INTRODUCTION

A multinational corporation (MNC) or multinational enterprise (MNE) is

a corporation that is registered in more than one country or that has operations in
more than one country. It is a large corporation which both produces and sells goods
or services in various countries. It can also be referred to as an international
corporation. They play an important role in globalization. The first multinational
company was the British East India Company, founded in 1600. The second
multinational corporation was the Dutch East India Company, founded March 20,
1602.
Economists are not in agreement as to how multinational or transnational corporations
should be defined. Multinational corporations have many dimensions and can be
viewed from several perspectives (ownership, management, strategy and structural,
etc.) The following is an excerpt from Franklin Root (International Trade and
Investment, 1994)
Ownership criterion: some argue that ownership is a key criterion. A firm becomes
multinational only when the headquarter or parent company is effectively owned by
nationals of two or more countries. For example, Shell and Unilever, controlled by
British and Dutch interests, are good examples. However, by ownership test, very few
multinationals are multinational. The ownership of most MNCs are uninational. (See
videotape concerning the Smith-Corona versus Brothers case) Depending on the case,
each is considered an American multinational company in one case, and each is
considered a foreign multinational in another case. Thus, ownership does not really
matter.
Nationality mix of headquarter managers: An international company is
multinational if the managers of the parent company are nationals of several
countries. Usually, managers of the headquarters are nationals of the home country.
This may be a transitional phenomenon. Very few companies pass this test currently.

Strategies
Corporations may make a foreign direct investment. Foreign direct investment is
direct investment into one country by a company in production located in another
country either by buying a company in the country or by expanding operations of an
existing business in the country.
A subsidiary or daughter company is a company that is completely or partly owned
and wholly controlled by another company that owns more than half of the
subsidiary's stock.[9][10]
A corporation may choose to locate in a special economic zone, which is a
geographical region that has economic and other laws that are more free-marketoriented than a country's typical or national laws.
Business Strategy: global profit maximization
According to Howard Perlmutter (1969)*:
Multinational companies may pursue policies that are home country-oriented.
or host country-oriented or world-oriented. Perlmutter uses such terms as
ethnocentric, polycentric and geocentric. However, "ethnocentric" is misleading
because it focuses on race or ethnicity, especially when the home country itself is
populated by many different races, whereas "polycentric" loses its meaning when the
MNCs operate only in one or two foreign countries.
According to Franklin Root (1994), an MNC is a parent company that
1. engages in foreign production through its affiliates located in several countries,
2. exercises direct control over the policies of its affiliates,
3. Implements business strategies in production, marketing, finance and staffing that
transcend national boundaries (geocentric).
In other words, MNCs exhibit no loyalty to the country in which they are
incorporated.

Three Stages of Evolution

1. Export stage

initial inquiries => firms rely on export agents

expansion of export sales

further expansion foreign sales branch or assembly operations (to save

transport cost)

2. Foreign Production Stage

DFI versus Licensing
Once the firm chooses foreign production as a method of delivering goods to foreign
markets, it must decide whether to establish a foreign production subsidiary or license
the technology to a foreign firm.
Licensing
Licensing is usually first experience (because it is easy)
e.g.: Kentucky Fried Chicken in the U.K.

it does not require any capital expenditure

it is not risky

payment = a fixed % of sales

Problem: the mother firm cannot exercise any managerial control over the
licensee (it is independent)
The licensee may transfer industrial secrets to another independent firm,
thereby creating a rival.
Direct Investment
It requires the decision of top management because it is a critical step.

it is risky (lack of information) (US -> Canada)

plants are established in several countries

Licensing is switched from independent producers to its subsidiaries.

export continues

3. Multinational Stage
The company becomes a multinational enterprise when it begins to plan, organize and
coordinate production, marketing, R&D, financing, and staffing. For each of these
operations, the firm must find the best location.
Rule of Thumb
A company whose foreign sales are 25% or more of total sales. This ratio is high for
small countries, but low for large countries, e.g. Nestle (98%: Dutch), Phillips (94%:
Swiss).
Examples: Manufacturing MNCs
24 of top fifty firms are located in the U.S.
9 in Japan
6 in Germany.
Petroleum companies: 6/10 located in the U.S.
Food/Restaurant Chains. 10/10 in the U.S.
US Multinational Corporations Exxon, GM, Ford, etc
Conflict of laws
Conflict of laws is a set of procedural rules that determines which legal system and
which jurisdictions applies to a given dispute.
The term conflict of laws itself originates from situations where the ultimate outcome
of a legal dispute depended upon which law applied, and the common law courts
manner of resolving the conflict between those laws. In civil law, lawyers and legal
scholars refer to conflict of laws as private international law. Private international law
has no real connection with public international law, and is instead a feature of local
law which varies from country to country.
The three branches of conflict of laws are

Jurisdiction whether the forum court has the power to resolve the dispute at
hand

Choice of law the law which is being applied to resolve the dispute

Foreign judgments the ability to recognize and enforce a judgment from an

external forum within the jurisdiction of the adjudicating forum.

Globalization

Multinational corporations are important factors in the processes of globalization.

National and local governments often compete against one another to attract MNC
facilities, with the expectation of increased tax revenue, employment, and economic
activity. To compete, political powers push towards greater autonomy
for corporations, or both. MNCs play an important role in developing the economies
of developing countries like investing in these countries provide market to the MNC
but provide employment, choice of multi goods etc.
On the other hand, economist Jagdish Bhagwati has argued that in countries with
comparatively low labor costs and weak environmental and social protection,
multinationals actually bring about a 'race to the top.' While multinationals will
certainly see a low tax burden or low labor costs as an element of comparative
advantage, Bhagwati disputes the existence of evidence suggesting that MNCs
deliberately avail themselves of lax environmental regulation or poor labor standards.
As Bhagwati has pointed out, MNC profits are tied to operational efficiency, which
includes a high degree of standardization. Thus, MNCs are likely to adapt production
processes in many of their operations to conform to the standards of the most rigorous
jurisdiction in which they operate (this tends to be the USA, Japan, or the EU). As for
labor costs, while MNCs clearly pay workers in developing countries far below levels
in countries where labor productivity is high (and accordingly, will adopt more laborintensive production processes), they also tend to pay a premium over local labor rates
of 10 to 100 percent. Finally, depending on the nature of the MNC, investment in any
country reflects a desire for a medium- to long-term return, as establishing plant,
training workers, etc., can be costly. Once established in a jurisdiction, therefore,
MNCs are potentially vulnerable to arbitrary government intervention such as
expropriation, sudden contract renegotiation, the arbitrary withdrawal or compulsory

purchase of licenses, etc. Thus, both the negotiating power of MNCs and the 'race to
the bottom' critique may be overstated, while understating the benefits (besides tax
revenue) of MNCs becoming established in a jurisdiction.

Transnational Corporations
A Transnational Corporation (TNC) differs from a traditional MNC in that it does not
identify itself with one national home. Whilst traditional MNCs are national
companies with foreign subsidiaries, TNCs spread out their operations in many
countries sustaining high levels of local responsiveness An example of a TNC
is Nestl who employ senior executives from many countries and try to make
decisions from a global perspective rather than from one centralized
headquarters. However, the terms TNC and MNC are often used interchangeably.

Criticism of multinationals
Main articles: Anti-globalization and Anti-corporate activism
Anti-corporate advocates criticize multinational corporations for entering countries
that have low human rights or environmental standards. They claim that
multinationals give rise to huge merged conglomerations that reduce competition and
free enterprise, raise capital in host countries but export the profits, exploit countries
for their natural resources, limit workers' wages, erode traditional cultures, and
challenge national sovereignty.

CHARACTERISTICS OF MULTINATIONAL
CORPORATIONS
The multinational corporations have certain characteristics which may be discussed
below:
(1) Giant Size:
The most important feature of these MNCs is their gigantic size. Their assets and sales
run into billions of dollars and they also make supernormal profits. According to one
definition an MNC is one with a sales turnover of f 100 million. The MNCs are also
super powerful organizations. In 1971 out of the top ninety producers of wealth, as
many as 29 were MNCs, and the rest, nations. Besides the operations, most of these
multinationals are spread in a vast number of countries. For instance, in 1973 out of a
total of (,000 firms identified nearly 45 per cent had affiliates in more than 20
countries.
(2) International Operation:
A Fundamental feature of a multinational corporation is that in such a corporation,
control resides in the hands of a single institution. But its interests and operations
sprawl across national boundaries. The Pepsi Cola Company of the U.S operates in
114 countries. An MNC operates through a parent corporation in the home country. It
may assume the form or a subsidiary in the host country. If it is a branch, it acts for
the parent corporation without any local capital or management assistance. If it is a
subsidiary, the majority control is still exercised by the foreign parent company,
although it is incorporated in the host country. The foreign control may range anywhere between the minimum of 51 per cent to the full, 100 per cent. An MNC thus
combines ownership with control. The branches and subsidiaries of MNCs operate
under the unified control of the parent company.

(3) Oligopolistic Structure:

Through the process of merger and takeover, etc., in course of time an MNC comes to
assume awesome power. This coupled with its giant size makes it oligopolistic in
character. So it enjoys a huge amount of profit. This oligopolistic structure has been
the cause of a number of evils of the multinational corporations.
(4) Spontaneous Evolution:
One thing to be observed in the case of the MNCs is that they have usually grown in a
spontaneous and unconscious manner. Very often they developed through "Creeping
incrementalism." Many firms become multinationals by accident. Sometimes a firm
established a subsidiary abroad due to wage differentials and better opportunity
prevailing in the host country.
(5) Collective Transfer of Resources:
An MNC facilitates multilateral transfer of resources Usually this transfer takes place
in the form of a "package" which includes technical know-how, equipment's and
machinery, materials, finished products, managerial services, and soon, "MNCs are
composed of a complex of widely varied modern technology ranging from production
and marketing to management and financing. B.N. Ganguly has remarked in the case
of an MNG "resources are transferred, but not traded in, according to the traditional
norms and practices of international trade."
(6) American dominance:
Another important feature of the world of multinationals is the American dominance.
In 1971, out of the top 25 MNCs, as many as 18 were of U.S. origin. In that year the
U.S. held 52 per cent of the total stock of direct foreign private investment. The U.E.
has assumed more of the role of a foreign investor than the traditional exporter of
home products.

SIGNIFICANCE OF MULTINATIONAL CORPORATIONS (MNCs):

The multinational corporations today have a revolutionary effect on the international
economic system. It is so because the growth of international transactions of the
multinationals has affected the more traditional forms of capital flows and
international trade for many economies. Today they constitute a powerful force in the
world economy.
The value of the products sold by the MNCs in 1971 was more than $ 500 billion
which was about one-fifth of the GNP of the entire world, excepting that of socialist
economies. In the host countries, the volume of their production was about $ 330
billion. The present growth rate of their output in the host countries is a spectacular 10
per cent per annum which is almost double the growth rate of the world GNP.
In the field of international trade and international finance, the multinational firms
have come to exercise enormous power. In early seventies the MNCs accounted for
about one-eighth of all international trade- From the nature of their growth it may be
presumed that in the early eighties their share will raise to one-fourth.
Among the developing countries only India had an annual income twice that of
General Motors, which is the biggest multinational corporation. Otherwise the annual
income of the other less developed countries is much less than that of the giant
MNCs. By their sheer size the MNGs can disrupt the economies of the less developed
countries, and may even threaten their political sovereignty.
We may comprehend the relative economic power of the MNCs vis-a-vis the nationstates by ranking them together according to gross annual sales and gross national
product respectively. As Lester R. Brown has shown, out of 100 entries in the merged
list 56 were nation-states and as many as 44 were MNCs.
According to one estimate by early eighties some 300 large MNCs will come to
control 75 per cent of the world's manufacturing assets.

IMPORTANCE OF MULTINATIONAL
CORPORATIONS/MERITS
The Multinational Corporations have been observed as the instrument of development
in the developing states for example National Petroleum Construction Company
NPPC has been awarded contract of laying transmission line in Kuwait. Following are
the important advantages of MNCs.
1. Globalization
The first advantage of Multinational Corporations MNCs is that they work for the
globalization and went to give global village shape to the whole world. For example,
shell works nearly in 132 states of the world that has integrated the Holland, with the
host countries because in millions the employees are paid by the shell that simply
means that they are the citizen of Holland, because Holland cant not provide here own
citizen to all these 132 states of the world.
If shell has been closed million employees will become jobless and due to this billion
of families will be affected. Thus it means that from only one MNCs (Shell) billion of
people are taking advantages and the same is the case of the other MNCs also.
2. Increase world dependency
The most important advantage of MNCs is that it increasing the dependency of world
countries over each other due to that they become friends of each other.
3. No war
MNCs also plays very important role in the maintenance of world peace. For example
there are a lot of Germany and French MNCs that are working in Germany and
French, they will always try to focus on friendly and good relationship and boost their
economies.

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4. Integration of world mind

One of the most significant roles of Multinational Corporation is unification of world
mind and have become successful in this regard. Throughout the globe, instead of
domestic goods, imported products are used. It means that the MNCs have made the
world as a global village.
5. Mixture of whole world culture
Due to its comprehensiveness throughout the world, different states of the world i.e.
their cultures and civilization have become amalgamated with each other. For
example British ladies and male like Muslims clothes and their civilization while on
the other hand Muslims wants to wear British clothes and caps etc. So we can say that
it is all due to the role of MNCs.
6. Transfer of technology
MNCs also have played and are playing a contributing role in the transfer of highly
sophisticated technology from the developed countries of the world to the less
developed countries of the world to the less developed countries, especially to third
world countries.
7. Economic growth
In some countries where neither domestic investment nor foreign economic aid is
available in sufficient quantities for repaid development, the help of foreign firms,
companies and enterprises is sought for capital to speed up the process. Private
foreign capital can be major stimulus to the economic growth of under developed
countries.

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8. Job opportunities
In countries where unemployment is a major problem foreign corporations or firms
provide great opportunities to the local people. Since, it is too expensive to import
large number of skilled labours from abroad or from the home country. The foreign
investors find it cheaper to train unskilled labours needed by the enterprise.
9. MNCs produce more and better products
MNCs produce more and better products at lower costs because they establish their
plants in those countries where they can draw resources easily.
10. World modernization
MNCs are regarded as agents of world modernization in the developing countries.
They produce new jobs, introduce new technology, and train the local people in the art
of science and technology.
11. MNCs brings foreign exchange
Another most important advantage of MNCs is that it brings foreign exchange to
developing countries because in developing countries, the rate of saving is very low.
12. MNCs take economic risk
Another important advantage of MNCs is that it takes economic risk in business in
developing countries because they have financial powers and developing or third
world countries are not in such a position to take economic risk.

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DISADVANTAGES OF MULTINATIONAL COMPANY

(1) High Profit Low Risk Investment:

The multinational company prefers to invest in areas of low risk and high profitability.
Issue like social welfare, national priority etc. have less priority on their agenda.
Mostly they invest in consumer goods industry.
(2) Interference in Political Matters:
The multinational company from developed countries interferes in the political affairs
of developing nations. There are many cases where multinational company has bribed
political leadership for their own economic gains.
(3) Create Artificial Demand:
These companies create artificial and unwarranted demand by making extensive use
of advertising and ales and promotion techniques.
(4) Exploitation:
These companies are financially very strong and adopt aggressive marketing
strategies to sale their products, adopt all means to eliminate competition and create
monopoly.
(5) Technological Problem:
Technology they use is capital intensive so sometimes that technology does not fully
fit in the needs of developing countries. Also, multinational company is criticized for
transferring outdated technology to developing countries.

13

(6) Foreign Exchange go outside the Country:

The working of multinational company is a burden on the limited resources of
developing countries. They charge high price in the form of commission and royalty
paid by local business subsidiary to its parent company. This leads to outflow of
foreign exchange.
(7) National Threat:
Sometimes outdated technology is used by domestic industries which hamper the
quality and price of their products so they cannot compete with those multinational
company. Hence, there is a threat of nationwide opposition to multinational company.
Arrival of these companies creates an atmosphere of uncertainly to the domestic
industries.
(8) Impose their Culture:
Multinational company imposes their culture on developing countries. Along with the
products they also indirectly impose the culture of developed nations. These
companies have imposed the culture of fast food and soft drinks onto the developing
nations. For examples:- burger and coke.
(9) Work for Self Interest:
Multinational company work toward their own self interest rather than working for
the economic development of host country. They are more interested in marketing of
profits at any cost.

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MULTINATIONAL COMPANIES IN INDIA

Multinational companies are the enterprises or organizations that manage production
or offer services in more than one country. India has been the home to a number of
multinational companies. Indeed, since the financial liberalization in the country in
1991, the number of multinational companies in India has increased noticeably.
Although majority of the multinational companies in India are from the U.S., however
one can also find companies from other countries as well. Multinational companies in
India are taking their toll on family businesses. They are not only destroying the
household economies for small business people but also leading to the cultural
uniformity of the global brands in the market place in India. There are Many reasons
why the multinational companies are coming down India.
India has got a huge market. It has also got one of the fastest growing economies in
the world. Besides, the policy of the government towards FDI has also played the
most important role in attracting the multinational companies in India. For quite a
long time, India had a restrictive policy in terms of foreign direct investment. As a
result, there was lesser number of companies that showed interest in investing in
Indian market. However, the scenario changed during the Economic liberalization of
the country, especially after 1991.
Government, nowadays, makes constant efforts to attract foreign investments by
relaxing several of its policies. As a result, a number of multinational companies have
shown interest in the Indian market.

15

MULTINATIONAL CORPORATION
COMPANY OF LG

LG Corporation (Korean: LG ) is a South Korean multinational conglomerate

corporation. It is the fourth-largest company of its kind in South Korea, following
Samsung Group, Hyundai Motors Group and SK group. Its headquarters are situated
in the LG Twin Towers building in Yeouido-dong, Yeongdeungpo-gu, Seoul. LG
makes electronics, chemicals, and telecom products and operates subsidiaries such as
LG Electronics, Zenith, LG Display, LG Telecom and LG Chem in over 80 countries.
History
LG Corp. founder Koo In-Hwoi established Lak-Hui Chemical Industrial Corp. in
1947.[3] In 1952, Lak-Hui (pronounced "Lucky", currently LG Chem) became
the first Korean company to enter the plastic industry. As the company
expanded its plastic business, it established Goldstar Co. Ltd. (currently LG
Electronics Inc.) in 1958. Both companies Lucky and Goldstar merged and
formed Lucky-Goldstar.
Goldstar produced South Korea's first radio. Many consumer electronics were sold
under the brand name Goldstar, while some other household products (not available
outside South Korea) were sold under the brand name of Lucky. The Lucky brand was
famous for hygiene products such as soaps and HiTi laundry detergents, but the brand
was mostly associated with its Lucky and Perioe toothpaste. Even today, LG
continues to manufacture some of these products for the South Korean market, such
as laundry detergent.

16

In 1995, to compete better in the Western market, the Lucky-Goldstar Corporation

was renamed "LG", (the abbreviation of "Lucky-Goldstar"). The company also
associates the letters LG with the company's tagline "Life's Good", which is actually a
backronym. Since 2009, LG has owned the domain name LG.com.
Vision & Business Goals
LG Electronics pursues its 21st century vision of becoming a true global digital
leader, making its customers worldwide delighted through its innovative digital
products and services. Going forward LG India will synergize all activities in keeping
with the global vision of becoming a global top 3 player in all business areas by
following the Blue Ocean Strategy. The Blue Ocean strategy is based on the
understanding that only flexible companies that adapt to lifecycle and industry
changes will enjoy continued growth. The success of the Blue Ocean Strategy will
focus on creating high growth & profit by focusing on five key areas at LG: Products,
Business Model, Work, and Systems & People
In 1996 LG formed a joint venture with IBM; it was later terminated.
On 1 April 2000, LG Chemical was split into three separate companies, namely LGCI,
LG Chem, and LG Household & Health Care. Later, in July 2007, LG Chem merged
with LG Petrochemical.
Since 2001, LG has two joint ventures with Royal Philips Electronics: LG Philips
Display and LG Philips LCD, but Philips sold off its shares in late 2008. In 2005, LG
entered into a joint venture with Nortel Networks, creating LG-Nortel Co. Ltd.
On November 30th 2012, com Score released a report of the October 2012 U.S.
Mobile Subscriber Market Share that found LG lost its place as second in the U.S
mobile market share to Apple Inc.
On 20 January 2013, Counterpoint Research announced that LG has overtaken Apple
to become second largest smart phone manufacturer in the US.
LG has owned the LG Twins baseball club in Seoul, South Korea, since 1989.

17

The company logo of LG features the letters L and G, presented in the form of a
smiling human face.
Associated companies

GS Group

LS Group

LIG Group

Fields of activity
Holding company

Electronic industry

Companies
LG Corp.
LG Electronics

USD(2011)
US$ 9.2 billion[10]
US$ 50.03 billion[11]

LG Display

US$ 22.4 billion[12]

LG Innotek

US$ 4.19 billion[13]

LG Siltron

N/A

Lusem
LG Chem

N/A

LG Household &
Chemical industry

Health Care

Services

LG Hausys

US$ 3.18 billion[15]

N/A
N/A

LG MMA
LG Uplus

US$ 8.47 billion[17]

LG International Corp.

US$ 12.9 billion[18]

LG CNS

N/A

SERVEONE

N/A

LG N-Sys

N/A

Group families

Electronics industries

US$ 20.9 billion[14]

US$ 2.26 billion[16]

LG Life Sciences

Telecommunication and

The division's revenue, billion

LG Electronics

18

LG Display

LG Innotek

LG Micron

Hiplaza

Hi Logistics

System Air-Con Engineering

Siltron

Lusem

Chemical industries

LG Chem

SEETEC

LG Household & Health Care

o

sa Knox

The Face Shop

CocaCola Beverage Company (South Korea)

LG Hausys

LG TOSTEM BM

LG Life Sciences

LG MMA

Telecommunications and services

LG U+

CS Leader

AIN

LG Dacom

LG Powercom

DACOM Crossing

DACOM Multimedia Internet

CS ONE Partner

LG CNS

LG N-Sys

19

V-ENS

BIZTECH & EKTIMO

Ucess Partners

SERVEONE

LG International

TWIN WINE

monkey house

pixdix

Korea Commercial Vehicle

LG Solar Energy

G2R

HS Ad

Twenty Twenty

Media Prima Berhad

20

LG Electronics Aims to Be Truly Multinational, MarketingDriven Company

Company looks to take next step to become leading global corporate brand
LG Electronics (LG), a global leader and technology innovator in consumer
electronics, announced today its ambitious plans to be a multinational company in
every sense of the word. LGs plans include additional marketing investment,
businesses reorganization and system improvements and global standardization.
LG aims to become the best corporate brand with top-notch marketing capabilities in
each of the 140 countries where we currently operate. We want to make it completely
unimportant to consumers where LG is headquartered; all that will matter is how they
feel about our products, said Yong Nam, CEO of LG Electronics. This will be
possible only through a deep understanding of what todays global consumers really
want and by making strategic marketing investments. Being alert to consumers needs,
both practically and emotionally, is critical to survival today, especially as product
lifecycles are getting shorter and shorter.
Elevating Marketing Capabilities
LG aims to separate itself from other major electronics makers both through its
unique combination of advanced technology and stylish design as well as advanced
marketing practices. To enhance its brand, LG has increased its marketing investment
by USD 400 million over 2007. However, LG understands that it will take more than
money to win consumers hearts and minds.
Thats why LG has also undertaken some unique, aggressive campaigns to increase
consumer recognition and understanding of LGs brand identity as a sophisticated,
refreshing brand that sits at the intersection of function and form.

21

LGs focus on marketing investment has already begun to yield results. According to
research conducted by LG, the companys brand awareness in the U.S. market has
increased from 65 percent in 2005 to 83 percent in 2007. This wider recognition has
resulted in improved profits in North America.
Improving Business Portfolio
As part of its efforts to be a highly profitable organization, LG plans to reorganize its
business portfolio during the next five years. This includes reorganizing business units
and divisions, expanding outsourcing and participating in new businesses such as
energy, B2B solutions and healthcare.
Through its reorganization to improve both its growth and profit, LG expects to
achieve at least 10 percent sales growth, 6 percent profit margin, 4 times asset
turnover ratio and 20 percent ROIC. LG aims to increase its ROIC from 10 percent in
2007 to 15 percent in 2008, with the target for ROIC in 2010 at more than 20 percent.
As cash flow has become one of the most critical elements of a companys financial
structure, LG is focusing on improving its cash flow as well as ROIC.
Global Standard
LG has also enhanced its management structure by appointing Reginald J. Bull as
Chief Human Resources Officer (CHO), an Executive Vice President-level position,
last week. Mr. Bull will direct all aspects of ensuring LGs HR policies and systems
are up to global standards.

22

As a part of LGs efforts to enhance its position as a global brand and boost
performance, the company has been filling C-suite positions with non-Korean global
leaders who are overseeing marketing, supply chain and procurement.
Last year, the company appointed Dermot Boden, formerly of Pfizer, as Chief
Marketing Officer (CMO); Thomas K. Linton from IBM as Chief Procurement
Officer (CPO); and Didier Chenneveau from Hewlett-Packard as Chief Supply Chain
Officer (CSCO).
With these investments and initiatives, LG expects to achieve its business goals improving both growth and profit - as well as position itself as a truly global brand.

23

STRUCTURE OF THE GROUP AND THE

FINANCIAL POSITION
LG Corporation is a holding company that operates worldwide through more than 30
companies in the electronics, chemical, and telecom fields. Its electronics subsidiaries
manufacture and sell products ranging from electronic and digital home appliances to
televisions and mobile telephones, from thin film transistor-liquid crystal displays to
security devices and semiconductors. In the chemical industry, subsidiaries
manufacture and sell products including cosmetics, industrial textiles, rechargeable
batteries and toner products, polycarbonates, medicines, and surface decorative
materials. Its telecom products include long-distance and international phone services,
mobile and broadband telecommunications services, as well as consulting and
telemarketing services. LG also operates the Coca-Cola Korea Bottling Company,
manages real estate, offers management consulting, and operates professional sports
clubs.

24

LG ELECTRONICS COMPANY ANALYSIS

In this competitive business world marketing strategies is very important .They are
several multinational company run their business over the world so the multinational
company must use its own marketing strategies. This analysis describe the macro
environment of the organization and its future decision making process. Globally the
lot of business to achieve their goal by its own marketing strategies plan. Here the
study tells about the LG Electronics and its future plan in the competitive market.
LG Electronics is the one of well known multinational company in this world. This
company delivery innovative digital product such as entertainment, games, home
media and home appliance to customer. LG Electronics funded in 1958 as Gold Star
in Korea. In 1995 its renamed as LG. Its prior product is consumer TV, radio,
refrigerator, air conditioner and washing machine. LG electronics introduce some new
technology to the digital world such as the first CDMA digital handset, 60 inch
plasma TV. LG electronics have good corporate culture some of these No excuse, We
not I, Fun work place. LG brand comprised of four basic element value, benefits,
promise and personality. This company set the long term goal and works towards the
goal. The vision of the company is Global top three in 2010.
LG controls 114 local subsidiaries all over the world. They are 82000 people work for
this company. LG accept as true that technological innovation is the only way to
achieve the market. So its delivery latest technology to the customer.
MACRO ENVIRONMENT
Main external and out of control factor that influence an organization decision making
and change the performance and strategies The major factor are
1. Political factor
2. Economic factor
3. Social factor
4. Technical factor
These are the main factor influence the company or organization decision making and
its improve or decrease company performance.

25

LG
Political factor
Technical factor
Economic factor
Social factor
Political Analysis:
LG Electronics is the intercontinental Company which has a range of industrialized
Units and sources. The company focus the international market for his product .the
political environment nothing but how the law and government taxation policy
influence an organization .There is a lot of political interaction has integrated in this
business and it has operated between the political and legal factors. This factor may
increase the cost of factor some time it decrease the product cost. The LG electronics
facing lots of problem while its production and exporting goods to the overseas.
Economic Analysis:
LG has a very big competitive market in world and it have constant development in
their innovation in electronics equipment, secondary products, planned process of LG
etc.. it have leads to sell goods to other countries . The LG contribute the world wide
stock market and money market also. The LG have well and strong economic source
and it has capable of introduce some new technology to the electronic market. LG
leads the electronics market with enormous technology and economic resource. The
below the table shows the financial highlight of LG electronics. The sale of the
company is constantly increase the last seven year it possible by the good economic
status
Technological Analysis:
The LG has more technology shock towards its electronics product. In every
manufactured goods in LG they improve their technology and they became a first
world exporter of the country. The LG has a huge technology like LCD, plasma TV,
Games and, Laptops, Videos, CDMA Mobile phones with a number of features. The
challenger cant beat its clear imagery their technology towards its innovation of

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product. The 3D Plasma TV, Camera with massive features like clear images and slide
activities, high battery etc..
The LG introduce lots of new technology to the digital world such as This business
group has entitled more quality product and services to the customer. it has introduced
lot of technology in every business group of product. Recently the LG has introduced
3k model of Camera which has lot facilities and clear images. It is a exiting product to
the market. and also the company has introduced more innovative product like 3D
products, professional cameras, Blue ray Disk, increasing network services etc.. The
LG has lead its technology and it introduce number of products with exclusive
features to the market.
Socio-cultural Analysis:
LG Corp has introduced the number of product to the different customer into the
society. Mainly it has introduced for easy usage with several option of different user.
It has introduced to the delighting product to the customer. The LG product such as
laptop, various electrical products, mobile devices, iPod, ipad, financial services,
network system etc. So it has changing life style of the LG user. LG increase its
ethical standard contributes in Research and development and health of the
organization. It also leads to image of the country.
LG creates its employment opportunity: After the 2009 the LG has creates a more
product services and sales growth. It improve its manufacturing process to various
countries. So it creates a employment opportunity to the country. it develop career
expectation to the people and they able to recruit a more number of peoples and it
leads to employment opportunity and life style changes of the people. LG product has
a number of user form 6 years to 60 years of the people. So in every generation it
creates a lot of life changes and life expectancies of the product.
LGs New Customer and New Geographies:
At presently, LG has concentrated the end user of its consumer. The Company has
introduced lot of technologies and it has followed by their competitor. The LG has

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analysis in a different perspective of different customer. Based on the experience of

the consumer the product has developed. It has developed not only by the technology
impact, it also based on the usage of customer. The company also reinvest into their
retail sales to various countries. It leads to improve customer contact and to get a feed
back about the product directly. LG Make believe the brand image has increased its
lot of brand image of the product. The new customers are increased into the market
and it has increased more geographic are in retail market.
Future Market:
LG has increased its various technologies and various marketing strategy to capture
the future market. LG product has easier product and it has so much of coverage in
the world. If the company has to leads its competitive markets means, it must increase
its capability of marketing strategy and best customer services than the competitor. In
future it has increased play station network and it has increased its core value, games
and videos etc. The market has in wide area and it must cover whole classes of
people. So day by day it has increased its technology up gradation and cost price
movements. Then only it will able to sustain its sales growth in future market. LG has
separated as a three business groups and it increased its more strategy towards its
business. It increase more products and services like, deploy LG online services for
the network infrastructure. And also it has increase the network product and it
enhance more customer for future period.
There is more competitor company like Dell, Apple Inc, HP, and Samsung etc. to
enter into the market. The LG must leads its competitor and fulfill their customer
satisfaction. Most of the competitor has same product and same features with less
price of the product. The LG must be differentiating its product among the customer.
So it has introduced more technology with the quality conscious and Music player has
more effect than the competitor product. LG management has re invested in retail
market and it increases its cost cutting strategy to reduce its price movements. This
has leaded the future market as a competitive way. I hope the LG Corp has leads its
future market

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MARKETING MIX OF ITS LG CORP

Every company has increased its marketing mix strategy to improve its sales growth
among competitor. The LG Corp also has marketing mix like Price, Place, Promotion,
Product, people, process, physical evidence etc. The LG has also used its more
strategic alliances and performances of its product.
Price:
The LG has enormous technology and it has used the more electronics and quality
spares for its products. So the price of the product has increased. After some period
the LG has realized and it give more quality and services for its expensive product.
None of the competitor has increased its effectiveness in the sounds and videos. In
2008 because of the recession the LG has reach its low sales market and it has
declined in the various products and services. After the recession in 2009 they started
the to cut cost materials and it provide a variety of pricing strategies. The price of the
LG has given some effects to the customer and it leads to sales growth for some
period.
Place:
The LG Corp make. Believe the brand image have a worldwide to produce more
customers to enter into the market. The LG product has sales around world. But some
of the product has not reached into the some of places like china and some of the
countries are not allowing getting the product into the market. The geographic are
must be increased worldwide. The manufacturing company is in Japan, U.K, U.S etc..
It has increased its product range and it sales around the world. At present the retail
market has developed and it increase its competitive advantage towards its customer

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Promotion:
The LG different product has a different range of effects and it has many offers it
depends upon the product range and products. The LG has provided a different
Advertisement to the different countries of same product, because the people and
customer views and culture will be different into a various countries. The
advertisement and promotion strategy has been formulated by LG management to
increase its sales growth by nature.
Product:
The LG corp. has a product portfolio. There is a number of product and brand images
among the LG and it has more effective strategies towards its business. There is 3
business groups and it has increased its product services to the market and it increase
its effectiveness of networking system. The product has segmented as electronic
goods, financial services, networking system, health science R & D etc.. The different
product has a different ranges and quality effective towards its customer.Physical Evidence:
The LG has increased its infrastructure at every movement. It has several showrooms
and retail market to increase its sales growth and it should impress the customer to
buy the product. Hope it make a enormous physical quality to the LG. The every
movement of LGs workstation has increased its quality range in infrastructure facility
and it have more stylish in nature. It has increased its profitability in hardware,
software and networking system.
Competitive Strategy of LG:
This study has formulated the Porters competitive strategy. The LG Company has lot
of competitor and it has a lot of strategy to leads its competitor market. The
competitive strategy has concerned the lower cost strategy and the differentiation
strategy.

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LG Electronics Company Analysis

In this competitive business world marketing strategies is very important .They are
several multinational company run their business over the world so the multinational
company must use its own marketing strategies. This analysis describe the macro
environment of the organization and its future decision making process. Globally the
lot of business to achieve their goal by its own marketing strategies plan. Here the
study tells about the LG Electronics and its future plan in the competitive market.
LG Electronics is the one of well known multinational company in this world. This
company delivery innovative digital product such as entertainment, games, home
media and home appliance to customer. LG Electronics funded in 1958 as Gold Star
in Korea. In 1995 its renamed as LG. Its prior product is consumer TV, radio,
refrigerator ,air conditioner and washing machine. LG electronics introduce some new
technology to the digital world such as the first CDMA digital handset, 60 inch
plasma TV. LG electronics have good corporate culture some of these No excuse, We
not I, Fun work place. LG brand comprised of four basic element value, benefits,
promise and personality. This company set the long term goal and works towards the
goal. The vision of the company is Global top three in 2010.
LG controls 114 local subsidiaries all over the world. They are 82000 people work for
this company. LG accept as true that technological innovation is the only way to
achieve the market. So its delivery latest technology to the customer.

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LG adapts cost leadership and Differentiation

competitive strategy:
LG Corp has a lot of competitor and it have to lead its market. Before LG has a lot
manufacture and process to do the lot product innovation and it introduced into the
market. In 2008 because of the recession the LG has reached its declined stage and the
sales of growth has very low into the market. So the LG has taken a effective decision
of cost cutting system. It implemented the cost cutting system into the market. Many
manufacturing unit has cut the process of product and it decreases the manufacturing
product for some period. It leads to cutting the prices of product and
it become a more sales by the segments of low prices. The LG devices like Mobile
phones, iPod, laptops especially in W series of models has high cost than the
competitive. But it has more features than the competitor. This segment of LG has
focusing the particular quality customer to buy the product. The cost leaderships
strategy has increase its product effectiveness and sales growth to the company.
LG has more feature than the competitor product. The devices like LG digital camera,
LG Vaio, LG mobile phones, PCs, Networking system etc., it has from the competitor
product. Presently the LG introduced the 3D products its play station and it games etc.
It increase its product designs, technology, features etc to leads its competitive
market.
LG also its developed its market in wide range by introducing networking system of
the company. The LG corp. has more marketing strategies to increase its promotion
strategy towards its customer. The product has a wide market, so it must want more
place strategy and promotion strategy to reach its end user of the customer. LG
make. Used the various technologies and it includes various features. Every product
must differentiate believe it implies the LG brand has more innovative product and it
increase its lot of marketing strategy. And also it associated with brand image,
features, technology, dealer network and direct networking system etc.

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Growth Strategy:
There is a diversified market in the strategy. The LG Corp has horizontally increased
their product to the market. Day by day company has expanded in business growth by
the way of increasing product segmentation and various product services. The LG has
a wide market towards its market and it has increased its growth strategy towards its
business. The Concentrated in the wide range of activities and it has increased its
strength and effectiveness in their price and markets. They are diversified their market
by improving both related products and unrelated products like life science, financial
services.

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Recommendation
The analysis of LG has comprises that it has more quality services and market
sustainable capability towards its business. The company still its has some unlike
movements in some markets. The LG must improve its price strategy and promotion
strategy at the movement. The LG announces the core capability and environment
development product to develop in a certain level. This makes LG a wide brand image
of the product. Even though LG employee was a many skills and talented to increase
its innovative technological products to customer. But still there is some lacking into
the marketing mix like pricing strategy and promotion strategy to reach the customer.
In future the LG must improve its pricing strategy like to cut the cost of the exiting
product by the way of minimizing its process and it must increase time utility. There
is a many competitor has arise for LG product. So the technology has concerned it
should increase to implement in timely manner. This will increase to capture a more
market in future. I hope the LG electronics and other components have more
capability to reach their customer.

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CONCLUSION

The review has explained about the Macro environment analysis and Marketing mix
strategy. It comprises the LG future development and this review has provide more
detail analysis about the LG Corp. I hope in future the LG has a very good capability
and sustainable maintenance in sales growth. The LG has entered into the more
related and unrelated products into the market. This is a good beginning of LG to
increase its market capability to its wide ranges.

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BIBILIOGRAPHY OF REFERENCES
BOOKS:
P. A. JOHNSON: ECONOMICS OF GLOBAL TRADE AND FINANCE
PUBLISHED BY MANAN PRAKASHAN MUMBAI, 2012
OTHER SOURCE OF DATA :
1. OTHER WEBSITE

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