LG Electronics SWOT & PESTLE Analysis
COMPANY PROFILE -LG Electronics, Inc.
Business Sector :Consumer Electronics and Home Appliances
Operating Geography :South Korea, Global
About LG Electronics, Inc. :
LG Electronics, Inc., was established in the year 1958 under the name of GoldStar. The current company emerged from a merger between Lak-Hui and GoldStar, the initials of which are represented by the “L and G” used today. The company headquarters are located in Seoul, South Korea. LG Electronics has today positioned itself as a global leader and technology innovator in the field of mobile communications, consumer electronics and home appliances. The company primarily deals in the four business units of Home Entertainment, Home Appliances & Air Solutions, Mobile Communications, and Vehicle Components. LG Electronics employs more than 72600 people in 118 locations across the globe as per early 2020 records. In 2020, the company received the Daimler Supplier Award 2020 in the Innovation category for its in-vehicle touchscreen displays. The U.S. Environmental Protection Agency (EPA) has also named it the 2020 ENERGY STAR® Partner of the Year.The mission statement of LG Electronics reads, “To maintain our hard-earned reputation for bringing added value to the lives of consumers.” The slogan of the company is “Life’s Good”. LG Electronics’s USP or unique selling proposition lies in it being the second-largest LCD television manufacturer in the world.
LG Electronics, Inc. Revenue :
KRW 62.3 trillion (USD 53.0 billion) – FY ending 31st Dec 2019 (y-o-y growth 1.6%)
KRW 61.3 trillion (USD 54.4 billion) – FY ending 31st Dec 2018
Competitive Analysis of LG Electronics, Inc.
| 1. Healthy growth in the Home Appliance Business Unit 2. A Global Behemoth with Strong Brand Image 3. An Extensive Distribution Network 4. Product Mix 5. Straddle Positioning of the Products | 1. Muted Overall Sales with Mobile Communications Business Unit acting as a drag factor 2. In BCG Matrix Analysis, Cell Phone is in the Dog Category and Smart watch is in Question Mark Category 3. Exposure to Exchange Risks 4. Debt/Equity Ratio |
| 1. Growing and Changing Technological Landscape 2. Market Expansion 3. Strategic Alliance/Partnership | 1. Price War with its closest competitors/ Adoption of Red Ocean Strategy 2. Sluggish economic growth of advanced economies and rising raw materials cost |
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Detailed SWOT Analysis of LG Electronics, Inc.
Strengths
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Weaknesses
1. Muted Overall Sales with Mobile Communications Business Unit acting as a drag factor: The company reported sales of 55.37 trillion KRW (USD 49.61 billion) for the year ending December of 2016. When we compare it to the data of 2015, there is decrease of 2.0%. In 2015, company’s sale stood at 56.51 trillion KRW. In fact, the sales level of 2016 is close to the sales level of 2011: in 2011, LG Electronics reported a sale 54.26 trillion KRW. Contributing to this drop in overall sales was the 18.7% decline in Mobile Communications Business Unit from 14.40 trillion KRW to 11.71 trillion KRW. Also, Innotek - an aerospace division of LG Electronics reported a decrease in sales (down 3.0% to 4.67 trillion KRW). Also, Mobile Communications Division constitute 23.03% of the overall revenues.
2. In BCG Matrix Analysis, Cell Phone Business is in the Dog Category and Smartwatch Segment is in Question Mark Category: LCD TVs and Home Appliances come under the category of Cash Cows and hence will keep generating the revenues in bulk. But, the cell phone business with its meagre 3.2% market share is pulling the ship. Also, the Smartwatch business is in the Question Mark Category and investments in the same can have higher risks involved.
3. Exposure to Exchange Risks: LG generates a chunk of its revenue from export model and thus, there is always an exposure to exchange related risks. Debt/Equity Ratio: With total liabilities being 24499 KRW (bn), Total Assets (2016) equivalent to 37855 KRW (bn) and the Debt/Equity Ratio (2016) being 24499/13356 = 183.43%, it is seen that the company has been heavily taking on debt and thus has high risk.
Opportunities
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Threats
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References used in LG Electronics, Inc. Analysis Report
1. LG performance results 2020 - https://www.lg.com/global/pdf/ir_report/20%201Q%20Earning%20Release%20of%20LGE.pdf
2. LG Financial results 2019 - http://www.lgnewsroom.com/2020/01/lg-announces-2019-financial-results/
3. LG revenue 2019 - https://ace.electronicsforu.com/buzz/finance/53-billion-lg-electronics-revenue-in-2019/
4. LG company website - http://www.lgcorp.com/
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LG Electronics SWOT & PESTLE Analysis - SWOT & PESTLE.COM
SWOT & PESTLE.com (2020). LG Electronics SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/lg-electronics/ [Accessed 09 Aug, 2020].
In-text: (SWOT & PESTLE.com, 2020)
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