SWOT Analysis of LG | LG Strengths, Weaknesses, Opportunities and Threats
1. What is LG?
LG is a multinational conglomerate company. It manufactures products such as air conditioners, refrigerators, and televisions.
They also make printers, monitors, lamps, and many other electronic devices. The company’s head office is in Seoul, South Korea.
LG’s sales are around 34 billion USD, which is almost one fifth of South Korea’s overall revenue. The company has over 74,000 employees worldwide.
Their headquarters are in Seoul, South Korea. The company has subsidiaries in 142 countries around the world.
LG subsidiary companies manufacture products in 142 countries worldwide including India, China, Thailand, Indonesia, Vietnam, Taiwan, and Canada among others.
LG is one of the largest companies in the world when it comes to revenue and market capitalization as well as product portfolio.
2. How is the Business Model of LG?
LG’s business model in the world is to gain markets. The CEO of LG has said that they are always thinking of new product to expand their customer base.
They try to provide the best in technology at an affordable price. LG’s core competencies are branding, distribution, technology, and innovation.
LG has expanded its market through exports whereas it still markets products in its own country.
Affiliation Business Model
LG uses the affiliation marketing model. Through this business model, LG creates value for customers through brand reputation.
Customers are assured of the name behind an LG product even if they are not local. The company also has various ways of returning customers to their brand, including its loyalty programmed.
As the company grows bigger it spreads into more countries, thus causing growth in association marketing networks thereby allowing it to enter into new markets.
Diverse Business Model
LG is not only known for their electronics, but also for their house appliances and consumer goods. LG manufactures and sells various items such as air conditioners, refrigerators, microwaves, range hoods.
LG has positioned itself as one of the leading manufacturers of home appliances and consumer goods in the world.
Brand Power Business Model
LG has a strong brand name that is recognized worldwide. It is a well-known brand in the electronics, air conditioners, and microwaves industries.
Given the fact that LG has been in existence for over 70 years means that it has been able to establish itself as a powerful brand around the world.
LG’s products are sold through special connections which include sales agents and dealers.
The majority of LG products are sold through dealers and distributors all over the world.
LG makes use of many types of manufacturing strategies to ensure effective production and after-sales service.
4. How Does LG Makes Money?
LG is a very profitable company. It has continued to provide the people with additional benefits which include free electricity. LG is one of the largest companies in South Korea.
LG generates revenues through various ways, these are;
a) Products: LG produces and sells household appliances and consumer goods. They also produce and sell televisions, air conditioners, and other electronic items.
b) Distributors: LG is able to achieve customers through its distributors. Consumers purchase their products from their resellers with different levels of loyalty.
c) Commissions: The Company receives commissions from the dealers that they partnered with such as the dealers that sell their products for a certain amount after which they receive a commission from them.
d) Aftersales and Parts: After and during the sale of products, LG is also able to make revenues through its services such as Aftersales and parts.
e) Leasing: the company leases its products over a period of time for a specific price. The client pays the leasing company every month until the time they get their product back.
5. LG Revenues and Financials
LG has had a major impact given the fact that it is the only South Korean company to have surpassed Samsung in terms of annual revenue.
The company has continued to grow over the years. LG realize a profits of 3.20 trillion won (US$ 2.85 billion) in 2020, up 31.1 percent from the previous year, owing to increasing sales of luxury home appliances and OLED televisions.
It made an operational profit of 650.20 billion won (US$ 580.19 million) in 2020 quarterly report, up 538.7% year on year, and a net profit of 262.3 billion won, compared to a deficit of 849.8 billion won the previous year.
The annual revenue of 2020 raise to 63.26 trillion won (US$ 56.45 billion) from 18.78 trillion won (US$ 16.76 billion) in 2019.
6. LG Partnerships
LG’s main partners are the following:
a) SYNNEX: This is a global business technology company who purchase products from LG and resells them to their customers all over the world.
b) Tech Data: This is a supply-chain software company that imports products from LG and resells them to their customers all over the world.
c) Stampede: This is a company that is known for importing products from LG and resells them to their customers all over the world.
d) INGRAM: This is a company that imports products from LG and resells them to their customers all over the world.
7. LG Competitors
LG is only one of the many companies that is known as a highly innovative brand. The company has been able to grow from its humble beginnings.
LG has been considered as one of the most dominant companies in South Korea. The following companies are competing with LG;
The Company has continued to expand and grow globally which has made it one of the most successful companies in the world.
Samsung is the largest information and telecommunication company which is based in South Korea and ranked fourth in terms of market capitalization globally.
It was founded by Lee Byung-chul in 1938 as a trading company. It was later not only established as an electronics manufacturer but also as a designer, developer, manufacturer, television owner, computer maker, mobile device maker among many things.
The Company that is known for its Apple iPhone and iPad has had a huge impact on the market. The company has also expanded into many different fields unlike LG.
The Company was started in 1891 by Gerard Philips, Frederik Philips and has been regarded as the first company that has concentrated on selling and distributing light bulbs.
It is ranked in the top most among the companies when it comes to market capitalization.
This Japanese electronics company focuses in household appliances and other related products such as air conditioners, televisions, and cameras.
It has been expanding its business globally in order to seek for competitive advantages among its competitors such as Samsung and LG.
This European Company has been expanding its market globally in order to grow its market capitalization. It is ranked among the top four largest consumer electronics companies.
8. LG Business and Marketing Strategies
LG is a South Korean multinational conglomerate company that has grown rapidly over the years.
The company has continued to grow owing to its successful strategies in reaching out to its target market.
LG strategy that has contributed significantly in the growth of the company is the following;
a) Product Innovation: This is one of the things that have contributed significantly in terms of growth for LG. The company has always invested in Research and Development in order to ensure that it continues to come up with innovative products year in year out.
b) Target market: the company has always followed the steps of identifying customer needs and then developing products to meet these needs.
c) Direct Marketing: the company has realized that it is through direct marketing that it is able to reach out to its target market.
d) Scope for growth: LG is determined in continuing what it has started in terms of growth. LG believes that the future will be bright if it continues its strategy of reaching out to more customers.
e) Strategic alliances: This is one of the strategies that have been adopted by LG in order to ensure that it continues to grow. The company sees this as an opportunity to get the best from its competitors.
f) Participation in fairs and exhibitions: This strategy has been applied by the company in order to get a feel of how the target market perceives its products.
g) Price variances: The Company has always been in a position to ensure that it increases and decrease its prices in order to remain competitive within the market place.
h) Global expansion: The Company has always been willing to expand its business globally in order to gain a competitive advantage.
i) Emphasis on Research and Development: The Company has always invested heavily in Research and Development in order to ensure that it comes up with the best products.
j) Outsourcing: This is another strategy that has been adopted by LG as it aims at ensuring that the provision of service and maintenance is done by others than its own employees.
k) Strategic alliance with other companies: The Company has always been in a position to realize that it can benefit from what its competitors can provide.
l) Joint ventures: This is one of the strategies that have been adopted by LG in order to ensure that they continue to grow.
m) Strategic alliance with the government: This is another strategy that has been adopted by LG in terms of ensuring that it continues to grow.
9. SWOT Analysis of LG
· Strengths of LG
a) The company has been in a position to introduce innovative products year in year out.
b) The company has been able to grow globally and open many different markets.
c) The company has continued to expand its business in terms of industries such as home appliances, entertainment and chemical products among others.
d) The company is known for offering high quality products at affordable prices.
e) The logo of the company is always associated with innovation and quality when it comes to electronics and electrical devices.
f) The company has continued to expand its product range in order to meet the needs of its customers.
g) LG is able to respond quickly to consumer needs.
h) The company has got a wide range of products that are appealing to most consumers.
i) The company has been able makes available all the required technology for its customers.
j) LG has continued to invest in Research and Development in order to come up with innovative products.
k) LG has always been able to ensure that it has the best staff in order to meet the needs of its customers.
· Weaknesses of LG
a) LG does not have the capacity to produce products that are very high quality.
b) The company has a wide product range but majority of their products are on a short waiting list.
c) LG does not have a competitive advantage compared with other companies.
d) The company believes that it is through strategic alliances with other companies that it will be successful.
e) The company does not have the capacity to meet all the needs of its customers.
f) The company has reduced its price variances over time leading to a negative impact on its sales.
g) The company does not have sufficient capacity for product innovation.
h) LG lacks sufficient manpower to ensure that the service and maintenance of its products is done by others than their own employees.
i) The company does not have any strategic alliances with other companies.
j) There is a wide range of competitors within the market place.
Opportunities for LG
a) The company has been able to introduce unique products in terms of design and quality.
b) There is a need for cheaper products from other companies. This gives LG an opportunity to target a wider range of customers who would have never considered buying from the company before.
c) The company has continued to invest in Research and Development in order to ensure that they continue to offer new innovations in terms of their products.
d) The company has made available advanced technology to its customers thus leading to positive growth in the future.
e) The company has continued to invest in Research and Development as well as direct marketing as they look for more efficient ways of reaching out to the target market.
f) The company has realized that it can benefit from what its competitors can provide them with. This gives them an opportunity of realizing the strategic alliances that could help them in continuing their growth.
g) There is a need for cheaper products that will be able to meet the needs of all consumers.
h) The company has been able to continue to expand its product range in order to meet the needs of its customers.
i) The company is looking at ways of working more efficiently thus leading to increased profits.
j) Other companies have only been focusing on only one or two product ranges. LG is looking at other opportunities that it can capitalize on.
k) There is a need for an improved communications system which will lead to quicker response of the customers and hence greater sales by the company.
· Threats of LG
a) The company has reduced its prices many times causing its sales to decline. This has led to it losing its customers thus lowering the effectiveness of its advertising campaigns.
b) The company is not able to meet the needs of all customers. This means that they are not able to remain successful.
c) The company has decreased the price variances over time leading to a negative impact on their sales.
d) The company is not able to produce high quality products which could be detrimental in the long term.
e) The company has not invested in Research and Development as they continue to look for easier ways of promoting their products.
f) The company has continued to invest in Research and Development as well as direct marketing as they look for more efficient ways of reaching out to the target market. This has ultimately led to them losing customers over time.
g) The company is not able to produce enough high quality products which could lead to lower sales in the future.
h) The company is not able to provide all the necessary technology for its customers. This will lead to lower sales in the future.
i) There has been an improvement in communication systems in many parts of the world which is leading to faster responses by the customers. This has led to lower sales in the long term.
j) The company does not have capacity for product innovation thus causing them to lose sales over time.
k) Other companies have only been focusing on only one or two product ranges. LG is looking at other opportunities that it can capitalize on. This could lead to it losing sales over time.
What are the challenges faced by LG?
One of the most significant challenges is the competition with Samsung Electronics Co., Ltd., one of LG’s larger competitors that has been dominating this industry for some time now.
This means that the company needs to work with other companies in order to produce better products, however this could prove difficult as they are not familiar with working with each other.
Unfortunately for LG, they do not have enough resources to compete with the larger companies which is proving difficult for them.
Why did LG fail?
Failing is a subjective opinion, as Samsung has been competing with LG for a long time now and Samsung has been able to gain the upper hand.
LG only focuses on a few product ranges which means that it is not as diverse as other companies which could make a difference in today’s competitive markets.
Why was LG successful?
LG focused on its main aim of providing consumers with services and products that would solve their problems without necessarily focusing on the competition.
They also like to target a wide range of customers which makes them stand out in the competitive environment and has given them a large variety of products to work with.
How does LG keep its customers?
LG seeks to provide consumers with well-priced products, this means that even if they focus on a few different product ranges, they like to ensure that these would be highly affordable and capable enough for the task in hand.
Why is LG an important company?
LG is well positioned in terms of production and distribution. This means that they are in a good position to meet the needs of all customers and provide them with the products they require.
What will LG do with its overseas expansion?
LG looks for ways to expand into markets that will allow them to increase their appeal and hence their sales. They also look for ways of improving the quality of their products thus ensuring that all customers receive optimal services.
Why have LG’s TV sales declined over the last year?
LG’s TV sales have declined year on year because of several factors such as intense competition in the market and a lack of innovation in terms of their products.
Are LG’s foreign markets doing well?
Due to intense competition in the overseas markets, LG has been failing to gain any ground when it comes to increasing the quality of their foreign markets.
How does LG compete with Samsung?
LG looks to compete with Samsung by providing lower priced products, however this is not always possible due to competition. A company that has an effective marketing initiative is also able to increase their sales.
Why didn’t LG do as well as their competitors?
The company has been unable to expand its product line as they focus on producing a few different products. This has left them struggling to compete with other companies.
LG has not been able to introduce new products over the last 5 years which means that the company needs to work on increasing their investment in Research and Development if they want to stay competitive.
LG has also been looking at ways of increasing profits by improving efficiency and decreasing production costs and this could ultimately be detrimental in the long term.
How can LG improve their production?
LG needs to reduce inefficiencies and increase the efficiency of the company in order to win in this competitive market.
The company has been focusing on increasing the efficiency of their products and services in order to save costs which ultimately leads to them producing their products at lower costs, however this could mean that they will lose out in terms of quality.
The company needs to invest in Research and Development in order to stay competitive. This means that they need to improve production by looking at ways of increasing the quality of their products without having to increase the production costs.
How can LG improve its overseas expansion?
LG is looking for ways to enhance its overseas expansion by focusing on providing customers with quality products.
They are also looking at the different markets they can expand into, however this could prove difficult as they are not familiar with producing or distributing their products abroad.