LG Electronics Business Analysis Report

This comprehensive report analyzes LG Electronics' business performance using several frameworks. It begins by outlining LG's vision, mission, business divisions, and resources, followed by a SWOT analysis identifying strengths, weaknesses, opportunities, and threats. A Business Model Canvas is presented, detailing key partners, customer segments, value propositions, distribution channels, key activities, key resources, customer relationships, revenue streams, and cost structure. The report further explores LG's ecosystem, including collaborators, supporting infrastructures, customers, and competitors (such as Samsung and Sony). Porter's generic strategic strategies are applied to LG's market positioning, and a Herfindahl index assesses market concentration. Finally, financial KPIs (gross profit margin, operating profit margin, net profit margin, ROCE, ROA, debt-to-equity, current ratio, cash ratio, operating cost to sales, revenue per employee, sales growth, R&D to sales, market share, number of patents, and inventory turnover) are analyzed, along with non-financial KPIs focusing on sustainability and environmental responsibility. A BCG matrix concludes the analysis, categorizing LG's business units (appliances, LCD, mobile phones, and oil & gas). The report utilizes data from various sources, including LG's website and other reputable online resources.

Table 1: 5 C's
Company
1.1 Vision :
Vision statement of LG electronics is to
become a worldwide leader in digital
media with ensuring about the
appropriate satisfaction of customers by
innovative products and qualitative
services (1).
1.2 Mission:
Mission of the company is creating value
for customer, respecting human dignity
and becoming best in its industry (4).
1.4 Business division of LG Electronics:
 Mobile communication
 Digital display
 Digital media (5)
 Digital appliance
1.5 Resources:
1.5.1 LG electronics is operating its
business worldwide with 128 local
subsidiaries.
1.5.2 Total available human resources are
83000 people (2).
1.5.3 Over 57 years it is providing best
electronics product to its customers.
1.5.4 All human resources are skilled and
experienced (11).
1.6 Infrastructure:
1.6.1 LG electronics is investing huge
amount of money in developing
strong and huge infrastructure (4).
1.6.2 It will invest US$300 million in Hai
Phong to build a 400,000m2-wide
home appliances factory by 2020
(7).
1.7 Core Competencies:
1.7.1 Innovative product development.
1.7.2 LG electronics has used the multi sourcing strategy for
developing chipset which helps in adding efficiency to
the overall product development process (8).
1.7.3 This organization has developed extensive distribution
network for targeting retail outlets for developing
strong brand value (3).
1.7.4 Making collaborations and acquisition is one of the
major strategic alliance of LG electronics.
1.7.5 Strong research and development is also one of the
major core competencies of the organization (3).
1.8 Weakness
1.8.1 Low profit margins due to the high
cost in research and development and
innovation (12)
1.8.2 Major competitors also have large
number of buyers (20).
1.8.3 Focus on large portfolio of products
1.8.4 Lawsuits of different countries.
1.9 Threats:
1.9.1 Foreign exchange risk in different international
markets (19).
1.9.2 Rapid changes in technologies.
1.9.3 Increment in the number of substitute products of
competitors (8).
1.10 Strength
1.10.1 LG is operating its business
operations in wide geographical area
which shows the global presence of
the company (4).
1.10.2 Strong research and development
departments (3)
1.10.3 Comprehensive product portfolio
 Home entertainment
 Mobile communication
 Home appliance (1)
 Air conditioning
 Energy solutions (13)
1.11 Opportunity:
1.11.1 LG electronics have started a new product line in solar
industry so, there is a huge opportunities in this
segment.
1.11.2 Company can grow its business in developing
countries also (2).
1.11.3 Company can introduce new products and services due
to the changes in current trends which will also help in
getting high profitability (10).
Competitions
Sony Samsung
1.12 Core Competencies:
1.12.1 Core competencies are
relevant to the whole
company rather than the
individual (5). These
competencies help in
attaining the advantages in
the whole industry.
1.13 Core competencies:
1.13.1 Continuous innovation in rapid manner.
1.13.2 Success Hi-Pass System (11).
1.13.3 Skilled and experienced staff and employees (6).
1.13.4 Regular innovation and efficient management.
1.13.5 Strong relationship with supplier and customers (1).
1.13.6 It has strong relationships with different financial institutes which also help in gett
finance for different business operations.

1.12.2 Miniaturization with the
use of electronics (3).
1.12.3 Innovative designs of the
products and services as
per the needs and
requirements of customers.
1.12.4 Manufacturing power of
Sony Corporation is also
one of the major
competency of this
organization (6).
1.12.5 Marketing and advertisement
department is also very
strong which increases sales
and profitability of the
organization (7).
1.12.6 Sony uses the deep
technologies for producing
products and services.
1.12.7 High quality products and
services.
1.12.8 It is capable enough to
turnout variety of products
and services (17).
1.12.9 It also focuses on the core
design products and services
for different segments of the
society (5).
1.12.10 It has strong brand image
in some specific products
and services such as
Walkman or portable CD
players which help in
attaining different
advantages also (12).
1.12.11 Very strong research and
development in terms of new
technologies and new
updates (13).
1.14 Strength:
1.14.1 Valuable physical assets
1.14.2 Clear market advantages
1.14.3 Low production cost due to
the strong R&D (5).
1.14.4 It has rich heritage of
technologies expertise (13).
1.14.5 Quality of Sony music and
Sony pictures is unbeatable
in this industry (14).
1.15 Strength:
1.15.1 Samsung is world’s most successful manufacture of electronics products and servi
1.15.2 It has world’s number one market share with 21.4 % in second quarter of 2015.
1.15.3 It has impressive research and design capabilities (19).
1.15.4 Strong manufacturing and marketing capabilities (14).
1.15.5 Longstanding relationship with retailers in US and UK (15).
1
Customers: Collaborators:
1.16 Business Area:
1.16.1 Information technologies
1.16.2 Telecommunication
1.16.3 Healthcare (7)
1.16.4 Environment
1.16.5 Digital media
1.17 New Focus Area
1.17.1 Hardware and software (5)
1.17.2 Change in future research and development
1.18 Business 2 Business
1.18.1 Company has obtained high growth in business to
business segment (2)
1.18.2 Company has also collaborated with different partners
for providing better services to its customers (6).
1.19 Business 2 customers
1.19.1 LG electronics offers different innovative products and
services to its customers for meeting their expectations.
1.17.1 LG electronics has collaboration
with different local and
mainstream distributer (12).
1.17.2 To improve the quality of the
products and services LG
electronics have contributed with
the software and hardware
companies (18).

Country:
1.18 Political
1.18.1 LG electronics is operating its
business in different countries so,
political stability of every country
also affect the business operations of
organization (4)
1.18.2 Different policies of FDI and
environmental protection are also
major factors which affect business of
LG (18).
1.19 Economical
1.19.1 Inflation rates, exchange rates and
economic policies of every country
affect the financial position of LG
electronics (13).
1.19.2 GDP growth rate and industry trend
of every nations affect the economic
position of company (17).
1.20 Social
1.20.1 Changes in current trends, needs and
requirements of customers affect the
production and manufacturing
process of LG Electronics (19).
1.20.2 Lifestyles of customers
1.21 Technological
1.21.1 Due to the high competition from Samsung and Sony Company is
facing competition in technological aspects also (12).
1.21.2 High research and development of competitor’s forces LG electronics
to invest huge amount of money in innovation and technologies
changes (8).
1.22 Legal
1.22.1 Different countries have their own rules and regulations with respect
to the joint venture and business operation. So, LG electronics needs
to consider all these rules and regulations (13)
1.22.2 Energy regulation, employment and environment law are also
considered as factors which affect the business operations of LG.
1.23 Environmental
1.24 Safety and security of environment through the manufacturing and
production process is major aspect (18).
Table 2: BM Canvas
2.1 Key Partners:
 For developing a better
display LG becomes partner
with Samsung. Both
companies launches new
phones and also put design
behind the curve (18)
 LG and Schneider established
partnership on camera lenses
of mobile phones (13).
 LG and SIEMENS are
collaborating to develop the
standard control solutions for
air conditioners.
 LG and GE agreed on cross
technological licensing to
share the patents on
kitchenware (20).
 Through strategic alliance
with Maxdome, LG launches
a premium VOD broadband
service (9).
2.2 Customer segments:
 B2B- For business
purpose the
retailers and whole
sellers are the also
customers of LG
electronics (17).
 B2C- LG's
customer service
and support are
designed to help
and make the life
good (14). To
increase the
customer
satisfaction LG
improve their
customer services
by reducing the
queuing time and if
any customer is
facing problem
issue with product
than company solve
their problem
quickly by
scheduling repair
facility (16).
2.3 Value Proposition:
Value preposition refers to an
innovation, service or features.
This is used to make a company
or a product more attractive to
increase the customers. This is
basically a promise of value
which will be delivered and
experienced (12). LG have
achieve the highest standard for
great design by improving their
2.4 Key Activities:
LG business into mainly six
core business domains:
• Home Entertainment
• Mobile
Communication (16)
• Home Appliance
• Air Conditioning
• Energy Solutions
• Vehicle Components
(15)
R&D- LG is leading the
electronics industry and
bringing the new and updated
technology and innovation like
improving energy devices,
wireless networks and multi-
processing (11). And mobile
innovations to digital media
technology.
2.5 Key Resources: [73 to 74]
The resources of LG are discussed
below:
 Its global sales of USD 53.1
billions (7).
 83,432 employees are working
at 119 local subsidiaries.
 They owns Zenith and controls
37.9% of LG display (8).
 Certificate standard- ISO
9001:2008
 They employs the talented and
dedicated staff which can
develop the value added
products (10).
2.6 Customer
Relationships:
 LG is promoting its
products via social
sites, magazines,
promotion programs
and advertisements
(14).
 With the LG CNS
customers can
organize, manage and
track their inquiries.
 They have given the
toll free number to
customers (2).
 The online support
facility is also
available on the

concept, style and interface and
for this purpose they have global
network of top class designers.
LG have preposition for security,
customer satisfaction and they
also provide eco-friendly
products (19).
2.7 Distribution Channels:
LG channelize their production
through electronic retailers (4).
Cited firm have adopted
the regional distribution
channel in India.
websites for customers
(16).
 The repair agents
come at customers
place and repair the
devices.
 They have club for
their customers (20).
 They have enlisted
their service locations
all across the world.
2.8 Revenue Streams:
Collaboration and vertical integration.
Company's own showrooms and
websites (5).
Through its distributors.
By strategic alliance.
2.9 Cost Structure:
LG group spends 6.2 percentage
of its revenue or 3.66 trillion on
research and development
projects (9).
2.10 Collaborators:
LG signed an MOU with Korea Blind Union in July 2013.
LG and SIEMENS are collaborating to develop the standard control solutions for air conditioners.
Table 3: Ecosystem
3.1 Collaborators:
Alliances
 It has strategic alliances with world’s leading companies
such as Prada, Toyota, Siemens, Hitachi, etc.
 It has collaboration with large number of famous technical
companies (14).
3.2 Related and Supporting
Infrastructures:

3.3 Customers:
 It has large number of B2B
customers for increasing overall
sales of the company (16).
 Along with this, it is offering its
unique products to large number
of local customers also (12).
3.4 Competitors:
Samsung Sony
 Samsung is providing high
competition in mobile and
telecommunication range (11).
 Sony is providing competition in music product
and services of LG electronics (6).
3.5 Other Competitors:
 Sony, Samsung are the major competitors of LG electronics (9).
 Other than this, Panasonic and Motorola are also providing high competition in mobile market (1).
3.6 Other Innovations:
 Eco and environmental friendly products and services are the recent innovations of LG electronics.
Table 4: Porter Generic Strategic Strategies
4.1 Cost Leadership 4.2 Differentiation
Br
oad
Ma
rke
t
 Low cost of human resources
 Use of different budgetary tools for
reducing unnecessary cost (5)
 Use of cost effective technologies (6)
 LG electronics focuses on differentiating
their products and services from its
competitors by using latest technologies (9).

4.3 Cost Focus 4.4 Differentiation Focus
Na
rro
w
Ma
rke
t
 In this market company offers some
specific range of products and services
for reducing unnecessary marketing
cost (1).
 Use of energy and security solution help in
differentiating products and services in
narrow market segment (3).
Table # 5 Herfindahl Index [Ref: 82 to 85]
LG Apple Nokia RIM HTC Motorola Sony
Ericson
Samsu
ng
Huaw
ei
ZTE Oth
ers
Tot
al
4.0
0%
22.6
%
6.80
%
4.90
%
5.80% 2.7% 4.20% 27.70
%
6.30% 4.0% 11.
1%
4 22.60 6.80 4.90 5.80 2.70 4.20 27.70 6.30 4.00 11.
10
16 510.7
6
46.24 24.01 33.64 7.29 17.64 767.2
9
39.69 16 123
.21
160
1.7
7
1601.
77
moderate market concentration (2)
∑
Apple Nokia RIM HTC Motorola Sony E
+ LG
Samsu
ng
Huaw
ei
ZTE Oth
ers
22.60
%
6.80
%
4.90
%
5.80% 2.70% 8.20% 27.70
%
6.30% 4.00% 11.
10
%
22.6 6.8 4.9 5.8 2.7 8.20 27.7 6.3 4 11.
1
510.7
6
46.24 24.01 33.64 7.29 67.24 767.2
9
39.69 16 123
.21
163
5.3
7
1635.
37
moderate market concentration ()
∑
LG Apple Nokia RIM HTC Motorola Sony
Ericson
Samsu
ng
Huaw
ei
ZTE Oth
ers
4.0
0%
22.60
%
6.80
%
4.90
%
5.80% 2.70% 4.20% 6.30% 4.0% 11.
1%
4 22.6 6.8 4.9 5.8 2.7 4.20 6.30 4.00 11.
10
16 510.7
6
46.24 24.01 33.64 7.29 17.64 39.69 16 123
.21
834
.48
834.4
8
Less market concentration
Table # 6 Financial KPI ( £ ,000) [Ref: 87 to 96]
LG Samsung Sony
S.
No
.
KPI 201
3
Cha
nge
201
2
Cha
nge
201
1
2013 Chan
ge
201
2
Cha
nge
201
1
201
3
Chan
ge
201
2
Cha
nge
201
1
1 Gross
Profit
Marg
in
(%)
23.0
8
-
1.16
%
23.3
5
3.87
%
22.4
8
39.79 7.48
%
37.0
2
15.5
8%
32.0
3
34 4.94
%
32.4 -
0.93
%
32.7
2 Oper
ating
profit
margi
n (%)
NA 2.2 340.
00%
0.5 16.1 11.81
%
14.4 46.9
4%
9.8 3.38 -
425.0
0%
-
1.04
367.
31%
2.78
3 Net
profit
margi
n
-
0.42
-
450.
00%
0.12 -
113.
79%
-
0.87
11.32 -
200.0
0%
11.5
3
38.5
8%
8.32 0.63
%
-
100.0
9%
-
7.03
48.6
5%
-
3.61
4 ROC
E
(retur
n on
capita
l
NA 1.56 -
279.
31%
-
0.87
17.59 -
500.0
0%
18.5
4
40.5
6%
13.1
9
17.7
1
570.8
3%
2.64 297.
73%
-
5.22

empl
oyed)
(%)
5 ROA
(retur
n on
assets
) (%)
NA 0.19 -
113.
10%
-
1.45
13.11 -
4.79
%
13.7
7
45.4
1%
9.47 0.31 -
108.9
1%
-
3.48
42.2
4%
-
2.01
6 Debt
to
Equit
y
NA 0.35 9.37
%
0.32 0.02 -
5000.
00%
0.04 -
20.0
0%
0.05 NA NA 0.38 94.7
4%
0.02
7 Curre
nt
ratio
1.09 -
2.68
%
1.12 0.90
%
1.11 2.16 1600.
00%
1.86 15.5
3%
1.61 0.85 200.0
0%
0.83 -
12.0
5%
0.93
8 Cash
ratio
(%)
0.18 20.0
0%
0.15 -
16.6
7%
0.18 1.06 32.50
%
0.8 31.1
5%
0.61 NA NA NA NA
9 Oper
ating
cost
to
Sale
(%)
97.8 -
0.01
%
97.8
1
-
1.50
%
99.3 83.96 -
1.98
%
85.6
6
-
5.37
%
90.5
2
NA NA NA NA
10 Reve
nue
per
empl
oyee
163.
4
-
72.2
0%
587.
7
-
0.93
%
593.
2
798.8
3
-
63.97
%
221
7.19
37.0
2%
161
8.1
48.2 2100.
00%
39.9 260.
40%
-64
11 Sales
Grow
th
(%)
NA -
6.08
126.
02%
-
2.69
13.72 -
37.29
%
21.8
8
226.
08%
6.71 -
4.74
-
50.52
%
-
9.58
95.3
0%
-
0.45
12 R&D
to
Sales
(%)
NA 0.65 -
79.2
3%
3.13 6.26 9.25
%
5.73 -
5.29
%
6.05 NA NA NA NA
13 Mark
et
Share
of
electr
onics
#DI
V/0!
14 No of
paten
ts
194
7
20.4
1%
161
7
14.6
0%
141
1
4968 9.96
%
451
8
25.7
8%
359
2
309
8
300.0
0%
301
7
24.9
3%
226
5
15 Inven
tory
turno
ver
NA 8.1 4.25
%
7.77 7.47 -
1.32
%
7.57 -
1.82
%
7.71 6.33 1.77
%
6.22 -
15.1
1%
7.16
16 Earni
ngs
per
share
NA 366 -
111.
52%
-
317
8.1
19780
0
28.48
%
153
950
73.0
0%
889
90
40.1
9
-
10900
.00%
-
455.
03
43.1
6%
-
258.
66
17 Glob
al
sales
1.5E
+07
-
70.7
3%
5.1E
+07
-
6.08
%
5.4E
+07
22869
2667
13.72
%
2E+
08
21.8
8%
1.7E
+08
680
085
1
500.0
0%
649
321
2
-
10.6
0%
718
127
3
18 Glob
al
mark
et
share
6.2 Non-Financial KPI’s:
6.2.1 LG electronics focuses on the sustainable development of the organization which increases social,
economic and environmental value of the company (4).
6.2.2 It also focuses on the development of the environmental friendly produce which is helpful for

protecting environment of different countries (17).
6.2.3 It follows all rules and regulations of different nations which play significant role in managing
economic position of the company (7).
Table 7: BCG matrix
Stars
Appliances
Question Marks
LCD
Cash Cow
Mobile Phones and telecommunications (10)
Dogs
Oil and Gas divisions (13)
References:
1. http://www.lg.com/in
2. http://www.lg.com/global/investor-relations
3. http://www.lg.com/global/investor-relations/company-info
4. http://www.lg.com/global/investor-relations/company-info/articles-of-association
5. http://www.marketing91.com/marketing-mix-of-lg/
6. http://www.mbaskool.com/brandguide/consumer-electronics/5385-lg-
electronics.html
7. http://www.lg.com/in/corporate-information/overview/strategic-alliances
8. http://www.prnewswire.com/news-releases/lg-and-borrego-solar-collaboration-
expands-to-bring-more-high-efficiency-modules-to-us-commercial-customers-
300127496.html
9. http://www.3ds.com/customer-stories/single/lg-electronics/
10. http://www.samsung.com/in/home/
11. http://gadgets.ndtv.com/mobiles/samsung-phones
12. http://www.gsmarena.com/samsung-phones-9.php
13. https://www.youtube.com/user/SamsungMobile
14. http://www.lg.com/global/investor-relations/reports/earning-release
15. http://www.lg.com/global/investor-relations/reports/financial-statements
16. http://www.gsmarena.com/sony-phones-7.php
17. http://gadgets.ndtv.com/mobiles/sony-phones
18. http://pestleanalysis.com/market-analysis-tools/
19. http://www.entrepreneur.com/article/241534
20. http://www.businessnewsdaily.com/5693-bcg-matrix.html