LG Electronics: Global Strategy in Emerging Markets SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of LG Electronics: Global Strategy in Emerging Markets
This is a Thunderbird Case Study.The case discusses two important themes of contemporary interest in global strategy and international business; (1) the impact of location-specific advantage and the role of government policy in helping firms compete, and (2) leveraging home-grown competitive advantages in evolving into full-fledged MNEs (Multinational Enterprises). Emerging market multinationals have become a compelling force to contend with in the global economy, and this case illustrates the unique advantages that these firms bring. The case focuses on the specific issues relating to Korea and LG Electronics, one of the leading consumer electronics manufacturers in the world. It follows the fortunes of LG Electronics, a company that started as a contract manufacturer supplying OEM contracts to a variety of Japanese and U.S. appliance makers. It entered the U.S. market under its Goldstar label fairly early, and quickly realized that it needed to hone important skills of product differentiation, brand positioning, design, and innovation in order to succeed. Given the huge obstacle that this steep learning curve represented, LGE turned to emerging markets as a means of building credibility outside Korea. It charted a systematic strategy that encompassed a range of elements such as locally adapted designs, localized manufacturing, rural distribution, and cultural marketing that resonated very well with emerging market consumers. It had soon built a formidable position across all the BRIC countries (Brazil, Russia, India, and China). Turning its sights once again to the developed countries, it contemplated how it could take some of the lessons it had learned in the developing world to kickstart its developed country strategy into high gear. The case describes the challenges facing companies seeking to enter emerging markets and the important credentials that they can build in the process of understanding these settings
Swot Analysis of "LG Electronics: Global Strategy in Emerging Markets" written by Kannan Ramaswamy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lg Electronics facing as an external strategic factors. Some of the topics covered in LG Electronics: Global Strategy in Emerging Markets case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the LG Electronics: Global Strategy in Emerging Markets casestudy better are - – digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, geopolitical disruptions, cloud computing is disrupting traditional business models, increasing energy prices, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies,
central banks are concerned over increasing inflation, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of LG Electronics: Global Strategy in Emerging Markets
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in LG Electronics: Global Strategy in Emerging Markets case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lg Electronics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lg Electronics operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of LG Electronics: Global Strategy in Emerging Markets can be done for the following purposes –
1. Strategic planning using facts provided in LG Electronics: Global Strategy in Emerging Markets case study
2. Improving business portfolio management of Lg Electronics
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lg Electronics
Strengths LG Electronics: Global Strategy in Emerging Markets | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lg Electronics in LG Electronics: Global Strategy in Emerging Markets Harvard Business Review case study are -
Strong track record of project management
– Lg Electronics is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Lg Electronics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lg Electronics has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Lg Electronics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in LG Electronics: Global Strategy in Emerging Markets Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Analytics focus
– Lg Electronics is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Kannan Ramaswamy can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Effective Research and Development (R&D)
– Lg Electronics has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study LG Electronics: Global Strategy in Emerging Markets - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Lg Electronics in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the LG Electronics: Global Strategy in Emerging Markets Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Lg Electronics is one of the leading recruiters in the industry. Managers in the LG Electronics: Global Strategy in Emerging Markets are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Lg Electronics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lg Electronics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Lg Electronics are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– LG Electronics: Global Strategy in Emerging Markets firm has clearly differentiated products in the market place. This has enabled Lg Electronics to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Lg Electronics to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Lg Electronics in the sector have low bargaining power. LG Electronics: Global Strategy in Emerging Markets has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lg Electronics to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses LG Electronics: Global Strategy in Emerging Markets | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of LG Electronics: Global Strategy in Emerging Markets are -
Slow to strategic competitive environment developments
– As LG Electronics: Global Strategy in Emerging Markets HBR case study mentions - Lg Electronics takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Lg Electronics products
– To increase the profitability and margins on the products, Lg Electronics needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Lg Electronics is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Lg Electronics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lg Electronics to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study LG Electronics: Global Strategy in Emerging Markets that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case LG Electronics: Global Strategy in Emerging Markets can leverage the sales team experience to cultivate customer relationships as Lg Electronics is planning to shift buying processes online.
Interest costs
– Compare to the competition, Lg Electronics has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study LG Electronics: Global Strategy in Emerging Markets, is just above the industry average. Lg Electronics needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study LG Electronics: Global Strategy in Emerging Markets, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Kannan Ramaswamy suggests that, Lg Electronics is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Lg Electronics, firm in the HBR case study LG Electronics: Global Strategy in Emerging Markets needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Lg Electronics has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Lg Electronics even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Lg Electronics has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities LG Electronics: Global Strategy in Emerging Markets | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study LG Electronics: Global Strategy in Emerging Markets are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Lg Electronics can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lg Electronics is facing challenges because of the dominance of functional experts in the organization. LG Electronics: Global Strategy in Emerging Markets case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Lg Electronics to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Lg Electronics has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lg Electronics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Lg Electronics has opened avenues for new revenue streams for the organization in the industry. This can help Lg Electronics to build a more holistic ecosystem as suggested in the LG Electronics: Global Strategy in Emerging Markets case study. Lg Electronics can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Lg Electronics can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lg Electronics in the consumer business. Now Lg Electronics can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lg Electronics can use these opportunities to build new business models that can help the communities that Lg Electronics operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Leveraging digital technologies
– Lg Electronics can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Lg Electronics can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. LG Electronics: Global Strategy in Emerging Markets suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lg Electronics can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, LG Electronics: Global Strategy in Emerging Markets, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lg Electronics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats LG Electronics: Global Strategy in Emerging Markets External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study LG Electronics: Global Strategy in Emerging Markets are -
Consumer confidence and its impact on Lg Electronics demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Stagnating economy with rate increase
– Lg Electronics can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Lg Electronics business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Lg Electronics needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lg Electronics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Lg Electronics has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Lg Electronics needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Lg Electronics will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Lg Electronics needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Lg Electronics in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Lg Electronics high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Lg Electronics.
Weighted SWOT Analysis of LG Electronics: Global Strategy in Emerging Markets Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study LG Electronics: Global Strategy in Emerging Markets needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study LG Electronics: Global Strategy in Emerging Markets is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study LG Electronics: Global Strategy in Emerging Markets is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of LG Electronics: Global Strategy in Emerging Markets is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Lg Electronics needs to make to build a sustainable competitive advantage.