PREFACE
INTRODUCTIONAmultinational corporation(MNC) ormultinational
enterprise(MNE)is acorporationthat is registered in more than one
country or that has operations in more than one country. It is a
large corporation which both produces and sells goods or services
in various countries.It can also be referred to as aninternational
corporation. They play an important role inglobalization. The first
multinational company was the BritishEast India Company, founded in
1600.The second multinational corporation was theDutch East India
Company, founded March 20, 1602.
Economists are not in agreement as to how multinational or
transnational corporations should be defined. Multinational
corporations have many dimensions and can be viewed from several
perspectives (ownership, management, strategy and structural, etc.)
The following is an excerpt from Franklin Root (International Trade
and Investment, 1994)
Ownership criterion: some argue that ownership is a key
criterion. A firm becomes multinational only when the headquarter
or parent company is effectively owned by nationals of two or more
countries. For example, Shell and Unilever, controlled by British
and Dutch interests, are good examples. However, by ownership test,
very few multinationals are multinational. The ownership of most
MNCs are uninational. (See videotape concerning the Smith-Corona
versus Brothers case) Depending on the case, each is considered an
American multinational company in one case, and each is considered
a foreign multinational in another case. Thus, ownership does not
really matter.
Nationality mix of headquarter managers: An international
company is multinational if the managers of the parent company are
nationals of several countries. Usually, managers of the
headquarters are nationals of the home country. This may be a
transitional phenomenon. Very few companies pass this test
currently.
StrategiesCorporations may make aforeign direct investment.
Foreign direct investment is direct investment into one country by
a company in production located in another country either by buying
a company in the country or by expanding operations of an existing
business in the country.
Asubsidiaryor daughter companyis acompanythat is completely or
partly owned and wholly controlled by another company that owns
more than half of the subsidiary'sstock.[9]
HYPERLINK
"http://en.wikipedia.org/wiki/Multinational_corporation" \l
"cite_note-10"[10]A corporation may choose to locate in aspecial
economic zone, which is a geographical region that has economic and
other laws that are more free-market-oriented than a country's
typical or national laws.
Business Strategy: global profit maximization
According to Howard Perlmutter (1969)*:
Multinational companies may pursue policies that are home
country-oriented.
or host country-oriented or world-oriented. Perlmutter uses such
terms as ethnocentric, polycentric and geocentric. However,
"ethnocentric" is misleading because it focuses on race or
ethnicity, especially when the home country itself is populated by
many different races, whereas "polycentric" loses its meaning when
the MNCs operate only in one or two foreign countries.
According to Franklin Root (1994), an MNC is a parent company
that
1. engages in foreign production through its affiliates located
in several countries,
2. exercises direct control over the policies of its
affiliates,
3. Implements business strategies in production, marketing,
finance and staffing that transcend national boundaries
(geocentric).
In other words, MNCs exhibit no loyalty to the country in which
they are incorporated.
Three Stages of Evolution
1. Export stage
initial inquiries => firms rely on export agents
expansion of export sales
further expansion foreign sales branch or assembly operations
(to save transport cost)
2. Foreign Production Stage
DFI versus Licensing
Once the firm chooses foreign production as a method of
delivering goods to foreign markets, it must decide whether to
establish a foreign production subsidiary or license the technology
to a foreign firm.
Licensing
Licensing is usually first experience (because it is easy)
e.g.: Kentucky Fried Chicken in the U.K.
it does not require any capital expenditure
it is not risky
payment = a fixed % of sales
Problem: the mother firm cannot exercise any managerial control
over the licensee (it is independent)
The licensee may transfer industrial secrets to another
independent firm, thereby creating a rival.
Direct Investment
It requires the decision of top management because it is a
critical step.
it is risky (lack of information) (US -> Canada)
plants are established in several countries
Licensing is switched from independent producers to its
subsidiaries.
export continues
3. Multinational Stage
The company becomes a multinational enterprise when it begins to
plan, organize and coordinate production, marketing, R&D,
financing, and staffing. For each of these operations, the firm
must find the best location.
Rule of Thumb
A company whose foreign sales are 25% or more of total sales.
This ratio is high for small countries, but low for large
countries, e.g. Nestle (98%: Dutch), Phillips (94%: Swiss).
Examples: Manufacturing MNCs
24 of top fifty firms are located in the U.S.
9 in Japan
6 in Germany.
Petroleum companies: 6/10 located in the U.S.
Food/Restaurant Chains. 10/10 in the U.S.
US Multinational Corporations Exxon, GM, Ford, etc
Conflict of lawsConflict of lawsis a set of procedural rules
that determines which legal system and whichjurisdictionsapplies to
a given dispute.The termconflict of lawsitself originates from
situations where the ultimate outcome of a legal dispute depended
upon which law applied, and the common law courts manner of
resolving the conflict between those laws. Incivil law, lawyers and
legal scholars refer to conflict of laws as private international
law. Private international law has no real connection withpublic
international law, and is instead a feature of local law which
varies from country to country.The three branches of conflict of
laws are Jurisdiction whether the forum court has the power to
resolve the dispute at hand Choice of law the law which is being
applied to resolve the dispute Foreign judgments the ability to
recognize and enforce a judgment from an external forum within the
jurisdiction of the adjudicating forum. GlobalizationMultinational
corporations are important factors in the processes
ofglobalization. National and local governments often compete
against one another to attract MNC facilities, with the expectation
of increasedtaxrevenue, employment, and economic activity. To
compete, political powers push towards greater autonomy
forcorporations, or both. MNCs play an important role in developing
the economies of developing countries like investing in these
countries provide market to the MNC but provide employment, choice
of multi goods etc.On the other hand, economistJagdish Bhagwatihas
argued that in countries with comparatively low labor costs and
weak environmental and social protection, multinationals actually
bring about a 'race to the top.' While multinationals will
certainly see a low tax burden or low labor costs as an element of
comparative advantage, Bhagwati disputes the existence of evidence
suggesting that MNCs deliberately avail themselves of lax
environmental regulation or poor labor standards. As Bhagwati has
pointed out, MNC profits are tied to operational efficiency, which
includes a high degree of standardization. Thus, MNCs are likely to
adapt production processes in many of their operations to conform
to the standards of the most rigorous jurisdiction in which they
operate (this tends to be the USA, Japan, or the EU). As for labor
costs, while MNCs clearly pay workers in developing countries far
below levels in countries where labor productivity is high (and
accordingly, will adopt more labor-intensive production processes),
they also tend to pay a premium over local labor rates of 10 to 100
percent. Finally, depending on the nature of the MNC, investment in
any country reflects a desire for a medium- to long-term return, as
establishing plant, training workers, etc., can be costly. Once
established in a jurisdiction, therefore, MNCs are potentially
vulnerable to arbitrary government intervention such as
expropriation, sudden contract renegotiation, the arbitrary
withdrawal or compulsory purchase of licenses, etc. Thus, both the
negotiating power of MNCs and the 'race to the bottom' critique may
be overstated, while understating the benefits (besides tax
revenue) of MNCs becoming established in a jurisdiction.
Transnational Corporations
A Transnational Corporation (TNC) differs from a traditional MNC
in that it does not identify itself with one national home. Whilst
traditional MNCs are national companies with foreign subsidiaries,
TNCs spread out their operations in many countries sustaining high
levels of local responsiveness An example of a TNC isNestlwho
employ senior executives from many countries and try to make
decisions from a global perspective rather than from one
centralized headquarters.However, the terms TNC and MNC are often
used interchangeably.
Criticism of multinationals
Main articles:Anti-globalizationandAnti-corporate
activismAnti-corporate advocates criticize multinational
corporations for entering countries that have lowhuman rightsor
environmental standards.They claim that multinationals give rise to
huge merged conglomerations that reduce competition and free
enterprise, raise capital in host countries but export the profits,
exploit countries for their natural resources, limit workers'
wages, erode traditional cultures, and challenge national
sovereignty.CHARACTERISTICS OF MULTINATIONAL CORPORATIONSThe
multinational corporations have certain characteristics which may
be discussed below:(1) Giant Size:The most important feature of
these MNCs is their gigantic size. Their assets and sales run into
billions of dollars and they also make supernormal profits.
According to one definition an MNC is one with a sales turnover of
f 100 million. The MNCs are also super powerful organizations. In
1971 out of the top ninety producers of wealth, as many as 29 were
MNCs, and the rest, nations. Besides the operations, most of these
multinationals are spread in a vast number of countries. For
instance, in 1973 out of a total of (,000 firms identified nearly
45 per cent had affiliates in more than 20 countries.
(2) International Operation:A Fundamental feature of a
multinational corporation is that in such a corporation, control
resides in the hands of a single institution. But its interests and
operations sprawl across national boundaries. The Pepsi Cola
Company of the U.S operates in 114 countries. An MNC operates
through a parent corporation in the home country. It may assume the
form or a subsidiary in the host country. If it is a branch, it
acts for the parent corporation without any local capital or
management assistance. If it is a subsidiary, the majority control
is still exercised by the foreign parent company, although it is
incorporated in the host country. The foreign control may range
anywhere between the minimum of 51 per cent to the full, 100 per
cent. An MNC thus combines ownership with control. The branches and
subsidiaries of MNCs operate under the unified control of the
parent company.(3) Oligopolistic Structure:Through the process of
merger and takeover, etc., in course of time an MNC comes to assume
awesome power. This coupled with its giant size makes it
oligopolistic in character. So it enjoys a huge amount of profit.
This oligopolistic structure has been the cause of a number of
evils of the multinational corporations.
(4) Spontaneous Evolution:One thing to be observed in the case
of the MNCs is that they have usually grown in a spontaneous and
unconscious manner. Very often they developed through "Creeping
incrementalism." Many firms become multinationals by accident.
Sometimes a firm established a subsidiary abroad due to wage
differentials and better opportunity prevailing in the host
country.
(5) Collective Transfer of Resources:An MNC facilitates
multilateral transfer of resources Usually this transfer takes
place in the form of a "package" which includes technical know-how,
equipment's and machinery, materials, finished products, managerial
services, and soon, "MNCs are composed of a complex of widely
varied modern technology ranging from production and marketing to
management and financing. B.N. Ganguly has remarked in the case of
an MNG "resources are transferred, but not traded in, according to
the traditional norms and practices of international trade."
(6) American dominance:Another important feature of the world of
multinationals is the American dominance. In 1971, out of the top
25 MNCs, as many as 18 were of U.S. origin. In that year the U.S.
held 52 per cent of the total stock of direct foreign private
investment. The U.E. has assumed more of the role of a foreign
investor than the traditional exporter of home
products.SIGNIFICANCE OF MULTINATIONAL CORPORATIONS (MNCs):The
multinational corporations today have a revolutionary effect on the
international economic system. It is so because the growth of
international transactions of the multinationals has affected the
more traditional forms of capital flows and international trade for
many economies. Today they constitute a powerful force in the world
economy.
The value of the products sold by the MNCs in 1971 was more than
$ 500 billion which was about one-fifth of the GNP of the entire
world, excepting that of socialist economies. In the host
countries, the volume of their production was about $ 330 billion.
The present growth rate of their output in the host countries is a
spectacular 10 per cent per annum which is almost double the growth
rate of the world GNP.
In the field of international trade and international finance,
the multinational firms have come to exercise enormous power. In
early seventies the MNCs accounted for about one-eighth of all
international trade- From the nature of their growth it may be
presumed that in the early eighties their share will raise to
one-fourth.
Among the developing countries only India had an annual income
twice that of General Motors, which is the biggest multinational
corporation. Otherwise the annual income of the other less
developed countries is much less than that of the giant MNCs. By
their sheer size the MNGs can disrupt the economies of the less
developed countries, and may even threaten their political
sovereignty.
We may comprehend the relative economic power of the MNCs
vis-a-visthe nation-states by ranking them together according to
gross annual sales and gross national product respectively. As
Lester R. Brown has shown, out of 100 entries in the merged list 56
were nation-states and as many as 44 were MNCs.
According to one estimate by early eighties some 300 large MNCs
will come to control 75 per cent of the world's manufacturing
assets.
IMPORTANCE OF MULTINATIONAL CORPORATIONS/MERITS
The Multinational Corporations have been observed as the
instrument of development in the developing states for example
National Petroleum Construction Company NPPC has been awarded
contract of laying transmission line in Kuwait. Following are the
important advantages of MNCs.
1. GlobalizationThe first advantage of Multinational
Corporations MNCs is that they work for the globalization and went
to give global village shape to the whole world. For example, shell
works nearly in 132 states of the world that has integrated the
Holland, with the host countries because in millions the employees
are paid by the shell that simply means that they are the citizen
of Holland, because Holland cant not provide here own citizen to
all these 132 states of the world.
If shell has been closed million employees will become jobless
and due to this billion of families will be affected. Thus it means
that from only one MNCs (Shell) billion of people are taking
advantages and the same is the case of the other MNCs also.
2. Increase world dependencyThe most important advantage of MNCs
is that it increasing the dependency of world countries over each
other due to that they become friends of each other.
3. No warMNCs also plays very important role in the maintenance
of world peace. For example there are a lot of Germany and French
MNCs that are working in Germany and French, they will always try
to focus on friendly and good relationship and boost their
economies.4. Integration of world mindOne of the most significant
roles of Multinational Corporation is unification of world mind and
have become successful in this regard. Throughout the globe,
instead of domestic goods, imported products are used. It means
that the MNCs have made the world as a global village.
5. Mixture of whole world cultureDue to its comprehensiveness
throughout the world, different states of the world i.e. their
cultures and civilization have become amalgamated with each other.
For example British ladies and male like Muslims clothes and their
civilization while on the other hand Muslims wants to wear British
clothes and caps etc. So we can say that it is all due to the role
of MNCs.
6. Transfer of technologyMNCs also have played and are playing a
contributing role in the transfer of highly sophisticated
technology from the developed countries of the world to the less
developed countries of the world to the less developed countries,
especially to third world countries.
7. Economic growthIn some countries where neither domestic
investment nor foreign economic aid is available in sufficient
quantities for repaid development, the help of foreign firms,
companies and enterprises is sought for capital to speed up the
process. Private foreign capital can be major stimulus to the
economic growth of under developed countries.8. Job opportunitiesIn
countries where unemployment is a major problem foreign
corporations or firms provide great opportunities to the local
people. Since, it is too expensive to import large number of
skilled labours from abroad or from the home country. The foreign
investors find it cheaper to train unskilled labours needed by the
enterprise.
9. MNCs produce more and better productsMNCs produce more and
better products at lower costs because they establish their plants
in those countries where they can draw resources easily.
10. World modernizationMNCs are regarded as agents of world
modernization in the developing countries. They produce new jobs,
introduce new technology, and train the local people in the art of
science and technology.
11. MNCs brings foreign exchangeAnother most important advantage
of MNCs is that it brings foreign exchange to developing countries
because in developing countries, the rate of saving is very
low.
12. MNCs take economic riskAnother important advantage of MNCs
is that it takes economic risk in business in developing countries
because they have financial powers and developing or third world
countries are not in such a position to take economic risk.
DISADVANTAGES OF MULTINATIONAL COMPANY
(1) High Profit Low Risk Investment:
The multinational company prefers to invest in areas of low risk
and high profitability. Issue like social welfare, national
priority etc. have less priority on their agenda. Mostly they
invest in consumer goods industry.
(2) Interference in Political Matters:
The multinational company from developed countries interferes in
the political affairs of developing nations. There are many cases
where multinational company has bribed political leadership for
their own economic gains.
(3) Create Artificial Demand:
These companies create artificial and unwarranted demand by
making extensive use of advertising and ales and promotion
techniques.
(4) Exploitation:
These companies are financially very strong and adopt aggressive
marketing strategies to sale their products, adopt all means to
eliminate competition and create monopoly.
(5) Technological Problem:
Technology they use is capital intensive so sometimes that
technology does not fully fit in the needs of developing countries.
Also, multinational company is criticized for transferring outdated
technology to developing countries.(6) Foreign Exchange go outside
the Country:
The working of multinational company is a burden on the limited
resources of developing countries. They charge high price in the
form of commission and royalty paid by local business subsidiary to
its parent company. This leads to outflow of foreign exchange.
(7) National Threat:
Sometimes outdated technology is used by domestic industries
which hamper the quality and price of their products so they cannot
compete with those multinational company. Hence, there is a threat
of nationwide opposition to multinational company. Arrival of these
companies creates an atmosphere of uncertainly to the domestic
industries.
(8) Impose their Culture:
Multinational company imposes their culture on developing
countries. Along with the products they also indirectly impose the
culture of developed nations. These companies have imposed the
culture of fast food and soft drinks onto the developing nations.
For examples:- burger and coke.
(9) Work for Self Interest:
Multinational company work toward their own self interest rather
than working for the economic development of host country. They are
more interested in marketing of profits at any cost.
MULTINATIONAL COMPANIES IN INDIA
Multinational companies are the enterprises or organizations
that manage production or offer services in more than one country.
India has been the home to a number of multinational companies.
Indeed, since the financial liberalization in the country in 1991,
the number of multinational companies in India has increased
noticeably. Although majority of the multinational companies in
India are from the U.S., however one can also find companies from
other countries as well. Multinational companies in India are
taking their toll on family businesses. They are not only
destroying the household economies for small business people but
also leading to the cultural uniformity of the global brands in the
market place in India. There are Many reasons why the multinational
companies are coming down India.
India has got a huge market. It has also got one of the fastest
growing economies in the world. Besides, the policy of the
government towards FDI has also played the most important role in
attracting the multinational companies in India. For quite a long
time, India had a restrictive policy in terms of foreign direct
investment. As a result, there was lesser number of companies that
showed interest in investing in Indian market. However, the
scenario changed during the Economic liberalization of the country,
especially after 1991.
Government, nowadays, makes constant efforts to attract foreign
investments by relaxing several of its policies. As a result, a
number of multinational companies have shown interest in the Indian
market.
MULTINATIONAL CORPORATION
COMPANY OF LG
LG Corporation (Korean: LG ) is a South Korean multinational
conglomerate corporation. It is the fourth-largest company of its
kind in South Korea, following Samsung Group, Hyundai Motors Group
and SK group. Its headquarters are situated in the LG Twin Towers
building in Yeouido-dong, Yeongdeungpo-gu, Seoul. LG makes
electronics, chemicals, and telecom products and operates
subsidiaries such as LG Electronics, Zenith, LG Display, LG Telecom
and LG Chem in over 80 countries.
History
LG Corp. founder Koo In-Hwoi established Lak-Hui Chemical
Industrial Corp. in 1947.[3] In 1952, Lak-Hui (pronounced "Lucky",
currently LG Chem) became the first Korean company to enter the
plastic industry. As the company expanded its plastic business, it
established Goldstar Co. Ltd. (currently LG Electronics Inc.) in
1958. Both companies Lucky and Goldstar merged and formed
Lucky-Goldstar.
Goldstar produced South Korea's first radio. Many consumer
electronics were sold under the brand name Goldstar, while some
other household products (not available outside South Korea) were
sold under the brand name of Lucky. The Lucky brand was famous for
hygiene products such as soaps and HiTi laundry detergents, but the
brand was mostly associated with its Lucky and Perioe toothpaste.
Even today, LG continues to manufacture some of these products for
the South Korean market, such as laundry detergent.
In 1995, to compete better in the Western market, the
Lucky-Goldstar Corporation was renamed "LG", (the abbreviation of
"Lucky-Goldstar"). The company also associates the letters LG with
the company's tagline "Life's Good", which is actually a backronym.
Since 2009, LG has owned the domain name LG.com.
Vision & Business Goals
LG Electronics pursues its 21st century vision of becoming a
true global digital leader, making its customers worldwide
delighted through its innovative digital products and services.
Going forward LG India will synergize all activities in keeping
with the global vision of becoming a global top 3 player in all
business areas by following the Blue Ocean Strategy. The Blue Ocean
strategy is based on the understanding that only flexible companies
that adapt to lifecycle and industry changes will enjoy continued
growth. The success of the Blue Ocean Strategy will focus on
creating high growth & profit by focusing on five key areas at
LG: Products, Business Model, Work, and Systems & PeopleIn 1996
LG formed a joint venture with IBM; it was later terminated.
On 1 April 2000, LG Chemical was split into three separate
companies, namely LGCI, LG Chem, and LG Household & Health
Care. Later, in July 2007, LG Chem merged with LG
Petrochemical.
Since 2001, LG has two joint ventures with Royal Philips
Electronics: LG Philips Display and LG Philips LCD, but Philips
sold off its shares in late 2008. In 2005, LG entered into a joint
venture with Nortel Networks, creating LG-Nortel Co. Ltd.On
November 30th 2012, com Score released a report of the October 2012
U.S. Mobile Subscriber Market Share that found LG lost its place as
second in the U.S mobile market share to Apple Inc.
On 20 January 2013, Counterpoint Research announced that LG has
overtaken Apple to become second largest smart phone manufacturer
in the US.
LG has owned the LG Twins baseball club in Seoul, South Korea,
since 1989.
The company logo of LG features the letters L and G, presented
in the form of a smiling human face.
Associated companies GS Group LS Group LIG GroupFields of
activityCompaniesThe division's revenue, billion USD(2011)
Holding companyLG Corp.US$ 9.2 billion[10]
Electronic industryLG ElectronicsLG DisplayLG InnotekLG
SiltronLusemUS$ 50.03 billion[11]US$ 22.4 billion[12]US$ 4.19
billion[13]N/AN/A
Chemical industryLG ChemLG Household & Health CareLG
HausysLG Life SciencesLG MMAUS$ 20.9 billion[14]US$ 3.18
billion[15]US$ 2.26 billion[16]N/AN/A
Telecommunication and ServicesLG UplusLG International Corp.LG
CNSSERVEONELG N-SysUS$ 8.47 billion[17]US$ 12.9
billion[18]N/AN/AN/A
Group familiesElectronics industries LG Electronics LG Display
LG Innotek LG Micron Hiplaza Hi Logistics System Air-Con
Engineering Siltron LusemChemical industries LG Chem SEETEC LG
Household & Health Care
sa Knox The Face Shop CocaCola Beverage Company (South Korea) LG
Hausys LG TOSTEM BM LG Life Sciences LG MMATelecommunications and
services LG U+ CS Leader
AIN
LG Dacom LG Powercom
DACOM Crossing
DACOM Multimedia Internet
CS ONE Partner
LG CNS LG N-Sys
V-ENS
BIZTECH & EKTIMO
Ucess Partners
SERVEONE
LG International
TWIN WINE
monkey house
pixdix
Korea Commercial Vehicle
LG Solar Energy G2R HS Ad Twenty Twenty Media Prima Berhad
LG Electronics Aims to Be Truly Multinational, Marketing-Driven
Company
Company looks to take next step to become leading global
corporate brand
LG Electronics (LG), a global leader and technology innovator in
consumer electronics, announced today its ambitious plans to be a
multinational company in every sense of the word. LGs plans include
additional marketing investment, businesses reorganization and
system improvements and global standardization.
LG aims to become the best corporate brand with top-notch
marketing capabilities in each of the 140 countries where we
currently operate. We want to make it completely unimportant to
consumers where LG is headquartered; all that will matter is how
they feel about our products, said Yong Nam, CEO of LG Electronics.
This will be possible only through a deep understanding of what
todays global consumers really want and by making strategic
marketing investments. Being alert to consumers needs, both
practically and emotionally, is critical to survival today,
especially as product lifecycles are getting shorter and
shorter.
Elevating Marketing Capabilities
LG aims to separate itself from other major electronics makers
both through its unique combination of advanced technology and
stylish design as well as advanced marketing practices. To enhance
its brand, LG has increased its marketing investment by USD 400
million over 2007. However, LG understands that it will take more
than money to win consumers hearts and minds. Thats why LG has also
undertaken some unique, aggressive campaigns to increase consumer
recognition and understanding of LGs brand identity as a
sophisticated, refreshing brand that sits at the intersection of
function and form.
LGs focus on marketing investment has already begun to yield
results. According to research conducted by LG, the companys brand
awareness in the U.S. market has increased from 65 percent in 2005
to 83 percent in 2007. This wider recognition has resulted in
improved profits in North America.
Improving Business Portfolio
As part of its efforts to be a highly profitable organization,
LG plans to reorganize its business portfolio during the next five
years. This includes reorganizing business units and divisions,
expanding outsourcing and participating in new businesses such as
energy, B2B solutions and healthcare.
Through its reorganization to improve both its growth and
profit, LG expects to achieve at least 10 percent sales growth, 6
percent profit margin, 4 times asset turnover ratio and 20 percent
ROIC. LG aims to increase its ROIC from 10 percent in 2007 to 15
percent in 2008, with the target for ROIC in 2010 at more than 20
percent.
As cash flow has become one of the most critical elements of a
companys financial structure, LG is focusing on improving its cash
flow as well as ROIC.
Global Standard
LG has also enhanced its management structure by appointing
Reginald J. Bull as Chief Human Resources Officer (CHO), an
Executive Vice President-level position, last week. Mr. Bull will
direct all aspects of ensuring LGs HR policies and systems are up
to global standards.
As a part of LGs efforts to enhance its position as a global
brand and boost performance, the company has been filling C-suite
positions with non-Korean global leaders who are overseeing
marketing, supply chain and procurement. Last year, the company
appointed Dermot Boden, formerly of Pfizer, as Chief Marketing
Officer (CMO); Thomas K. Linton from IBM as Chief Procurement
Officer (CPO); and Didier Chenneveau from Hewlett-Packard as Chief
Supply Chain Officer (CSCO).
With these investments and initiatives, LG expects to achieve
its business goals - improving both growth and profit - as well as
position itself as a truly global brand.
STRUCTURE OF THE GROUP AND THE FINANCIAL POSITIONLG Corporation
is a holding company that operates worldwide through more than 30
companies in the electronics, chemical, and telecom fields. Its
electronics subsidiaries manufacture and sell products ranging from
electronic and digital home appliances to televisions and mobile
telephones, from thin film transistor-liquid crystal displays to
security devices and semiconductors. In the chemical industry,
subsidiaries manufacture and sell products including cosmetics,
industrial textiles, rechargeable batteries and toner products,
polycarbonates, medicines, and surface decorative materials. Its
telecom products include long-distance and international phone
services, mobile and broadband telecommunications services, as well
as consulting and telemarketing services. LG also operates the
Coca-Cola Korea Bottling Company, manages real estate, offers
management consulting, and operates professional sports clubs.
LG ELECTRONICS COMPANY ANALYSIS
In this competitive business world marketing strategies is very
important .They are several multinational company run their
business over the world so the multinational company must use its
own marketing strategies. This analysis describe the macro
environment of the organization and its future decision making
process. Globally the lot of business to achieve their goal by its
own marketing strategies plan. Here the study tells about the LG
Electronics and its future plan in the competitive market.
LG Electronics is the one of well known multinational company in
this world. This company delivery innovative digital product such
as entertainment, games, home media and home appliance to customer.
LG Electronics funded in 1958 as Gold Star in Korea. In 1995 its
renamed as LG. Its prior product is consumer TV, radio,
refrigerator, air conditioner and washing machine. LG electronics
introduce some new technology to the digital world such as the
first CDMA digital handset, 60 inch plasma TV. LG electronics have
good corporate culture some of these No excuse, We not I, Fun work
place. LG brand comprised of four basic element value, benefits,
promise and personality. This company set the long term goal and
works towards the goal. The vision of the company is Global top
three in 2010.
LG controls 114 local subsidiaries all over the world. They are
82000 people work for this company. LG accept as true that
technological innovation is the only way to achieve the market. So
its delivery latest technology to the customer.
MACRO ENVIRONMENT
Main external and out of control factor that influence an
organization decision making and change the performance and
strategies The major factor are
1. Political factor
2. Economic factor
3. Social factor
4. Technical factor
These are the main factor influence the company or organization
decision making and its improve or decrease company
performance.
L G
Political factor
Technical factor
Economic factor
Social factor
Political Analysis:
LG Electronics is the intercontinental Company which has a range
of industrialized Units and sources. The company focus the
international market for his product .the political environment
nothing but how the law and government taxation policy influence an
organization .There is a lot of political interaction has
integrated in this business and it has operated between the
political and legal factors. This factor may increase the cost of
factor some time it decrease the product cost. The LG electronics
facing lots of problem while its production and exporting goods to
the overseas.
Economic Analysis:
LG has a very big competitive market in world and it have
constant development in their innovation in electronics equipment,
secondary products, planned process of LG etc.. it have leads to
sell goods to other countries . The LG contribute the world wide
stock market and money market also. The LG have well and strong
economic source and it has capable of introduce some new technology
to the electronic market. LG leads the electronics market with
enormous technology and economic resource. The below the table
shows the financial highlight of LG electronics. The sale of the
company is constantly increase the last seven year it possible by
the good economic status
Technological Analysis:
The LG has more technology shock towards its electronics
product. In every manufactured goods in LG they improve their
technology and they became a first world exporter of the country.
The LG has a huge technology like LCD, plasma TV, Games and,
Laptops, Videos, CDMA Mobile phones with a number of features. The
challenger cant beat its clear imagery their technology towards its
innovation of product. The 3D Plasma TV, Camera with massive
features like clear images and slide activities, high battery
etc..The LG introduce lots of new technology to the digital world
such as This business group has entitled more quality product and
services to the customer. it has introduced lot of technology in
every business group of product. Recently the LG has introduced 3k
model of Camera which has lot facilities and clear images. It is a
exiting product to the market. and also the company has introduced
more innovative product like 3D products, professional cameras,
Blue ray Disk, increasing network services etc.. The LG has lead
its technology and it introduce number of products with exclusive
features to the market.
Socio-cultural Analysis:
LG Corp has introduced the number of product to the different
customer into the society. Mainly it has introduced for easy usage
with several option of different user. It has introduced to the
delighting product to the customer. The LG product such as laptop,
various electrical products, mobile devices, iPod, ipad, financial
services, network system etc. So it has changing life style of the
LG user. LG increase its ethical standard contributes in Research
and development and health of the organization. It also leads to
image of the country.LG creates its employment opportunity: After
the 2009 the LG has creates a more product services and sales
growth. It improve its manufacturing process to various countries.
So it creates a employment opportunity to the country. it develop
career expectation to the people and they able to recruit a more
number of peoples and it leads to employment opportunity and life
style changes of the people. LG product has a number of user form 6
years to 60 years of the people. So in every generation it creates
a lot of life changes and life expectancies of the product.
LGs New Customer and New Geographies:
At presently, LG has concentrated the end user of its consumer.
The Company has introduced lot of technologies and it has followed
by their competitor. The LG has analysis in a different perspective
of different customer. Based on the experience of the consumer the
product has developed. It has developed not only by the technology
impact, it also based on the usage of customer. The company also
reinvest into their retail sales to various countries. It leads to
improve customer contact and to get a feed back about the product
directly. LG Make believe the brand image has increased its lot of
brand image of the product. The new customers are increased into
the market and it has increased more geographic are in retail
market.Future Market:
LG has increased its various technologies and various marketing
strategy to capture the future market. LG product has easier
product and it has so much of coverage in the world. If the company
has to leads its competitive markets means, it must increase its
capability of marketing strategy and best customer services than
the competitor. In future it has increased play station network and
it has increased its core value, games and videos etc. The market
has in wide area and it must cover whole classes of people. So day
by day it has increased its technology up gradation and cost price
movements. Then only it will able to sustain its sales growth in
future market. LG has separated as a three business groups and it
increased its more strategy towards its business. It increase more
products and services like, deploy LG online services for the
network infrastructure. And also it has increase the network
product and it enhance more customer for future period.There is
more competitor company like Dell, Apple Inc, HP, and Samsung etc.
to enter into the market. The LG must leads its competitor and
fulfill their customer satisfaction. Most of the competitor has
same product and same features with less price of the product. The
LG must be differentiating its product among the customer. So it
has introduced more technology with the quality conscious and Music
player has more effect than the competitor product. LG management
has re invested in retail market and it increases its cost cutting
strategy to reduce its price movements. This has leaded the future
market as a competitive way. I hope the LG Corp has leads its
future market
MARKETING MIX OF ITS LG CORP
Every company has increased its marketing mix strategy to
improve its sales growth among competitor. The LG Corp also has
marketing mix like Price, Place, Promotion, Product, people,
process, physical evidence etc. The LG has also used its more
strategic alliances and performances of its product.Price:
The LG has enormous technology and it has used the more
electronics and quality spares for its products. So the price of
the product has increased. After some period the LG has realized
and it give more quality and services for its expensive product.
None of the competitor has increased its effectiveness in the
sounds and videos. In 2008 because of the recession the LG has
reach its low sales market and it has declined in the various
products and services. After the recession in 2009 they started the
to cut cost materials and it provide a variety of pricing
strategies. The price of the LG has given some effects to the
customer and it leads to sales growth for some period.Place:
The LG Corp make. Believe the brand image have a worldwide to
produce more customers to enter into the market. The LG product has
sales around world. But some of the product has not reached into
the some of places like china and some of the countries are not
allowing getting the product into the market. The geographic are
must be increased worldwide. The manufacturing company is in Japan,
U.K, U.S etc.. It has increased its product range and it sales
around the world. At present the retail market has developed and it
increase its competitive advantage towards its
customerPromotion:
The LG different product has a different range of effects and it
has many offers it depends upon the product range and products. The
LG has provided a different Advertisement to the different
countries of same product, because the people and customer views
and culture will be different into a various countries. The
advertisement and promotion strategy has been formulated by LG
management to increase its sales growth by nature.Product:
The LG corp. has a product portfolio. There is a number of
product and brand images among the LG and it has more effective
strategies towards its business. There is 3 business groups and it
has increased its product services to the market and it increase
its effectiveness of networking system. The product has segmented
as electronic goods, financial services, networking system, health
science R & D etc.. The different product has a different
ranges and quality effective towards its customer.-Physical
Evidence:
The LG has increased its infrastructure at every movement. It
has several showrooms and retail market to increase its sales
growth and it should impress the customer to buy the product. Hope
it make a enormous physical quality to the LG. The every movement
of LGs workstation has increased its quality range in
infrastructure facility and it have more stylish in nature. It has
increased its profitability in hardware, software and networking
system.Competitive Strategy of LG:
This study has formulated the Porters competitive strategy. The
LG Company has lot of competitor and it has a lot of strategy to
leads its competitor market. The competitive strategy has concerned
the lower cost strategy and the differentiation strategy.
LG Electronics Company AnalysisIn this competitive business
world marketing strategies is very important .They are several
multinational company run their business over the world so the
multinational company must use its own marketing strategies. This
analysis describe the macro environment of the organization and its
future decision making process. Globally the lot of business to
achieve their goal by its own marketing strategies plan. Here the
study tells about the LG Electronics and its future plan in the
competitive market.
LG Electronics is the one of well known multinational company in
this world. This company delivery innovative digital product such
as entertainment, games, home media and home appliance to customer.
LG Electronics funded in 1958 as Gold Star in Korea. In 1995 its
renamed as LG. Its prior product is consumer TV, radio,
refrigerator ,air conditioner and washing machine. LG electronics
introduce some new technology to the digital world such as the
first CDMA digital handset, 60 inch plasma TV. LG electronics have
good corporate culture some of these No excuse, We not I, Fun work
place. LG brand comprised of four basic element value, benefits,
promise and personality. This company set the long term goal and
works towards the goal. The vision of the company is Global top
three in 2010.
LG controls 114 local subsidiaries all over the world. They are
82000 people work for this company. LG accept as true that
technological innovation is the only way to achieve the market. So
its delivery latest technology to the customer.LG adapts cost
leadership and Differentiation competitive strategy:
LG Corp has a lot of competitor and it have to lead its market.
Before LG has a lot manufacture and process to do the lot product
innovation and it introduced into the market. In 2008 because of
the recession the LG has reached its declined stage and the sales
of growth has very low into the market. So the LG has taken a
effective decision of cost cutting system. It implemented the cost
cutting system into the market. Many manufacturing unit has cut the
process of product and it decreases the manufacturing product for
some period. It leads to cutting the prices of product andit become
a more sales by the segments of low prices. The LG devices like
Mobile phones, iPod, laptops especially in W series of models has
high cost than the competitive. But it has more features than the
competitor. This segment of LG has focusing the particular quality
customer to buy the product. The cost leaderships strategy has
increase its product effectiveness and sales growth to the
company.
LG has more feature than the competitor product. The devices
like LG digital camera, LG Vaio, LG mobile phones, PCs, Networking
system etc., it has from the competitor product. Presently the LG
introduced the 3D products its play station and it games etc. It
increase its product designs, technology, features etc to leads its
competitive market.
LG also its developed its market in wide range by introducing
networking system of the company. The LG corp. has more marketing
strategies to increase its promotion strategy towards its customer.
The product has a wide market, so it must want more place strategy
and promotion strategy to reach its end user of the customer. LG
make. Used the various technologies and it includes various
features. Every product must differentiate believe it implies the
LG brand has more innovative product and it increase its lot of
marketing strategy. And also it associated with brand image,
features, technology, dealer network and direct networking system
etc.
Growth Strategy:
There is a diversified market in the strategy. The LG Corp has
horizontally increased their product to the market. Day by day
company has expanded in business growth by the way of increasing
product segmentation and various product services. The LG has a
wide market towards its market and it has increased its growth
strategy towards its business. The Concentrated in the wide range
of activities and it has increased its strength and effectiveness
in their price and markets. They are diversified their market by
improving both related products and unrelated products like life
science, financial services.
Recommendation The analysis of LG has comprises that it has more
quality services and market sustainable capability towards its
business. The company still its has some unlike movements in some
markets. The LG must improve its price strategy and promotion
strategy at the movement. The LG announces the core capability and
environment development product to develop in a certain level. This
makes LG a wide brand image of the product. Even though LG employee
was a many skills and talented to increase its innovative
technological products to customer. But still there is some lacking
into the marketing mix like pricing strategy and promotion strategy
to reach the customer. In future the LG must improve its pricing
strategy like to cut the cost of the exiting product by the way of
minimizing its process and it must increase time utility. There is
a many competitor has arise for LG product. So the technology has
concerned it should increase to implement in timely manner. This
will increase to capture a more market in future. I hope the LG
electronics and other components have more capability to reach
their customer.
CONCLUSIONThe review has explained about the Macro environment
analysis and Marketing mix strategy. It comprises the LG future
development and this review has provide more detail analysis about
the LG Corp. I hope in future the LG has a very good capability and
sustainable maintenance in sales growth. The LG has entered into
the more related and unrelated products into the market. This is a
good beginning of LG to increase its market capability to its wide
ranges.BIBILIOGRAPHY OF REFERENCES
BOOKS:
P. A. JOHNSON: ECONOMICS OF GLOBAL TRADE AND FINANCE
PUBLISHED BY MANAN PRAKASHAN MUMBAI, 2012
OTHER SOURCE OF DATA :
1. OTHER WEBSITE
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