LG Electronics, a global leader and technology innovator in consumer electronics, announced today its long-term business plan and strategy to succeed in the current business environment.
In order to maintain product leadership and increase market competitiveness, LGE CEO Yong Nam confirmed that the company would not reduce — and could even increase — its investment in R&D, marketing, branding and design.
“Every company — not just LG — has been affected negatively by the economic downturn,” said CEO Nam, who was behind the successful turnaround of LG Telecom during the Asian Financial Crisis of 1997, “The poor performance of many global companies in the last quarter of 2008 was a wake-up call that we needed to take drastic actions, not just safe ones.”
Recession and Beyond
The company has intensified its efforts to increase market share despite the volatile economic situation. To achieve this, LG has reorganized its business portfolio to focus on areas with longer-term growth potential and profitability. Partnerships will continue to be a key element of the company’s marketing activities to elevate its brand position.
LG will continue to invest in future growth engines such as solar power, commercial air conditioners and business (B2B) solutions, all sectors LG expects will expand and become increasingly profitable once the economy is back on track.
Crisis War Room
At the end of 2008, LG Electronics established a Crisis War Room (CWR) to bring together LG’s five business units, eight regional headquarters and executives to implement and manage the company’s aggressive business plan. In just three short months the CWR — with the collaboration of each of the company’s business units and company divisions such as supply chain management, marketing, procurement, human resources and finance — has identified and developed 11 key action items. Business units have been instructed to establish task force teams to take responsibility for managing the cost-saving initiatives.
LG is targeting a reduction in expenses of KRW 3 trillion in 2009. This company-wide initiative, which includes headquarters and all 82 subsidiaries around the world, also applies to manufacturing and indirect costs.
Globally, LG has been working to further improve its procurement system, which includes everything from raw materials to investment in facilities, financial services and recruitment. LG’s efforts to improve its cash flow has already resulted in reduced inventory, increased liquidity, optimized supply chain management and a more consolidated, efficient purchasing process overall.
To cement its position as a global company, LG will continue to direct significant resources toward improving standards to global organizational levels. Efforts currently underway include improving its HR system, reorganizing business portfolios, focusing on customer-centric processes, recruiting and retaining global talent, eliminating unnecessary costs and continuing to foster technology and design innovations. LG now has non-Korean executives occupying five of its seven highest positions and has recruited approximately 200 other professionals around the world to oversee marketing, supply chain and procurement.
“These initiatives will enable LG to improve both growth and profitability over the long-term, regardless of the economic climate,” CEO Nam remarked. “Becoming a stronger global brand will be a natural outcome of this effort.”