LG Corp (3550) SWOT Analysis / TOWS Matrix / MBA Resources
Audio & Video Equipment
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for LG Corp (South Korea)
Based on various researches at Oak Spring University , LG Corp is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, wage bills are increasing, geopolitical disruptions, increasing energy prices, central banks are concerned over increasing inflation,
digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that LG Corp can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the LG Corp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which LG Corp 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 Corp can be done for the following purposes –
1. Strategic planning of LG Corp
2. Improving business portfolio management of LG Corp
3. Assessing feasibility of the new initiative in South Korea
4. Making a Audio & Video Equipment sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of LG Corp
Strengths of LG Corp | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of LG Corp are -
Training and development
– LG Corp has one of the best training and development program in Consumer Cyclical industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of LG Corp
– The covid-19 pandemic has put organizational resilience at the centre of everthing LG Corp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that LG Corp 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.
Digital Transformation in Audio & Video Equipment industry
- digital transformation varies from industry to industry. For LG Corp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. LG Corp 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.
Analytics focus
– LG Corp 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 Audio & Video Equipment industry. The technology infrastructure of South Korea is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Strong track record of project management in the Audio & Video Equipment industry
– LG Corp is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– LG Corp is one of the most innovative firm in Audio & Video Equipment sector.
Diverse revenue streams
– LG Corp is present in almost all the verticals within the Audio & Video Equipment industry. This has provided LG Corp 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.
Superior customer experience
– The customer experience strategy of LG Corp in Audio & Video Equipment industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy of LG Corp comprises – understanding the underlying the factors in the Audio & Video Equipment 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.
High brand equity
– LG Corp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled LG Corp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Audio & Video Equipment industry
– LG Corp has clearly differentiated products in the market place. This has enabled LG Corp to fetch slight price premium compare to the competitors in the Audio & Video Equipment industry. The sustainable margins have also helped LG Corp to invest into research and development (R&D) and innovation.
Weaknesses of LG Corp | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of LG Corp are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of LG Corp supply chain. Even after few cautionary changes, LG Corp is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left LG Corp vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, LG Corp 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, LG Corp is slow explore the new channels of communication. These new channels of communication can help LG Corp to provide better information regarding Audio & Video Equipment products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As LG Corp is one of the leading players in the Audio & Video Equipment industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Audio & Video Equipment industry in last five years.
Employees’ less understanding of LG Corp strategy
– From the outside it seems that the employees of LG Corp don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee of LG Corp is just above the Audio & Video Equipment industry average. It 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.
High cash cycle compare to competitors
LG Corp has a high cash cycle compare to other players in the Audio & Video Equipment industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of LG Corp is dominated by functional specialists. It is not different from other players in the Audio & Video Equipment industry, but LG Corp needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help LG Corp to focus more on services in the Audio & Video Equipment industry rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, LG Corp has high operating costs in the Audio & Video Equipment industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract LG Corp lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, LG Corp 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 Audio & Video Equipment industry using digital technology.
Lack of clear differentiation of LG Corp products
– To increase the profitability and margins on the products, LG Corp needs to provide more differentiated products than what it is currently offering in the marketplace.
LG Corp Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of LG Corp are -
Learning at scale
– Online learning technologies has now opened space for LG Corp 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects LG Corp can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, LG Corp 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.
Better consumer reach
– The expansion of the 5G network will help LG Corp to increase its market reach. LG Corp 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. LG Corp can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– LG Corp has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Audio & Video Equipment sector. This continuous investment in analytics has enabled LG Corp to build a competitive advantage using analytics. The analytics driven competitive advantage can help LG Corp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for LG Corp to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for LG Corp to hire the very best people irrespective of their geographical location.
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 Corp can use these opportunities to build new business models that can help the communities that LG Corp operates in. Secondly it can use opportunities from government spending in Audio & Video Equipment sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, LG Corp is facing challenges because of the dominance of functional experts in the organization. LG Corp can utilize new technology in the field of Audio & Video Equipment industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help LG Corp to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Audio & Video Equipment industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. LG Corp 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 Corp 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.
Use of Bitcoin and other crypto currencies for transactions in Audio & Video Equipment industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for LG Corp in the Audio & Video Equipment industry. Now LG Corp can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of LG Corp has opened avenues for new revenue streams for the organization in Audio & Video Equipment industry. This can help LG Corp to build a more holistic ecosystem for LG Corp products in the Audio & Video Equipment industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats LG Corp External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of LG Corp are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, LG Corp may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Audio & Video Equipment sector.
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.
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 Corp.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, LG Corp 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 LG Corp prominent markets.
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.
Shortening product life cycle
– it is one of the major threat that LG Corp is facing in Audio & Video Equipment sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Audio & Video Equipment industry are lowering. It can presents LG Corp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Audio & Video Equipment sector.
Consumer confidence and its impact on LG Corp 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 Audio & Video Equipment industry and other sectors.
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 Corp business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of LG Corp
– 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 Corp.
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 Corp 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.
Environmental challenges
– LG Corp 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 Corp can take advantage of this fund but it will also bring new competitors in the Audio & Video Equipment industry.
Regulatory challenges
– LG Corp 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 Audio & Video Equipment industry regulations.
Weighted SWOT Analysis of LG Corp Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at LG Corp 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 LG Corp 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 LG Corp 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 Corp 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 Corp needs to make to build a sustainable competitive advantage.