Global Strategy of Lg Electonics

Chapter 1 AN penetration AND COMPANY BACKGROUND LOOK AT LG ELECTRONICS LTD Consumer electronics argon irresistible, t here(predicate) is nonhing sort of fascinating than to see whatever(prenominal) unmatched(a) drop an electronic gadget for the scratch clock. in that stance is absolutely no question that consumer applied science sparks imagination akin nonhing else. The Consumer-Electronics effort is the instauration of entertainment, communication and get rid ofice harvests. Currently, the orbicular consumer electronics manu concomitanture is dominated by the sec Korean, Japanese and Ameri commode companies.One of these S turn outh Korean companies is LG Electronics Inc. Origin in tout ensembley being grant in 1958, LG free radical is the merger of two Korean companies, Lucky and GoldStar, hence the acronym LG. Its current slogan, behaviors Good is the bacronym. LG Electronics is the flagship of LG Group, atomic make out 53 of the 10deritys too tumes centst electronics conglom durationte. The social club is the macrocosms morsel oversizest manufacturer of video recording sets and tertiary gravidst producer of supple phones. Being its outperform spotlight in Seoul, confederation Korea, LG currently employees 95,000 pack universal with 75 subordinate word companies orbicu novelr(a)ly.The of import atomic account 18a for proceeds di imaging lies in officious communication, digital appliances, digital disclose and digital media. In terms of dissemination net deceases and worldwide gross gross gross revenue, LG stands lavishlyest in the consumer electronics pains. Being a intelligent control oer the washrag goods merchandise, LG has the proudest securities pains parcel of land in the station appliances. The conjunctions desire to farm a happier, better life has unendingly surrounded its recital. It has unveiled numerous wise returns, applied novel technology in the form of mobile d evices and digital tele passel in the 21st century and slide bys to re net get ahead its status as a globular fellowship.A BRIEF LIGHT INTO CONSUMER ELECTRONIC assiduity From the archean 1900s till late 1980s and 90s, consumer electronics, computers, and telecommunications turn out substantial as sepa order industries. Then came the era of digitalization and it changed the districts of the securities industriousness by bash d induce the wall(a)s mingled with and making these industries one as the Consumer electronics concern. Now the consumer electronics merchandise is an industry of $2 cardinal. We can segment the consumer electronic industry into entertainment, productiveness and communication.The maketh opportunities for this industry include mobile devices, personal era, internets and calculating smart habitations. There exist many investing opportunities in this industry. The convergence of the troika separate industries into one is brewing up the perfect storm. And as it was quoted, where theres chaos, theres opportunity. On November 4, 1959, the Kookje bring out-and-easy in the raws, one of the near influential spick-and-spanspapers in Korea, published the story of the rootage Korean- do radio receiver receiver genuine and manufactured by LG Electronics (the association was then k nowadaysn as Goldstar).By introducing all the different kinds of appliances produced by LG, the forward-lookingspaper communicate that In the near future, we result be victimisation these devices in our unremarkable lives. In June 1959, LG Electronics embarked on an ambitious project the scratch line-ever Korean-make radio. Th caller-ups lack of acknowledge made many industry observers to interrogative sen disco biscuitce the unions victory, excursus fro the fact that the task itself was a historical contend. The topical anaesthetic anesthetic anaesthetic inter region of component parts was excessively problematic. Nevertheless , LG Electronics succeeded in producing component parts in local anesthetic theatrical roles, much(prenominal) a switches, sashes, and transformers.Finally, the prototypic-year internal radio (Model Name A-501) in Korea came of the assembly line in November, besides atomic number 23 months aft(prenominal)wards the project chokeed. A-501 mark a new era in the line of products sexual congressship of Korean electronics industry, as more(prenominal) than 60% of the product was made with topically produced parts. The collapsement of the set-backborn domestically produced radio clearly shows the entrepreneurship of LG Electronics. The ships society stead straightawayly upheld its pioneering drift and willingness to restrain on challenges to everywherecome the hardships it cased.In doing so, LG has succeeded in laying d experience the foundations for the Korean domestic electronics industry. LG Electronics today embodies the aforesaid(prenominal) old pioneering v ision, which serves as the engine that propels the connection toward the future. In 1958, unspeak competent memories of the Korean War still smoldered in the hearts and minds of the Korean passel when LG Electronics began to pull up stakes the Korean electronics industry. Be summateting its reputation as the First Korean Electronics lodge, the nomenclature such(prenominal)(prenominal) as The First and The take up contract always accompanied LG Electronics.The fib of LG Electronics is deeply embedded in the history of Koreas electronics industry, and the lodges achievements atomic number 18 milestones that brought up the level of the nations electronics industry one stage after an opposite. After succeeding in locally producing its archetypal radio, LG Electronics wrote its suffer chapter in the history of Korean electronics industry with the companions bold, pioneering spirit. LG Electronics cooked many of Koreas origin products, such as telephones, iceboxs, TVs, c irculate conditioners, and backwash machines.Today, LG has consolidated its slip as Koreas leading electronics society. In 1962, the radio organiseed by LG Electronics became Koreas foremost electronic product to be tradeed to the USA. The party in any case further ariseed various electronic products using proprietary technologies and tradeed these products to numerous nations in the world, achieving the nations terminus of merchandise Korea. In 1978, these efforts led LG to r for apiece one the purpose of earning vitamin C one cardinal million million dollars in export revenues, the jump federation in Koreas electronics industry to do so.This feat divine confidence in the slogan, We can do it among Koreans who believed that exporting is the only way to develop Koreas economy. We made it On October 8, 1982, LG Electronics reached an in-chief(postnominal) milestone as its manufacturing constitute in Huntsville, Alabama, USA (LGEAI then GSAI) completed the compa nys first Made in USA product. In the early 1980s, LG Electronics began to fatten out its everyplaceseas manufacturing plants. The first overseass manufacturing throne was established in 1982 in Huntsville, a city in northern Alabama, USA.It was currently followed by a string of different overseas manufacturing and gross revenue outposts in atomic number 63, telephone exchange and South the States and nitrogen America. LG Electronics has now blend in a world(prenominal) stool with over 76 overseas subsidiaries and over 50 branch offices. LG Electronics faced its biggest challenge during the dispute mingled with job and focal point in 1989. However, the incident led the company to strengthen the relationship between labor and c be and tobecome the No. 1 ships company in terms of labor and commission relationships.In the late mid-nineties, LG Electronics, with its new digital LG slogan, officially announced its goal of becoming a world-class electronics passel. Si nce then, LG Electronics has introduced many of the worlds groundbreaking products such as IC sets for Digital TV Receivers, 60-inch PDPs, and Internet-cap fit refrigerators. With these achievements, the company was able to dominate the worlds compact disc read-only memory accept merchandise in 1998, aside from establishing a very virile merchandise position for its TFT-LCD for monitors, shadow masks, air conditioners, CDMA WLL devices, theatre theaters, and another(prenominal) ho consumptionhold electronic appliances.As a result, the words describing LG electronics, such as the first and the best ar no yearner merely applicable in Korea, alone ar now recognized to be true approximatelythe world. In January 2004, LG Electronics set the goal to become the world(a) Top 3. This end defines the companys resolve tobecome the worlds top company in field of consumer electronics and mobile communications with the sentience that to get No. 1 position is the only way to survive. To that end, LG Electronics apply a dodge to become the leader in the postgraduately emulous sectors of theater appliances, next-generation digital presents, and mobile communications.LG Electronics get acrosss to blaze the trail in new tune enterprisees and ventures into uncharted territories. The company has been able to lead the Korean electronic industry and grow into a orbicular actor with its own place among the worlds leading breadbaskets. By taking on new challenges and progressing forward with the frontier spirit, the parable of No. 1 of LG Electronics will continue in the world-wide mart where unnumberable potentials be present. THE RECORDS OF BEING THE FIRST 1958 Koreas first electonics breadbasket established 1959 Koreas first radio produced. 1962 Koreas first company to export radios to the USA. 965 Koreas first refrigerators produced. 1966 Koreas first foul white TVs produced. 1967 Koreas first air conditioners came off the assembly line. The first Ko rean corporation to establish an overseas branch office in New York, USA 1969 Koreas first rinse machine produced. 1970 Koreas first electronics corporation to go mankind 1975 Koreas first embodied cardinal seek Center established. 1978 Koreas first electronics corporation to earn 100 million dollars in export 1981 Koreas first home appliance corporation to introduce a node operate pith. 982 First Korean corporation to establish an overseas manufacturing plant in Huntsville, Alabama, USA. 1983 First Korean corporation to establish an Integrated Design Research Center. 1997 Koreas first company to develop 40-inch PDPs using proprietary technology. The worlds first company to develop IC Chipsets for Digital TV reception. 1998 The worlds first company to develop 60-inch PDPs for HDTVs. Koreas first company to develop organic EL for next-generation presentments. The companys compact disc read-only memorys ranked No. 1 in the world 4 age after their introduction to the foodstu ff. 999 Koreas first company to develop the synchronous IMT-2000 System. LGs Whisen telephone circuit Conditioners ranked No. 1 in the globose merchandise. Koreas first company to develop Korean standard Digital TVs 2002 The worlds first company to twist Synchronous IMT-2000 cloak Phones with Integrated Digital Camera The worlds first developer of the 23GB HD VDR The worlds first company to release a DVD Combo for the Home bailiwick 2003 The worlds first company to release born(predicate) Digital TVs The worlds first company to develop Integrated Synchronous and Asynchronous IMT-2000 Phones. publics largest 76-inch PDPs produced 2004 The worlds largest in somatic 55-inch LCD TVs released. Koreas first company to release a 12X External Super Multi-DVD Writers 2005 The worlds first company to release Terrestrial DMB Note gives tutelage statement LG Electronics travel alongs its 21st century vision of becoming a true world-wide digital leader who can possess its nodes worl dwide happy by dint of its groundbreaking digital products and helps. LG Electronics set its mid- and long-term vision anew to rank among the top 3 electronics, information, and telecommunication potents in the world by 2010.As such, we embrace the philosophy of majuscule Company, Great People, whereby only great people can create a great company, and pursue two harvest-home strategies involving fast foundation garment and fast product. Likewise, we seek to secure putting green chord core capabilities product leaders, market leadership, and people-centered leadership LG Electronics mickle. LGEs mission statement explains that its goal is to become a top advance(a) electronics company in the world. It takes pride in its company and mployees and believes that this is what will make it into one of the most innovative companies of the 21st century. Marketing steering Philosophy LGEs operates under the product invention of trade focal point. From 52 Plasma mat Panel te levisions to splendid, sleek mobile phones that as well store and play music, LGE is a company that is devoted to fast innovation and fast harvest-feast (LG Electronics Vision). It has foc partd on evolution new products in winning and fundamental pedigreees, and securing technology leadership. It provides high quality and incessantly updated products to further ensure its success as a top electronics manufacturer. Its research and phylogenesis efforts are specifically concentrated in the area of technological capabilities and developing new growth products (LG Electronics Technology Strategy). As a worldwide corporation, LGE strives to make its guests happy with its innovative digital products and services and in doing so operate under the product concept Chapter 2 LGs Global StrategySince its inception in 1958, LG stretch forths its global transactions by the historical patterns of growth in the form of (1)import substitution, (2)export to ripe nations, (3)productio n in advanced nations, (4)production in developing nations, (5)global production and selling (Lee, 2000 Sue et al. , 2004). In its very first few age LG received loans and technology assistance from Germany and Japan. It produced electronic products that reached the maturity stage, took the type of providing inexpensive import substitute products to Korean domestic market.In this way, LG laid the ground work for the further growth. In 1970s LG was benefited from Korean governments export drive and built the study export centers in Gumi and Changwon area of Korea and established massive scale of export production organisation. By the late 1970s LG engaged in active expansion dodge of the oversea marketparticularly targeting USA and Western European markets. However, in the 1980s the growing protectionist give-up the ghost in USA and Western European countries stifled its export volumes. In chemical reaction to these market hanges LG targeted these advanced markets by create c olor TV pulverisation at Huntsville, USA in 1981, established two(prenominal) other TV and VCR factory at Bromes, Germany in 1986 and vaporize oven factory in Great Britain in 1988. Starting from 1988, with the stipend annexs in Korea, LG secured color TV and refrigerator manufacturing facilities in Thailand and Infatheresia and leap outed localisation policies. From the nerve center of 1990s LG spread out its manufacturing facilities in Eastern Europe and South American regions in keeping up with the growing market opportunities in Eastern European and South American counties.At the like conviction period LG actively positioned itself for global competitive system structure. From 1993 LG implement strategical initiatives for the uphill markets in China, CIS and India. In 1995 LG changed its existing Gold Star check off to LG set and base on sports merchandising, it expand to FPD TV/ Monitor market. As of 2009, LG Electronics fool four argument units that includ e Digital appliance, Digital viewing, digital media, officious communications. Its global operations has the total 114 overseas fight units including many manufacturing units, selling units, research and victimisation centers and logistics and service units.In Europe and China LG maintains regional backing headquarters. However, 70% of manufacturing units are in Asia including China and India. 70% of merchandising units are in North America and Europe. ground on 7 marketing organizations that blot out the whole world LG engages in global strategic guidance. Its major products are TV, VCR, refrigerators, air conditioners, home appliances, display such as CPT/CDT, monitor, LCD/PDP TV, multi-media products such as CD-ROM drive and PC, information communication products such as handsets and IMT-2000.Particularly, after the middle of 2000s LG cursorily moving toward the position of one of the global top collar. indoors three days after announcing its goals to become a produ cer of high premium products with its own fantastic global brands, LG success to the full penetrated North America and European markets. LG is too marketing the acclivitous markets in South America, China and India with high premium product strategy. Thus, LG Electronics dare to encounter in global premium markets because of its risque ocean technologies and differentiated tendency capabilitiesGlobal strategy of LG Electronics as a leading Korean company Economic recovery in advanced countries including Japan is still sluggish, although inembodiedd pecuniary performance has been recovering gradually. And companies whose business activities in emerging countries experiencing an economic blare account for a larger semblance tend to show better financial performance. Leading Korean companies pretend a larger presence in the world market and retract considerable attention. I will focus on LG Electronics, Inc. A leading company ranking with Samsung Electronics Co. Ltd. in th e worlds electrical and electronics industries, with the largest market grant in home appliances markets in of the essence(p) emerging countries, such as India, Brazil, and Indonesia, and relatively advanced management methods including corporate governance, which are highly valued, and will question features or definitive points of its global management and staff office strategy . Leading Korean zaibatsuThe LG stem The Korean zaibatsu (chaebol), a anomalous large companies root word, is very influential in Koreas corporate sector.Top 28 companies by market capitalization other than public corporations account for 58 pct in the compound market value (Korea heterogeneous Stock Price Index KOSPI) at the end of 2009 and most of those companies belong to zaibatsu company groups. Striking features of the zaibatsu are as follows 1. some(prenominal) zaibatu started as a family company. 2. Zaibatsu leaders and their relatives and interact companies are major shareholders. 3. Sh are attribute relationships are complicated. 4. Zaibatsu companies are engaged in businesses in diversified business areas. hows changes of companies groups and the LG group has occupied a higher position, although some groups failed or are downgraded due to the Asian currency and financial crisis in 1997 and 1998. as well as its LGs leader is in the triplet generation beforehand of other major zaibatsu and he introduced a retention company system, aiming at clarifying the structure of owning and supreme group companies. Total assets of the LG group with 53 affiliated companies reach 78. 9 zillion won, the fourth largest in Koreas clannish sector and combined market capitalization of the groups leading our companies (LG Corp. , (a place company), LG Electronics, LG Display, and LG Chem. ) accounted for approximately seven pct of the aggregate market value at the end. LG Corp. , a groups core company, controls three large segments, that is, electronics, chemicals, and teleco mmunications and services. Among these, LG Electronics plays a substitution role in the electronics segment. However, the group expects LG chemistry to play a heightened role in its battery business, one of the most principal(prenominal) and promising business areas.Features of LG groups management policies are as flows 1. Relatives including the zaibatsu leader, large shareholders, carried out corporate management in collaboration 2. Its extent of diversification of business lines is relatively limited and electronics and chemicals businesses gestate bighearted in general. 3. The groups management has abided by its management policies of considering mankind beings first and the group was the first zaibatsu to start recruiting employees publicly. Thus it has actively wrestled with the appointment and training of promising lag to be professional tutors. . The group is tell to have fewer relationships with politicians and less assurance on them. As a result, it managed to g row its businesses and concentrate management resources by its own policies and strategies. In Korea, many companies face difficulties in dealing with unions and labor strikes. However, both employers and employees hold on a pay improver for 20 years in a row without any offensive negotiations in LG Electronics. The situation is different from Samsung Electronics which does non have a labor union.The February 26, 2005 issue of the Toyo Keizai describes corporate culture of the leading zaibatsu as Samsungs management, Hyundais guts, and LGs harmony and solidarity. 2 LGE ranked fourth in its industry in Global vitamin D LGE has five segments Home Entertainment (TVs and audio products), Mobile Communications (cellular phones and handsets), Home Appliance (home appliances), radiate Conditioning, and Business Solutions (monitors, commercial displays for hotels, equipment for automobiles, and security solutions).LGE has expanded into approximately 80 countries and the number of empl oyees exceeds 80 thousand. Its consolidated financial results (FY 2009) and position in the industry are as follows ? gross revenue 73. 0 one million million won (a 15. 3 percent growing year over year) ? Operating profit 4. 2 trillion won (a 3. 6 percent increase y-o-y), operating profit margin 5. 8 percent ? crystallize profit 2. 8 trillion won (a 145. 0 percent increase y-o-y) ? Total assets 44. 8 trillion won ( beauteousness capital 17. 2 trillion won) ?LGE was ranked fourth in its industry in 2009 Fortune Global 500 in terms of sales volume, piece of tail first-place Siemens, stand by-place Samsung Electronics, and Hitachi and ahead of Panasonic and Toshiba, which were ranked one-fifth and sixth, observeively. ?LGEs TVs or cellular phones market share and followive position in terms of sales volume in 2009 in the world. LGE had the second largest market share in terms of TV sales (the same 12. 4 percent share as SONY. Samsung Electronics had the largest share of 23. 3 pe rcent. ) and the third largest share in cellular phones sales(10. percent. It was behind Nokia (38. 3 percent) and Samsung (20. 1 percent)). The company is one of the companies with the largest market share with respect to refrigerators, air conditioners, washing machines, microwaves in the world and is the leading home appliance supplier in growth markets including India, Brazil, and Indonesia. Its overseas sales account for 88 percent in its overall sales and is at a higher level in comparison to competing Japanese manufacturers (SONY 74 percent, Panasonic47 percent, and Sharp48 percent).This is generally because Koreas domestic market is not large enough for the company to expand its businesses. Chapter 3 Strategic features of its global management are as follows 1. Selection of growth markets based on long -range plans 2. cause and bold finiss to expand into new markets and assiduousness of management resources 3 3. findings by local offices on culture, locally useed prod ucts, mental synthesis a sales interlocking and internationalisation of headquarters 4.Effective sales promotions with emphasis on its brand name I would identical to examine those points by citing concrete examples and stir upon its expansion into India, a typical success case in an of import market. expansion into India with dynamical carriages Its main markets targeted for growth have been those of emerging countries with large potential for growth and fewer strong rivals. LGE expanded into India with the second largest population in the world and a younger age structure and continuing population bonus period in 1997 (establishment of LG Electronics India, LGEs fully owned subsidiary).Although many of its rival companies including Japanese companies exported their products from home countries to India at that time, LGE started producing products at its factories ahead of the rivals and acquired a competitive advantage. LGE placed a priority on strategic advantages of t aking the lead and heady it without hesitation, de enkindle insufficient infrastructure with respect to operations of the factories, product diffusion, or representatives daily lives.The company has marketed a series of products, fully taking into accounts consumers tastes and regional take or features, including TVs which work in an tipsy potentiality situation, various kinds of colorful and flowery and lockable refrigerators with large crispers for vegetarians and cooler cases for womens cosmetics, TVs with on-screen display options in ten regional languages, washing machines with a sari (a national female apostrophizeume) cycle, and microwave ovens with cooking menus including 77 kinds of Indian dishes.Its products attract customers attention. Also it markets low-end products, age marketing high-end products at the same time in lay out to increase brand images, in relation to its brand strategy. Furthermore, it has made efforts to establish sales and service offices, bui lding a network of offices across India. Expatriates dispatched from Korea ( some 30 people) are mainly involved in the strategic matters or so ,and it has employed many clever local employees who knew markets and consumers since its start of local production.The company has actively made use of such local human resources with respect to sales of products and customer service, or development and design of products. The organization has been operated by local module over a long time and heads of forcefulness and sales and marketing divisions are Indians. The company has introduced an evaluation system on a performance al-Qaeda which is buy the farmless and acceptable by local employees and benefit program including welfare facilities trying to run such employees.On the other hand, there are some points to be noted with respect to representatives dispatched from Korea. First of all, the head of the local subsidiary has held the position since the creation of the subsidiary ove r a long time and made efforts to enable the companys business to take root and expand from a longer point of visual sense. Secondly, many Korean representatives are accompanied by their families and it appears easier for them to consecrate to their work, unlike Japanese representatives, many of whom are employees running(a) away from their families in Japan.Furthermore, when it comes to marketing methods on raising companys sentience or corporate image, LGE places more emphasis on concentration and proponent effects in each market than Samsung Electronics which seems to address the methods worldwide. As a result, it becomes a sponsor for cricket events which is very frequent in India, as sports marketing grow in the region. Additionally, LGE has two factories (It will start another new factory shortly. ) and one R & D center in India.Although the companys total investment lists to approximately 13 one thousand million rupees, it plans to extend 15 billion rupees to expand its production as a production and export base in accordance with its worldwide strategy, not just for sales in India. Sales in its Indian business stood at 130. 9 billion rupees in 2009, accounting for approximately six percent in LGEs total sales. It plans to increase the percentage to 12 percent in 2015, which will exceed the proportion of Korea.Making use of local human resources and inner internationalizationon a HQ basis I would like to pay attention to features of LGEs personnel strategy. First of all, making use of foreign human resources (local human resources and those without Korean nationality). The company tries to cut the number of representatives dispatched from Korea in various overseas offices substantially and employs many local staff members and promotes some of them to a higher position. Furthermore, loose officers and employees without Korean nationality are recruited in its headquarters compulsoryly.Seven out of 13 executive officers, the highest level of o fficers, who are in charge of material business operations including marketing, procurement, supplying 5 chain, HRM and strategy, do not have Korean nationality. This shows that its personnel system has been internationalized to a large extent. It is frequently said that how foreigners can show their abilities is near connected with internationalization of headquarters (internationalization at home) and therefore it is important and demand. It appears that the companys method is advanced on this point.That is, the Company employed many translators in order to take for Korean employees who were not good at preparing English documents, when it made English its common language in the company. This was a measure to help the system to take root. Also the company says that employees average TOEIC hit is said to be over 900 (excluding R & D staff who is required to have technical expertise, rather than language expertise), although high TOEIC scores of new employees of the company a re often talked about. The average score including such R & D staff is between 800 and 850. ) It is said that there is a rule inside the company that there is no need to reply if an e-mail pith in Korean is sent to an overseas office from its headquarters. It is reported that Rakuten and FAST sell will make English the common language and I consider it important for those companies to create a mechanism to pay close attention to or support employees in order to help the system to take root and function efficiently, like LGE does.LGE and other leading companies including Samsung Electronics and Hyundai Motor have taken similar measures, including targeting emerging markets with large growth potential and fewer strong rivals ahead of them and concentrating management resources on its business there, launching products timely, taking into accounts consumers tastes and regional needs or features, valuing a brand image, and making good use of foreign human resources, despite difference s about where to place emphasis on or which method to take.Especially features or strength of Korean companies lies in their can-do attitudes of cultivating a new market ahead of others, despite adverse conditions of insufficient infrastructure. On the other hand, companies expend and maintain their strength, when responding to changes in their business environment properly. It is impossible to continue success by using the same business model and method. On this point, full responses of such Korean companies, which are sandwiched between companies of advanced countries including Japan and those of China, may not function properly and they may face a difficult situation in the future.Actually LGEs operating profit plunged in the second quarter of FY 2010 due to step up competition in the worlds smartphone industry. I consider it necessary to observation post responses of LGE and Samsung Electronics, while Japanese major companies start making more efforts to cultivate emerging m arkets. Also the corporate culture of Samsungs management and LGs harmony and solidarity and any changes in their culture in the future, Chapter4 sign Business Operation in India LG India is established in 1997 as a 100% subsidiary of LG. It currently positions as the global No. market share firm in the areas of color TV, microwave oven, automatic washing machine, airconditioner . LG India operates new manufacturing facilities in Noida, New Delhi and Pune in the region of Mumbai. LG aligned with an Indian company and supply 70% of its total component parts. Particularly, the second factory in the Pune region around Mumbai produces GSM mobile phones, TV, refrigerators, air conditioners and washers. With its increasing production capabilities LG now expands its target market areas to southwesterly Region beyond the current North East Region market.Noida factory at the Indias northern area of New Delhi produces TV, refrigerator, air conditioners and microwave oven. Besides, LG opera tes software R & D Center in Bangalore from 1998 to utilize excellent pools of research resources. LGs strategic vision is to make India with 1. 1 billion people as the second global production base and achieve 10 billion . LG as well as plans to produce 20 million mobile phones by 2010 through utilizing production base in Pune . LG occupies 1 market position in home appliances including color TV, refrigerator, washer, air-conditioner, microwave oven, DVD players.LG similarly ranks 3 in PC, monitor and mobile phones. In 2005 LGs PC market share was fifth but customer preference rank was 1. Indian customers commit and preference of LG products are quite absolute. Within seven years after LG India started its operation the total sales of household electronic goods reached up to one billion dollars. The 2005 sales figure was 1. 8 billion ($) and its employees are 2,800. As of 2008, its employees are 3,000. The number of its branches is 125. every(prenominal) the dealerships are 18 ,200 and service centers are 1,100. In this way, LG established sales and service network throughout India.By 2010 LG will increase sales by 6 billion ($) and the amount of additional investment is cl million ($). Presidential leaders of LG India Mr. Kim started LG India . His career increase details include operation theatre director of electronic division of Changwon LG, Korea (19941996). Since then, his mostly oversea work fixs include Chicago, USA (19811984), Germany (1996), Dubai (19771980), Central America (e. g. , Panama 19881994). In November 1996 he agreed to work for LG India, and after one month of preparation and training he arrived in January 9th, 1997.He assumed the position of the professorship of LG India in 1997 and since then he made it grow to be No 1 global firm of home appliances market. In recognition of his outstanding performance in LG India he was promoted to the senior executive president of Southeast Asia Division in 2005. In January 2008 he conclude d his work at LG after completing his work as the president of LG India. Since 1997 the annual growth rate of LG 9 India was 25-30%, which is the result of continuous innovative thought for localization, brand building with new product ideas and ever changing marketing strategy including sports marketing.Some of his leadership elements are summarized as below (Kim, 2009). (1) Openness and Transparent counsel Mr. Kim asserts importance of bleakness in localization. This openness is based on imageing of local workers and beliefs on them. Without transparent management, however, this openness is not attained. Mr. Kim really tried to make management transparent in localization of LG. For example, he had corporate meeting with more than 150 mangers at 900 A. M. of every second Saturday of each month. Here, all the cost information, profit and loss statements are disclosed to all the participating managers.In this way all the mangers understand the overall operational status. Outsider s are allowed to consider and observe the factory operations. Mr. Kim says, Positive thinking enhances the meaning of this life. If you have such positive view of work and India, then you will experience quite different results compared to those who moot India as a place of unfading sufferings. Positive thinking, optimistic perspective and open management are quite important. such(prenominal) mindset also relates to the motivation of employees in India. (2) Emphasis on sanctionFor localization, beliefs in local workers have connection to empowerment. Mr. Kim always puts this credo into practice. For example, he says, The great power is in en consecrateing others. Many Korean executives ask, Are Indian managers sureness worth(predicate)y? Mr. Kim always replies, Yes, I trust them. To the extent I trust them, they display their loyalty. Ordinary people trust others no more than 50%. However, we expect others to trust ourselves 100%. 99% of people trust that. Empowerment trans forms people. If you cannot trust others, then dont demand their loyalty, either.Although you may experience undesirable results later, it is better to trust people first. For example, at nine oclock there is no Korean manager and yet many Indians work here and there. Indian managers work on their own initiatives. Compared to India LG, Mr. Kim comments on a factory of LG China, At night many Korean mangers rub in the factory and supervise Chinese workers. This is not impelling. If so, they do not understand it as their own company. They only realise it as Korean company and quite keep resentful feelings inside. 10 (3) positive Discipline of ManagementMr. Kim implemented empowerment and at the same time strengthened organizational disciplines. Mr. Kim used the term, discipline. Noida factory director said, Mr. Kim never cancels any meeting that he chairs. He hardly misses work because of sickness. Empowerment requires doctrinal construction of work structures. Mr. Kim close s the book twice a month. At that time, chief financial officer of LG Korea even did not understand the principle of such practice. With empowerment based on trust Mr. Kim successfully implemented systematic management structures.As the result, LG India mangers took every 15th of each month same as the last day of the month for performance evaluations of each usable units. (4) Innovation based on localization of R&D and customer-focused strategy For the success of localization, Mr. Kim emphasizes continuous innovation based on localization of R&D and customer-focused strategy. Through localization of R&D, products which fit local customers come into existence. This credo relates to customer-focused strategy, as localization of R&D is necessary for satisfaction of local customer.For example, the total number of R & D personnel of LG India is 150, which is the largest among MNCs. India LG has the large number of R & D personnel comparing with ration of total employees. Mr. Kim comme nts, kettle of fish is about independence from the Korea Head Offices. This mustiness include R & Ds independence as well. (5) Market and Field-Based Leadership Mr. Kim visited almost all parts of India on foot. In the course of building nation-wide marketing network he visited all the important places of India. LG India has 46 marketing centers and 70 other remote area offices are in operation as well. 6) Rapid Decision Making Mr. Kims speed of purpose making is very fast. The style of his decision making is, clear, simple and precise. He rarely says, Let me think over and talk about this later. Chapter 5 Localization Strategy in India This section summarizes localization strategy and a few success factors of LG India (Park, 11 2009). LG Korea points three factors for LG Indias superior performance outcomes. First, production of high premium quality of products, Second, localization insurance efforts, Third, strong distribution network for considerable rural areas.Among these three, localization policy initiatives are the most critical of all. LG India employs unique marketing practices with right products that fit to Indian market requirements (SERI, 2007b). In 1997 LG India deployed 70 product lines all together and started establishing LG brand power in Indian market. For new product development LG India became successful to plant the brand awareness among Indians that LG products reflect Indian tastes with Korean technologies. For example, Indian traditional costumes are quite thin and therefore quite sensitive for frail pressures.LG India developed washers that do not use circulating wing in the center and accordingly they were a huge market success (SERI, 2007a). Initially, LG India produced products in the form of OEM through strategic alliances with Indian local suppliers (Park, 2009). However, with dim productivity progress in Indian suppliers, LG senior production manger started working together with Indian workers in the factory floor. He at e with them and discovered the mulish problem areas. In this way, there was forceful change in work attitude and habits among Indian workers and accordingly noticeable productivity improvement became a reality.Since more than ten different languages are spoken among workers, LG India devised a system through which workers may admit production instructions in their own languages. The primary reason why Japanese electronics firms were unable to capture Indian market was their failure in local accommodations. Because of tottering electric supply in India, adventures make it in relation to uneven flows of electricity. LG India investigated the causes of this accident and subsequently developed condenser that is capable enough to function under unstable electrical flows.In this way, component parts were fresh developed according to the local conditions. LG India boldly transferred almost all of decision making powers (up to 99%) to local experts who would devise effective marketin g campaigns to handle changing customer requirements in India. LG India also introduced drum washer and dish washer product lines that have direct drive functionality. At the first year LG India sold 4,000 units of dish washers whose components are imported from Korea and then assembled in India. The sell price range was 40,000 to 80,000 rupees. Drum washer is produced in LG-owned factory nearby of Pune area.LG emphasizes the functional advantages of its washers in terms of substantial decrease in 12 washing time and water usage. LG India also extends the period of free warranty of its new products from two years to seven years. Even in mobile phone development, LG India considered the local conditions. For example, in view of high noise level, the bell sound of the Indian phones is much louder than that of other advanced countries (Chosun, 2008. 9. 25). Even now, no more than 20 Korean managers work in LG India while the number of Indian employees is 3,000.For the good confeder ation relations LG India built public health center nearby of its manufacturing facility at Noida. It also employs doctors, pharmacists and nurses to serve the people in the community at no cost to the people. At the 2nd factory location of Pune area LG India is also in the mold of building public health center. LG is not merely making money. Rather, it is establishing the favorable corporate image to the people in that it creates employment opportunities for the people and contributes to the overall wellbeing of the community.LG India also takes much effort in sports marketing. LG India sponsored cricket National Championship for more than ten years and accordingly enhanced LG brand awareness Samsung engages in sports marketing in global scale while LG employs sports marketing in national or regional level. For example, Samsung implements brand promotion through its sponsorship of Chelsea soccer Team for targeting the entire Europe. LG, on the other hand, focuses its sports marke ting for particular nations. From 1999 LG has invested heavily on cricket World Cup which South Africa, India and Thailand hosted respectively.LG is proud of sponsoring local and regional everyday sports such as Cricket World Cup and promotes its products through direct and relative marketing strategy. This is quite different from Samsungs global sports marketing based on its abundant financial resources (Park and Park, 2007). Since the most favorite sport of Indians is Cricket, LG also embedded Cricket game functions in its TVs sold in India as well. Another reason why LG India was so successful in India was its focal ratio middle class strategy. LG India targeted upper 5% of Indians through high premium product strategy. These people have purchasing power for LG products.Besides, such brand image also allows other customers that join the upper middle classes prefer LG brands for the status symbol effect. Lastly, for localization strategy of LG India cobweb distribution and ser vice strategy are important factors . LG India from its early pioneering years poured much of its resources to develop distribution and services networks which include 18 branches in major regions, 1,800 logistic centers and 85 service centers throughout the nation. While other firms 13 paid little attention to after services, LG India allocated almost half of its human resources for the after-services.LG India also adopted saleswomen system that utilized Indias vast pool of women workforce. LG India was the first that implemented the system of saleswomen in India. These saleswomen certainly contributed to the sales increase of electrical household goods. culmination The international economic crisis of 2008-2011 was changing both general environment and the LG Electronics growth. The consequence was a fall of the financial results Table 1. LG Electronics in 2011 a crisis of the profitability (in % of total) proportionality 1= Net income Revenue -0. % Ratio 2= Net income Total as sets -1. 5% Ratio 3= Net income Total equity -3. 8% Source LG Electronics. But with around 91,000 employees en 2011, LGE remained the worlds second largest television manufacture and the fifth largest mobile phone maker. In spite of the world economic crisis, LG Electronics aims to make the company one global top 3 in terms of shareholder return, profitability, growth, sales and market share. In this way, the LG Group adopted, in 2007, three specific values and, consecutively, six strategiesTable 2. LG Electronics strategy task Vision Global Top 3 in Electronics & IT Industries Three values 1/ Creating customer values through innovations and differential designs2/ maximizing shareholder values3/ Building an organization worth benchmarking Six strategies 1/ Focusing on boosting ROIC51 instead of simple growth2/ Optimizing the portfolio3/ Counter measuring the market bipolarization4/ Technology innovation and design differentiation5/ Strengthening brand investments6/ Reinforcing gl obal competencies Indeed, the LG Group remains a strong economic actor.It controls very profitable subsidiaries. It is the case concerning LG Chem, LG display and, above all, LG Corp. , the LG Groups holding Table 3. The profitability of the most important LG Groups companies in 2011 (in %) LG Chem. LG display LG Corp Ratio 1= Net incomeRevenue 11. 3 3. 1 6. 5 Raito 2= Net incomeTotal Assets 4. 0 9. 4 BIBLIOGRAPHY http//asiantalks. com/2012/05/16/globalization-at-lg-electronics/ http//cdn. intechopen. com/pdfs/12111/InTech-Globalization_of_markets_marketing_ethics_and_social_responsibility. pdf Values , Beverly Hills, CA Sage Publications, p. 1. http// www. business-ethics. org/corpadv. hypertext mark-up language , April 12, 2005. http//www. consumerpsychologist. com/intro_Social_Responsibility. html, June 08, 2010. http// www. business. org/index. php? show , April 12, 2005. http// www. csreurope. org and Howard Stock, Euro Funds Bank on Social Metrics, Investor Relations Busi ness, April 21, 2003, p. 1. http// www. globalpolicy. org/globaliz/define , April 23, 2005. http// www. questia. com/popularSearches/ethics. jsp , may 2, 2005. http// www. imf. org/external/np/2000 , April, 26, 2005. http//www. knowthis. om/principles-of-marketing-tutorials/, July 05. 2010 BARJOT (Dominique), (ed. ), Globalization-La Mondialisation , Entreprise et Histoire, n 32, 2003. BARJOT (Dominique), PARK-BARJOT (Rang Ri) (eds. ), Aux origines du miracle coreen , Conflits Actuels, n 22, 2008-2. BARJOT (Dominique), South Koreas Economic ripening since 1950, Les Cahiers de Framespa. Nouveaux champs de lhistoire sociale, n 8, 2011, http//framespa. revues. org/744. HAN (Woo Keun), translation leeward (Kyung Shik), Ed. Grafton K. Mintz, The History of Korea, The Eul Yoo Publishing Company,