may leverage out the benefit of this and can extend its market share by considering competitors move.
Increasing the market share - By opening branches in emerging markets, LG will accelerate its growth rate (Evans, 2017).
Strategic partnership - LG is one of the companies with several partners. The company is advancing its technology and identifies business opportunities by forming alliances with giant companies in the world.
Stiff competition in the industry - LG operates in an industry where every company wants to shine and improve its market share. Most companies are taking every possible move to reduce competitions which at long last will have a negative impact on the industry as a whole.
Government regulations - The government has formulated policies that govern the use of innovative technology for energy and power conservations. Such systems have a negative impact on the electronic industry forcing them to migrate to renewable energy.
Low economic growth rate - The effect of economic factors such as recession, lack of employment opportunities and macroeconomic uncertainty on the industry will continue to be felt for a long time.
Hikes in costs of raw materials - As the cost of raw materials continues to experience a growing trend, companies operating in the electronics industry like LG may see their margins shrink making them less profitable.
Potential Governmental Action or Political Challenge That Will Affect LG
Businesses operate under the stipulated government regulations, and LG is not an exception. In 2017, New Jersey's state Senate president Steve Sweeney proposed the tax to be increased by 3% on corporations that earn more than $1,000,000 in annual net income. Sweeney hopes to raise around $700 million in revenue out of this proposal which will go along in the developing the state (Egea, 2017). This environment will affect LG's income making it less profitable considering that it's building a new corporate headquarters in New Jersey.
On its plan to construct a new corporate headquarters on the Hudson River in New Jersey, LG plans to build a 43-meter building which according to the company will meet the highest standards in sustainable architecture. However, the project has been criticized that it spoils natural views and demands LG to build a shorter building. According to New Jersey local governments, making constructed near the Palisades should not be more than 10.7 meters in height because they will hide the trees (Dilts, 2013). Although LG won the case and was allowed to construct its headquartered, any changes policy that governs architectural dimensions will affect LG's plans to add more construction in the region.
Organizations and Teams
LG Corporation has been organized into five business units comprising mobile communication, air conditioning, home entertainment, home appliance and business solutions. These departments are lead by respective project team managers (Lee, 2010). Home entertainment division is concerned with technology and innovation related to television issues. This unit is further divided into the digital display and digital media to permit more effective management, accountability and quick services delivery to customers across the globe (Lee, 2010).
Home appliances division focuses on a washing machine, refrigerators, kitchenware and other domestic appliances while air conditioning is exclusively focused on residential and commercial conditioning and different building management systems (Lee, 2010). The business solution organization provides the company clients with various integrated solutions that will take advantage of the corporation expertise and software, hardware and content systems. This division is centered on commercial business to business (B2B) monitors, security and telematics. Mobile communication division plays an integral part in the company's future success and survival. It plays a critical role in differentiating the company telecommunication devices through intense innovation. This has enabled the corporation to remain competitive in the telecommunication industry for a very long time (Hage, 2007).
The organization of the corporation is designed to speed the decision-making process in the organization and to deliver improved, quality and differentiated products in the market. The corporation recently created a new global leadership structure of an organization that is designed to give the company's divisions more autonomy to respond promptly and decisively to various market conditions and opportunities (Hage, 2007). Moreover, the corporation has also given different project team leaders more independence and freedom of implementing their responsibility to facilitate rapid decision making in their respective divisions.
LG has a good and reputable project profile series that helps to enhance the smooth functioning of the five divisions of the corporation. The corporation has in the past used the project teams in complying with governmental regulations (Hage, 2007). For instance, the corporation recognizes the rights of all its employees and upholds their values as a human being. Moreover, the corporation has used its project teams to accomplish all the labor requirements and standards as defined by the international organizations as the united nation (UN) and International Labor Organization (ILO) (Lee, 2010). The corporation has used its different project teams in ensuring maximum compliance is achieved in its goal of effectively responding to the government regulations. For instance, the corporation instructed the project teams to adhere to the company Global Labour Policy established in 2010 to ensure equality and happiness of all its employees and to uphold employee's dignity as human beings (Hage, 2007).
LG Corporation maintains a close relationship with its internal and external stakeholders besides having a great value for them. The corporation stakeholders include suppliers, communities, customers, investors, employee's international organizations and local governments. LG includes nongovernmental organizations in its planning and execution of its activities. The NGOs has helped the corporation to cope with global social issues and supporting the corporation. Moreover, the NGOs have contributed to human rights and labor especially in the developing countries (Hage, 2007).
Notably, based on its corporate management philosophy of creating value to its customers across the globe, LG has made tremendous efforts in satisfying its customers as one of their main stakeholders and as a result, the company has been able to achieve collective revenue of approximately KRW 55,753.8 billion in the 2010 financial, fiscal year (Hage, 2007). The corporation views customers as a great stakeholder for the long-term success and survival of the corporation, hence it provides privacy protection to customers, customer satisfaction, provide safety protects and services and practice fair marketing and pricing of its products (Hage, 2007). On the other hand the customers have remained loyal to the corporation products and brands hence preventing the corporation from being faced out in the market.
Another stakeholder is the corporation suppliers. As at December the year 2010, the corporation had realized a total of 5800 suppliers and spent a total of 35.7 billion USD in direct and indirect material procurement (Lee, 2010). The corporation has ever since reaped the benefits from suppliers such as fair trading and has responded adequately by timely payment to the suppliers. Moreover, the corporation has various investors as its stakeholders and as at the end year 2010; the corporation had a total of 141,725 shareholders with the holding company, LG Corp, amounting to 34.8% (Lehne, 2013). LG has responded effectively by handling its investors promptly by disclosing transparent management information to them that allows its investors to make a sound decision and also increasing the investor's value of the corporation through efficient management (Hage, 2007)
In addition to its operation in Korea, LG is conducting its business through an overseas network. Local purchase of the corporation represents about 50% of the entire purchase volume (Lehne, 2013). This has helped the corporation to reduce environmental effects near factories and also promote different development to the community like community care activities and curriculum activity sponsorship (Hage, 2007). In addition, the corporation has both local and oversea employees. As at December 2010, the corporation had employed a total 90,578 and out of this figure, 31, 840 work in the home country and 58, 738 in overseas (Hage, 2007). This implies that the corporation has been at the forefront of providing opportunities for career development and improving the overall corporate culture
The corporation has had a smooth an efficient operation by complying with local laws and regulations and meeting its tax obligation as and when they fall due in all the countries across the globe. Moreover, the corporation has occasionally collaborated with the government and university in some of the countries it operates in to come up with specialty products (Hage, 2007). The local governments as a stakeholder have advocated for the interest of the corporation by keeping the management of the corporation on toes an ensuring that they conduct a legal and ethical business which is in line with the corporate governance principle.
The stakeholders mentioned above have influenced political processes and advocated for business interest...
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