The present report would be covering very important aspect of an organisation which is LG Electronics Inc. which is the most renounced multinational electronics South Korean company. The company is also having its variety of range of mobile communication or smartphones running into the market. In this we would be including overview of company like what they are doing, with the competitive advantage like what they are doing to achieve the goal. Above this we would also be using two of the analysis tools like that of Porter's five force and PESTLE analysis to know more about the firm. Then towards the end we are going to recommend about what company could try to maintain their competitive advantage over the coming next 2-5 years.
History Of LG Electronics Inc.
LG Electronics Inc. is the multinational company which is vested in South Korea but having its presence in all around the world. LG is having its four major business units namely home appliance and air solutions, vehicle components, home entertainment and mobile communication. Initially in year 1958 company was founded as Gold star by Koo In-Hwoi and then after the Korean war it was incorporated as LG Group which at that time was only producing home appliance and consumer electronics (LG Electronics Company Analysis, 2018). It started to produce the 1st radio and other electronic products then in 1995 Lak-Hui Chemical and LG cable was founded which then finally changed their name as LG Electronic. Then after this the company earned a revenue of about $100 million which was first time in it s history in year 1978 and then company witnessed the effect of globalisation by establishing their first overseas production house in USA. In the year 1995 LG Electronics produced its first mobile handset which was of CDMA digital mobile then supplied the Ameritech and GTE within USA. Now they are producing very much wide range of smartphone, tablet devices, rolly keyboard and smart watches.
Market Share And Changes Observed
LG Electronic Inc. in the present time is having second largest TV manufacture company in year 2013 and is also playing very significant role in the world of electronic market in global consumer industry. In the year 2006 LG group was having the market share of about 14% and was in the Top 100 global brands. Then from the year 2010 the company entered into the world of smartphones since then LG is having its growth by introducing many smartphone devices which in same year manufactured the worlds first 84 inches ultra HD TV in the retail sector (Gerpott, Rams and Schindler, 2001). 2014 the company global sale of about $55.91 billion while the sale of 2017 was about 55.7 millions.
Marketing Of Company
Marketing is the most important strategies which company need to adopt so that they could be having their reach within more market area and the base of customer could be increased (Prasad and Sahoo, 2011). As LG group is multinational company which is having its presence all around the world so their marketing strategies should be very good and different from others in same market. LG is delivering most innovative and digital products like that of home appliances, vehicle components, home entertainment and mobile communication. They are having different range of products and service which are available into the market that are attracting customers so they are doing their promotion all around the world. However, the way they are promoting their products are different in each country due to distinction into view and culture of people who are living in the nations of world.
It is also having many competitors in market as they are having the segmentation of 4 types but the most common competitors would be including Samsung, Sony and Panasonic. The whole group is relying onto its trust and loyalty which customers are offering to them by their effective communication tools and techniques. In the year 2003 they sponsored the Cricket World Cup which increased their marketing base and customers on the same hand (Aydin, Özer and Arasil, 2005). The goal of company is that to make lives of their customer easier, better and richer with the use of smart technology so that they are able to put smile on the face of customers.
Porter's Five Force
LG is having more than 119 local subsidiaries all around the world by employing about 82000+ people from all around it was having its revenue of $55.91 billion.
Competitive Rivalry (High)
LG is having very tough competitions like that of Samsung, Panasonic and Apple making it very high competitive rivalry then also the market share of company in the year 2009 was about 26.4%. There is very high demand of electronic products like that of TV, refrigerator, smartphone and washing machines which all company is been providing to their customers from about 59 years (Porter's five force of LG, 2018). LG is having no product differentiation but there is very high influence of technology within this industry which is leading to high price competition.
Threat Of New Entrants (Medium)
There is always urge of new and latest technology within this market which would not be allowing new market entrants to enter the market and then grab down the higher number of customers which are already loyal to their existing products and company. Other than this there are many other threats which is not allowing them to enter like that of huge investment of capital and access to distribution channels. There is also very strong government regulations and safety measures which would be known to as the barriers into this industry. Then also there are many other companies which have successfully entered into market like that of Ecostar and Changhong Ruba so the threat of new entrants in market and industry is medium.
Bargaining Power Of Suppliers (Low)
Majority of the shareholders of LG are their big suppliers into the market so that they could be having better relationships with them. There are many types of suppliers into market like that of the electronic parts and equipments which they need to supply so that they could be manufacturing their products (Jin and Von Zedtwitz, 2008). LG mostly is purchasing the equipments and other parts of the products into bulk bases which is not allowing the suppliers to bargain with company making the bargaining power of supplier low.
Bargaining Power Of Buyers (High)
As there are number of competitors of company which are selling same type and same portfolio of products to their customers so all customers are having number of options to choose from. There is also lack of product differentiation which is making customers advantage to buy any products from so many companies. In recent time there is rivalry between the companies to provide products to customers with maximum features and longest warranty as well this is also leading to increase the power of customers.
Threat Of Substitutes (Low)
Most of the products which LG is providing are not having their substitutes like that of air conditioners, sound systems and washing machines (McAfee, Brynjolfsson and Barton, 2012). But some products like that of TV could be substitute by internet accessible mobile phones and computers. Maximum of the products and not having any substitutes so this is making threat of substitute products very low into the market.
At the current time company and its products and the part of most of their house holds of millions of customer all around the world. With this the company is generating about $50 billion of revenue each year LG is known to be the largest producer of washing machines in the world.
Government of each country would be playing very significant role into the profit and loss of LG as they are having their presence in almost every country of the world. So they need to follow all rules and regulations which government of every country is making for the electronic industry so that they are getting no hindrance in their operations (Pestle Analysis of LG, 2018). Government of country would be setting out the rules for the imports, exports, production and manufacturing of products which then they are supplying to other parts.
This factor would also be having some effect on the growth and developments of company which is due to like that of GDP and rate of inflation into certain or all the countries of world. The income and wealth distribution within country among the people would be impacting revenue and income of company as well. Thus increasing demand and supply of company for all the products which they are producing this is making LG to produce more products and then supply them all to higher number of customer making higher profits.
LG is always found in promoting the social rights and treatment of all their employees irrespective of their caste and gender they are been equal into the company. All these social factors would be having combined impact on the operations of LG so that they would be able to go into more market. They are known to be as market leader with creation of maximum employment opportunity for people which is called to be having positive effect on their sales and revenue of company. With this motive they also established the Global Labour Policy which was tend to have providing freedom to their employees to work against any pressure of work.
As been the electronic producing company LG is having and adopting the best and latest form of technological advancement which is leading company to raise and increase their market share into global market. This is also increasing their production techniques and methods which they were using earlier so that their price could be improved and decreased (Pestle Analysis of LG, 2018). Thus making them affordable for the customers to purchase and buy the products which is the most important part of company so that they could gain the maximum market share.
There are many laws which would be formed to protect the customers, employees and company against any fraud or illegal actions or activities which are having within society and nation. The law could be those like of consumer protection acts, employee welfare, excise duty and that related to trade restriction.
The company should be making many changes into their products and services which would be leading to environment like making ecofriendly products. This is now the demand of most of the customers in urge to save the environment from all harmful effects. LG must be making efforts in order to follow all these rules so that they could accepted by all customers of world.
Trying To Maintain Competitive Advantage Over 2-5 Years
LG mobile and the group would be making more and more efforts in order to gain and maintain the competitive advantages the main thing which they could do could be maintaining the core competency which they are having. They are at present concentrated onto their end used consumers only with launching many new technological changes in their products. They are made the huge investment into the retail sale of LG products especially that of LG smartphones group. In the coming future they are tending to increase their market share with the introduction of technological advancement (Prasad and Sahoo, 2011). They are making their products like that smartphone easy for their customers to use and accessible for them as well.
The number of mobile buyers and users are increasing day by day which is now covering whole world and market. So they should be making more changes into the features of smartphone especially like that of improvement into their cost and price of products. Country like that of India which is at present the largest consumer of smartphone LG could be making their more efforts to make their presence into Indian market with low cost and more features of products.
Towards the end it was concluded that LG which is the largest electronic manufacturing and selling company should be making their more and more efforts in the line of technological advancement so that cost of products could be decreased. As it was seen in the political factor that they are operating in all countries of world which is making them to understand the law and order regarding electronic industry in all those countries.
- Aydin, S., Özer, G. and Arasil, Ö., 2005. Customer loyalty and the effect of switching costs as a moderator variable: A case in the Turkish mobile phone market.Marketing Intelligence & Planning.23(1). pp.89-103.
- Gerpott, T.J., Rams, W. and Schindler, A., 2001. Customer retention, loyalty, and satisfaction in the German mobile cellular telecommunications market.Telecommunications policy.25(4). pp.249-269.
- Jin, J. and Von Zedtwitz, M., 2008. Technological capability development in China's mobile phone industry.Technovation.28(6). pp.327-334.
- McAfee, A., Brynjolfsson, E., and Barton, D., 2012. Big data: the management revolution.Harvard business review.90(10). pp.60-68.