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 - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, technology disruption, cloud computing is disrupting traditional business models,
increasing transportation and logistics costs, increasing energy prices, 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 -
Diverse revenue streams
– Lg Electronics is present in almost all the verticals within the industry. This has provided firm in LG Electronics: Global Strategy in Emerging Markets case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
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.
Highly skilled collaborators
– Lg Electronics has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in LG Electronics: Global Strategy in Emerging Markets HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Lg Electronics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lg Electronics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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.
Innovation driven organization
– Lg Electronics is one of the most innovative firm in sector. Manager in LG Electronics: Global Strategy in Emerging Markets Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Lg Electronics has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Lg Electronics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lg Electronics has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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 -
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the LG Electronics: Global Strategy in Emerging Markets HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Lg Electronics has relatively successful track record of launching new products.
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.
Products dominated business model
– Even though Lg Electronics has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - LG Electronics: Global Strategy in Emerging Markets should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Lg Electronics needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lg Electronics is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study LG Electronics: Global Strategy in Emerging Markets can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Lg Electronics has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
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 -
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.
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.
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.
Developing new processes and practices
– Lg Electronics can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing 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.
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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Lg Electronics can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Lg Electronics can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Better consumer reach
– The expansion of the 5G network will help Lg Electronics to increase its market reach. Lg Electronics will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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.
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.
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 -
Increasing wage structure of Lg Electronics
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Lg Electronics.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lg Electronics can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study LG Electronics: Global Strategy in Emerging Markets .
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.
Environmental challenges
– Lg Electronics needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Lg Electronics can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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.
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.
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.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Lg Electronics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
