Find comprehensive SWOT and PESTLE research reports across industries globally

Holistic Analysis Customized Solutions Top Quality

Please Enter Correct Data! X
Thanks for downloading our report! X
Check your email for the requested analysis report.
Be sure to place support@swotandpestle.com on your approved senders list to prevent emails from going into spam.
Thanks for downloading our sample report! X
Check your email for the requested sample analysis report.
You can also download it here.
Get The Free Sample Complete
SWOT & PESTLE Analysis Report
This report is shared in order to give you an idea of what the complete SWOT & PESTLE analysis report will cover after purchase. We invest deep in order to bring you insightful research which can add tangible value to your business or academic goals. We also guarantee that you cannot find matched quality at such competitive and economic pricing.
Great quality, Affordable pricing X

As a leading strategy research portal we invest deep to produce imperial quality reports that can help corporate professionals, academicians and students take their research forward and set a benchmark for high standard business research. The cost for reports has been kept minimal to just cover our operational and maintenance costs although the mission is not to reap monetary benefits. We look forward to your support.

LG Electronics SWOT & PESTLE Analysis

ID : 52228753 | Jun 2017

OVERVIEW

Name of the Company: LG Electronics, Inc.

Business Sector: Consumer Electronics and Home Appliances

Operating Geography: South Korea, Global

About the Company: LG Electronics, Inc. established in the year 1958 and headquartered in Seoul, South Korea is a global leader and technology innovator in the field of mobile communications, consumer electronics and home appliances. The company employs more than 75000 people in 118 locations across the globe. In the year of 2016, the company made global sales of USD 47.9 billion. The company has four business units which include Home Appliance and Air Solutions, Mobile Communications, Home Entertainment and Vehicle Components. Also, the company is one of the world’s leading producers of flat panel TVs, mobile devices and home appliances. It is a 2016 ENERGY STAR Partner of the Year.

Revenue: 55367 KRW(bn) (2016)

SWOT & PESTLE Analysis

The SWOT analysis for LG Electronics is presented below:
Strengths
Weaknesses
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
Opportunities
Threats
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
Get Your Free Summary Copy of the
SWOT & PESTLE Analysis Report
Get the summary SWOT & PESTLE.com report delivered straight to your email inbox for free.
Our insightful and holistic reports have helped corporate,academia and researchers to take their research forward. Like us on Facebook to stay updated with the latest published SWOT & PESTLE Report.

Safe and secure payments

* By clicking on "Buy Now" you agree to accept our "Terms and Conditions."

Strengths

1. Healthy Growth in the Home Appliance Business Unit: The decline in the sales of Mobile Communication Division of LG Electronics was partially offset by the increase in the sales of Home Entertainment (up 0.1% to 17.42 trillion KRW), Home Appliance (up 4.2% to 17.23 trillion KRW) and Others (up 1.7% to 1.57 trillion KRW). Also, Home Entertainment and Home Appliance together constitute 68.17% of the overall revenues.

2. A Global Behemoth with Strong Brand Image: LG commands a strong brand value. With its network of 114 local subsidiaries and more than 20 R&D Centres worldwide it commands an upper hand. It is known for its simple yet innovative designs, user friendly interfaces and reliable technologies. 13% people would buy a LG Smartwatch (Urbane) in United States if given an option solidifying the brand image that LG enjoys. The company is using two strategies to further enhance its brand image – Powerful targeting to generation X and generation Y; and Connecting Dots with Future. Through its continuous sponsoring of Sports and Lifestyle Events (ICC Cricket World Cup, Formula One Championship, Soccer Matches etc.) the company keeps the buzz alive.

3. An Extensive Distribution Network: LG has adopted a regional distribution model and all the distributors work directly with the company. The company follows a pull strategy and this has resulted in quicker rotation of stocks and better penetration into the lower-class markets. In many markets, it is working on the principles of GLO-CAL viz., be global but act local.

4. Product Mix: The company has a huge product portfolio across the categories; both in white and brown goods. The company shipped a total of 55 million smartphones in the year of 2016. Also, the number of LCD TV units that LG sold worldwide stands at 28.2 million which accounts for 11.9% of the global market and the large area display shipments share of LG Display stands at a mammoth 21.6% of the global sales. The company’s market share of Sound bar sales in the USA stands at a healthy 6.5%. With a large product portfolio of home appliances, mobile communication devices, home entertainment devices, computer products and business solution products the company enjoys a commanding share in most of the product segment.

5. Straddle Positioning of the Products: One very interesting strategy that LG adopts is of Straddle Positioning in which it adopts two frames of references with one set of points of difference and one set of points of parity. Example – In Television Sets, POD will be “Golden Eye Technology” and POP will be “Flat Screen”. In Air Conditioners, POD will be “Health Air System” and POP will be “Quick Cooling”. In Microwaves, POD will be “Health Wave System” and POP will be “Local Menu”.

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

1. Growing and Changing Technological Landscape: In between 2005 and 2014, LG acquired a total of 13640 patents. Among them, the company acquired 6072 patents in between 2012 – 2014 to reinforce its innovative competency. If we analyse this move closely, it is totally in sync with the ever growing and changing technological needs and requirements, which opens huge possibilities for a company like LG Electronics.

2. Market Expansion: With India and China becoming the growth engines of the world’s economy, LG can salvage this new Asian Age by further penetrating into the emerging markets. Also, growing urban population, rise in disposable income and shift towards technological products are some of the driving force that will fuel the future growth.

3. Strategic Partnership: LG requires several components from several manufacturers. A cell phone maker will get processors from one company and screen from another. LG can leverage this and expand its scope.

Threats

1. Price Wars with its closest competitors: Because of the intense rivalry between the companies to garner market share, price war takes place which eats up the revenue of these companies. Also, as the market gets crowded, products convert into commodities or niches and cutthroat rivalry turn the ocean red; also, known as “Red Ocean Strategy”.

2. Sluggish economic growth of advanced economies and rising raw material cost: Advanced economies constitute a major portion of LG's business and their slower than anticipated economic recovery might play hard with the margins of the company. Also, a major concern area is that of rising raw material costs.

To get the complete detailed SWOT report on LG Electronics please mail us at: support@swotandpestle.com. or contact us here.

LG Electronics SWOT analysis has been conducted by Nishant Vatsa and reviewed by senior analysts from Barakaat Consulting.

References

1. LG Electronics Company Snapshot- http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C410CR750

2. LG Electronics’s opportunities and risks- http://www.ipnomics.net/?p=14805

3. LG Electronics Financial Information- http://www.lg.com/global/investor-relations/financial-info

4. Revenue of LG Electronics by business segment- https://www.statista.com/statistics/364980/lg-electronics-revenue-by-segment/

Safe and secure payments

* By clicking on "Buy Now" you agree to accept our "Terms and Conditions."

The PESTLE analysis for LG Electronics is presented below:
Political
Economical
1. Fragile situation on the Korean Peninsula
2. “Chaebol” Reforms
3. USA Protectionism measures
1. Global Economy Outlook
2. India, a shining star in the FMCD segment
Social
Technological
1. Enhanced customer needs, desire to attain social status and an increase in the number of nuclear family
2. Millennials (or Gen Y) and Gen X
1. Increasing technology has helped to enhance the manufacturing process and deliver more on quality front
2. Computer Convergence
Legal
Environmental
1. Legal maze of various lawsuits
2. Implementation of GST in India
3. Electronic Waste Compliances
1. Rise of ethical consumerism
2. Rise in the demand of Air Conditioners & Refrigerators with increasing global temperature
Get Your Free Summary Copy of the
SWOT & PESTLE Analysis Report
Get the summary SWOT & PESTLE.com report delivered straight to your email inbox for free.
Our insightful and holistic reports have helped corporate,academia and researchers to take their research forward. Like us on Facebook to stay updated with the latest published SWOT & PESTLE Report.
Safe and secure payments

* By clicking on "Buy Now" you agree to accept our "Terms and Conditions."

Political

1. Fragile situation on the Korean Peninsula: Because of the North Korean aggression on the Korean Peninsula, investors have started looking at Japanese Yen as safe heaven. The yen has increased in price against the South Korean currency – the won – by about 3% on average since early April 2017 and the yen is expected to make further gains. The volatility of currency, strained relationship between North Korea and South Korea and weakened macro – economic sentiments is not healthy for a company like LG Electronics which is headquartered in South Korea.

2. “Chaebol” Reforms: “Chaebol” is the Korean term for large conglomerates like Samsung, LG Electronics and Hyundai. South Korea’s new president Moon – Jae – In took office vowing to reform the family run conglomerates by curbing the power of “Chaebols”. He also vowed to break the nexus of business and politics. The president will look into the chaebol’s complex web of cross - shareholdings among group companies and opaque governance which results in “Korean Discount” – meaning their shares are undervalued when compared to their global peers. These reforms will certainly have an impact on LG Electronics because it is one of the “Chaebol”.

3. USA Protectionism measures: The two important points are – The USA is South Korea’s second largest national trading partner after China and LG Electronics has no smartphone or appliance factory on the USA soil. And since there is no factory on the USA soil, the appliances are exported to USA. So, any trade barrier measure will keep LG on its toes. Also, newer presidential measures have clamped down on the cheaper outsourcing facilities making it tough for LG Electronics to keep its price competitive.

Economic

1. Global Economy Outlook: World Growth is expected to rise from 3.1% in 2016 to 3.5% in 2017, USA’s GDP growth rate will rise to 2.1% in 2017 from 1.9% in 2016, Europe’s GDP growth rate will climb to 1.7% in 2017 and 1.8% in 2018 - symbolising a steady growth rate - and South Korea’s trade ministry revised its 2017 export growth outlook to a 6% - 7%, far exceeding the earlier estimate of 2.9% - citing stronger shipments of semi conductors and display panels. Stronger economic activity, expectations of a more robust global demand, reduced deflationary pressures and optimistic financial markets will act as a driving force in creating a positive environment for LG Electronics. It is worth noting that USA, Europe and South Korea make up almost two thirds of LG Electronics’ revenue.

2. India, a shining star in the FMCD segment: In 2015, revenue from consumer durables sector in India stood at US$ 9.7 billion which increased to US$ 12.5 billion in FY16 registering a growth rate of 28.86%. LG Electronics is capitalizing on the same with the launch of new technologies in consumer electronics and home appliances. The company has adopted for product localisation and efficient manufacturing to reduce cost. The company is also bringing “LG Signature” brand in India to target premium segment. Also, the company is thinking of making India an export hub. It has two manufacturing plants in India through which it already exports to Middle East and African countries, and the company is exploring global markets to increase exports from India on the backdrop of India becoming economically competitive, and with the implementation of GST, the situation will only improve.

Social

1. Enhanced customer needs, desire to attain social status and an increase in the number of nuclear family across the globe: With the rapid development of technologies, consumers have become more demanding. They are putting a lot of stress on the companies for innovative features that can satisfy their desire to attain social status. LG Electronics is doing the same with the launch of cell phone models like V20 which has dual screen and dual camera setup or G6 which has an insane screen to body ratio. The demand for newer technologies is also fuelled by a rise in the disposable income and increase in the number of nuclear family across the globe.

2. Millennials (or Gen Y) and Gen X: Millennials constitute 23.46% of the USA’s population – 75.4 million out of the total population of 321.4 million – with annual spending power approaching $200 billion. Also, Gen X population is around 66 million in the USA. The numbers are important because this is the segment that is targeted by companies like LG Electronics.

Technological

1. Increasing technology has helped to enhance the manufacturing process and deliver more on quality front: We have seen that “Robotization” has helped in the cancellation of repetitive process and deliver more on quality front. Similarly, Artificial Intelligence will be the next big thing. Recently, LG unveiled Hub Robot with its in house AI assistant to compete with Amazon Echo and Google Home. AI will accelerate technological fusion of mind and machine and companies like LG Electronics should be prepared for it.

2. Computer Convergence: The idea here is that processing capabilities of mobile devices be increased to such an extent that it can match the performance level of personal computers. It will act as a driving force in the field of “Internet of Things” and companies like LG Electronics should be ready to make the most out of it.

Legal

1. Legal maze of various lawsuits: The case of Apple and Samsung is well known to us in which Samsung had to face heavy penalties for its alleged design imitation and because of this it took a beating on the public perception’s front. With the passage of time, as cell phone’s design become similar and slab like, the chances of getting involved in lawsuits have increased. So, the companies functioning in this domain should be wary of this fact.

2. Implementation of GST in India: India is an important market for LG Electronics, not only in terms of domestic consumption but also in terms of making India an export hub. The Indian Electronics industry has welcomed the move as it will simplify tax structure for goods and services. The new taxation system will help in the elimination of multiple levies and it will also allow for deeper penetration of digital services.

3. Electronic Waste Compliances: The lack of worldwide uniform electronic waste management makes it challenging for companies to fulfil their responsibility to properly and safely take back and recycle hardware products. Some of the compliances include: European Union – Waste Electrical and Electronic Equipment (WEEE) and California Electronic Waste Regulations.

Environmental

1. Rise of Ethical Consumerism: These are customers who want their products to be made in a socially and environmentally responsible manner. For this, companies do not compromise on the working conditions and pays wage as per standard.

2. Rise in the demand of Air Conditioners and Refrigerators with increasing global temperature: With soaring temperatures in many regions of the world, there is an increased demand for ACs and refrigerators. Global Air Conditioning Potential is defined as “the product of population of a country and cooling degree days (CDD)”. This unit – CDD – is used to determine the demand for energy to cool buildings. Global Air Conditioning Potential can be used to predict demand of ACs and refrigerators.

To get the complete detailed PESTLE report on LG Electronics please mail us at: support@swotandpestle.com. or contact us here.

LG Electronics PESTLE analysis has been conducted by Nishant Vatsa and reviewed by senior analysts from Barakaat Consulting.

References

1. The North Korean Crisis and Its Impact on the Global Economy- https://www.pastemagazine.com/articles/2017/04/the-north-korean-crisis-and-its-impact-on-the-glob.html

2. South Korea’s New President Vows to Take on the Country’s Huge Family-Run Conglomerates- http://fortune.com/2017/05/22/south-korea-antitrust-samsung-hyundai-chaebol-regulations-oversight

3. Every Smartphone Is Boring: Where Are The Radical Designs?- https://www.forbes.com/sites/ewanspence/2015/03/19/smartphone-design-failure/#573f93901ff6

4. LG unveils Hub Robot to compete with Amazon Echo and Google Home- https://www.theguardian.com/technology/2017/jan/04/lg-hub-robot-home-assistant-amazon-echo-google-home

5. Consumer durables revenues have been growing at a healthy pace- https://www.ibef.org/industry/indian-consumer-market.aspx

Safe and secure payments

* By clicking on "Buy Now" you agree to accept our "Terms and Conditions."

Copyrights and Disclaimer

Copyright of LG Electronics SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions page for usage guidelines.