Strategic management is an important aspect to grow business. Thus, we tried studying some of the external factors impacting LG.

1. External analysis of LG
Presented by: -
Taruchit Goyal
Nikhil Goregaonkar
Pushpa Pal
Apurva Goje
Chaitali Koli
Mrudul
Namit Patil
Ovaiz Rashid

2. Introduction about LG
1. South Korean multinational company
2. Founded in October 1958
3. Parent company: LG corporation
4. Some of its subsidiaries: -
4.1 LG Electronics
4.2 LG Chem
4.3 LG Household & Healthcare

3. Introduction about LG Electronics
1. LG Electronics include: -
i. Mobile communications: Not declared
ii. Home appliances: Rs. 10,903 crore business
iii. Home entertainment: Rs. 4,546 crore business
iv. Vehicle components: Not declared
2. LG Electronics India improved its net profit by 14%
in 2017-2018.
3. i. LG smartphones make up to 80% of Mobile
communications business unit.
ii. 20% include audio products and accessories.

4. Electronics market in India
1. Electronic products contributed to 82% of overall
market.
2. Electronics Industry in India is valued at $61.8
billion.
Major Segmentation is as follows: -
i. Mobile devices: 27%
ii. Consumer electronics: 18%
iii. Industrial electronics: 15%
3. 40.4 million units of smartphones were exported
from India in 2018.https://www.investindia.gov.in/sector/elect
ronic-systems

5. Opportunities
1. Rise in disposable income will drive more people to
buy electronic goods.
2. Increasing the product portfolio for market
expansion.
3. Inflation rate is average, thus, the situation can be
utilized.
4. Developing products required by corporate
companies and supplying in bulk quantities.
5. Bringing latest technology to all products.

6. Opportunities
5. Reaching out to rural areas and expand market share.
6. Smaller companies are expected to go bankrupt or
acquired, thus, LG can get back into market with
basic needs in place.
7. LG can focus on targeting budget oriented customers
to expand market share.
8. Use of AI for distinguishing products from rest
companies.

7. Threats
1. Intense rivalry in the industry.
2. Emerging companies have started gaining market
share.
3. Unemployment and high tax rates imposed will
impact sales of electronic goods.
4. Rise in raw material cost, labor cost will reduce the
profit margin.
5. Due to online buying the existing infrastructure and
supply chain may become difficult to sustain.

8. Porter’s 5 forces model

9. Industry rivalry
1. There is no differentiation of products among the
companies.
2. There are large number of players in the industry,
thus, intense rivalry.
3. Thus, industry rivalry is high.

10. Threat of new entrants
1. New companies emerging from China, have grabbed
market share.
2. However, with existing companies having strong
supply chain, new entrants will face tough time.
3. Thus, threat of new entrants is moderate.

11. Bargaining power of suppliers
1. There are large number of suppliers available to LG.
2. LG buys components in bulk quantities.
3. Changing of supplier does not affect the company.
4. Thus, threat of bargaining power of suppliers is low.

12. Bargaining power of buyers
1. Most of the products across companies work the
same.
2. Thus, buyers have wide range of products to select.
3. Switching cost is low or zero.
4. There is decrease in number of buyers selecting
products based on brand loyalty.
5. Thus, threat of bargaining power of buyers is high.

13. Threat of substitutes
1. Products like television and plasma can be replaced
by computer screens.
2. Majority products do not have substitutes.
3. Thus, threat of substitutes is low.

15. Political factors
1. The annual budget of the government directly
impacts sales of goods.
2. Higher GST will compel LG to reduce the cost of
products to attract people for buying them.
3. High tax on finished goods brought to India, to
support Make in India, will impact the company.
4. Rise in fuel price announced by government will
reduce the profits.
5. Decisions like demonetization have strong impact
on sales.

16. Political factors
6. 100% FDI allowed in electronic-hardware
manufacturing sector.
7. National Electronics Policy will encourage
investments.

17. Economic factors
1. People having more disposable income will
encourage them to buy goods.
2. Inflation rate is average, thus, market growth is
expected.
3. The uplift of GDP helps LG to invest and
manufacture new products.
4. The current situation will allow LG to invest in R&D
department to serve user’s needs and expectations.
5. India gain 77th position in ease of doing business.
Thus, it will encourage LG to invest and utilize the
economic atmosphere of the country.

18. Social factors
1. Changing trends impact the demand of certain
products.
2. Example: Long battery smart phones and flat
televisions.
3. Increase in number goods sold for children has made
them an important market segment.
4. LG has set a strategy to develop products that reduce
environmental impacts through out the life cycle of
the products.
https://www.lg.com/global/sustainability/e
nvironment/greener-products/green-
product-strategy

19. Technological factors
1. Technologies like AI, deep learning have evolved
rapidly in mobile devices.
2. LG lost mobile business after signing deal with
Microsoft rather Google for mobile OS.
3. Improvement in technology will help to reduce cost
of building the goods.

20. Competitors
1. Samsung: Market leader
2. Sony
3. Panasonic
4. Whirlpool
5. Haier
6. Phillips
7. Toshiba
8. OnePlus
9. Vivo
10. Oppo

21. Reports: 2017-2018
Published on 03 January 2019
1. LG leads in: -
i. Cool refrigerators
ii. Washing machines
iii. Microwave ovens
2. Second largest player in: -
i. LED televisions
ii. Air conditioners
3. LG is struggling with its mobile phone business.
https://economictimes.indiatimes.com/ind
ustry/cons-products/electronics/lg-to-step-
up-its-game-to-stay-no-1-in-white-
goods/articleshow/67358449.cms?from=m

22. Demographic analysis of
smartphones
1. 84% men
79% women
2. Age:
3. 83% people in urban areas
71% people in rural areas
Age %age of people
18-29 96%
30-49 92%
50-64 79%
65+ 53%
https://www.pewinternet.org/fact-
sheet/mobile/

23. LG stores visited
1. Sidhansh Electronics Pvt. Ltd.
Shop No. 14, Lords Building,
Plot No. 35/35A, Sector-15,
Palm Beach Road, CBD Belpaur,
Navi Mumbai- 400614
2. LG Electronics,
Shop No. 8/A, Sector-30A,
Vashi Kopar Khirane Road,
Vashi, Navi Mumbai- 400703