LG KM900 (LG Arena)
Tuesday, September 29, 2009
Monday, September 28, 2009
Business Strategy
LG Display Co Ltd uses differentiation as its main business strategy by producing goods and services that are unique to the market. That is products that are used to experience new, rich life of digital display through a variety of TFT-LCD LG Display provides, such as the production and supply of thin-film transistor liquid crystal displays called TFT-LCD panels, principally used for televisions to provide slim and sleek design. It also provides large, wide and high performance screens for notebook computers and wider, brighter and crisper screens for desktop monitors. In addition, it provides TFT-LCDs for handheld products such as mobile phones, and lighter and slimmer products for industrial and other applications such as entertainment systems, automobile navigation systems, portable DVD players, digital photo displays and medical diagnostic equipment. The customers served by LG Display include manufacturers of notebook computers, televisions and desktop monitors.
The customer service center provides product repair and warranty services to customers in the Americas region, where the demand for LCD TVs is rapidly growing, especially in the United States, Canada, Mexico and Brazil. The service center features optimized facilities and analysis equipment to provide warranty services primarily for LCD panels that are 32 inches and larger. In addition, the Company has one sales subsidiary and four representative offices in the U.S. As part of their strategy to improve customer alignment; this enables them to better respond to the needs of their customers in a timely and efficient manner.
The customer service center provides product repair and warranty services to customers in the Americas region, where the demand for LCD TVs is rapidly growing, especially in the United States, Canada, Mexico and Brazil. The service center features optimized facilities and analysis equipment to provide warranty services primarily for LCD panels that are 32 inches and larger. In addition, the Company has one sales subsidiary and four representative offices in the U.S. As part of their strategy to improve customer alignment; this enables them to better respond to the needs of their customers in a timely and efficient manner.
Michael Porter's Five Forces Analysis
In the industry LG Display operates, Michael Porter’s Five Forces Analysis is crucial in assessing the state of competition.
The Bargaining Power of Buyers
The bargaining power of buyers is moderate. There aren't many companies that offer the same quality of products as those of LG Display or have advanced as much technologically. The company’s televisions, monitors, notebook PCs and applications stand out among existing competitors. LG Display reduces the buyer power by designing its products in ways that appeal to and fit the needs of today's customers. Everything from the slim and sleek, wide view, portable and compact designs and display technologies make the products superior to the competing companies.
The Bargaining Power of Suppliers
As far as LG Display's bargaining power of suppliers, the power is on the lower end. The company forms information partnership to create cooperation among supply chain partners for mutual success. It enters into a cooperative relationship with its suppliers by becoming their shareholders. This allows LG Display to promote strategic relationships with equipment and parts suppliers, which enables a stable source of supply at competitive prices. The result is high-quality parts at a lower cost which is done through sharing product concepts with suppliers early in the product development cycle. This kind of cooperation with suppliers has lowered costs by 10% compared to the fourth quarter of 2008. LG Display stands apart from its peers in terms of market share, cost competitiveness and supply capacity.
Threat of Substitute Products or Services
The threat of substitute products is moderately low. Substitutes for LCD are LED (Light-Emitting Diode) and OLED (Organic Light-Emitting Diode), both are newer technologies currently developed by the company. As long as LG Display can maintain its current market share of a quarter percent for the newer products, substitute products would not be considered as threats. The company’s development of new products and technologies that can be differentiated from those of its competitors increases switching cost as well as reduces buyers’ propensity to substitute. In addition, its innovation technology is another switching cost for consumers.
Threat of New Entrants
The threat of new entrants is low in the flat panel display industry (TFT-LCD technology) due to its various entry barriers such as rapidly evolving technology, capital-intensive characteristics, brand equity, expected retaliation among existing competitors and the significant investments required by the economies of scale. In addition, the industry may not be as appealing to potential competitors due to its highly competitive nature. Existing competitors have already experienced pressure on their prices and margins due largely to additional industry capacity from other panel makers in Korea, Taiwan, China and Japan. Other entry barriers also include LG Display’s absolute cost advantage in its supply chain management and learning curve advantage with its years of experience as a leading player in the industry
Rivalry among Existing Competitors
Rivalry among existing competitors is on the higher end. Although the company’s market share increased to 26.4% in 2009 from 20.4% in 2007, there is still intense competition within the industry. Competitions are likely to remain intense not only due to the expected large demand for LCD panels in the market today but also due to additional industry capacity from other Asian LCD panel makers such as Samsung, AU Optronics and Sharp. However, the average selling prices may continue to decline as a result of technology advancements and cost reductions. In order to stay competitive, LG Display strives to differentiate itself with not only cutting-edge technology but also innovative designs. The BusinessWeek article "LG Bets Big on TV Design" clearly demonstrates this business initiative.
The threat of substitute products is moderately low. Substitutes for LCD are LED (Light-Emitting Diode) and OLED (Organic Light-Emitting Diode), both are newer technologies currently developed by the company. As long as LG Display can maintain its current market share of a quarter percent for the newer products, substitute products would not be considered as threats. The company’s development of new products and technologies that can be differentiated from those of its competitors increases switching cost as well as reduces buyers’ propensity to substitute. In addition, its innovation technology is another switching cost for consumers.
Threat of New Entrants
The threat of new entrants is low in the flat panel display industry (TFT-LCD technology) due to its various entry barriers such as rapidly evolving technology, capital-intensive characteristics, brand equity, expected retaliation among existing competitors and the significant investments required by the economies of scale. In addition, the industry may not be as appealing to potential competitors due to its highly competitive nature. Existing competitors have already experienced pressure on their prices and margins due largely to additional industry capacity from other panel makers in Korea, Taiwan, China and Japan. Other entry barriers also include LG Display’s absolute cost advantage in its supply chain management and learning curve advantage with its years of experience as a leading player in the industry
Rivalry among Existing Competitors
Rivalry among existing competitors is on the higher end. Although the company’s market share increased to 26.4% in 2009 from 20.4% in 2007, there is still intense competition within the industry. Competitions are likely to remain intense not only due to the expected large demand for LCD panels in the market today but also due to additional industry capacity from other Asian LCD panel makers such as Samsung, AU Optronics and Sharp. However, the average selling prices may continue to decline as a result of technology advancements and cost reductions. In order to stay competitive, LG Display strives to differentiate itself with not only cutting-edge technology but also innovative designs. The BusinessWeek article "LG Bets Big on TV Design" clearly demonstrates this business initiative.
Major Business Initiatives & IT Advantages
As a major manufacturer of LCD and other types of electronics screens such as LED and OLED, the company needs to have a strong Supply Chain Management (SCM) system to ensure supplies are in place at the right moment when they are needed (Just-In-Time method). This way cost can stay down while profits rise. Although it is uncertain whether LG Dispaly has any SCM in place, the company employs Inter-Modal Transportation to move its supplies from origin to destination through the help of Supplier Collaboration System, an ERP system that tracks goods from when they are shipped to the various stores that sell the products. The Customer Relationship Management (CRM) system is another focus of LG Dispaly since differentiation is its business strategy. The company's Customer Collaboration System serves to strengthen customer collaboration through providing services such as engineering support and market information. The Multi-channel Service Delivery also allows customers to interact with the company by either email, phone or the website. Another initiative businesses are increasingly using is E-Collaboration, the use of technology to support workflow, knowledge management, social networking, e-learning and collaboration. LG most likely uses virtual teams since there are employees in various countries like South Korea, China, Poland and the United States. The integrated collaboration environments improves work performance and allows sharing and flow of information. Considering the immence amount of technology involed in its industry, LG may also be using knowledge managment systems and wiki to capture, organize collaorate and share information. Finally, a company this size has to have an Enterprise Resource Planning (ERP) system in place to help facilitate the business practices. For LG, this integrated software that controls the various departments in the company is the Supplier Collaboration System. It allows all suppliers, forwarders and customers to review shipment processing, import trade, electronic certification, price estimation and vendor information management.
As a major manufacturer of LCD and other types of electronics screens such as LED and OLED, the company needs to have a strong Supply Chain Management (SCM) system to ensure supplies are in place at the right moment when they are needed (Just-In-Time method). This way cost can stay down while profits rise. Although it is uncertain whether LG Dispaly has any SCM in place, the company employs Inter-Modal Transportation to move its supplies from origin to destination through the help of Supplier Collaboration System, an ERP system that tracks goods from when they are shipped to the various stores that sell the products. The Customer Relationship Management (CRM) system is another focus of LG Dispaly since differentiation is its business strategy. The company's Customer Collaboration System serves to strengthen customer collaboration through providing services such as engineering support and market information. The Multi-channel Service Delivery also allows customers to interact with the company by either email, phone or the website. Another initiative businesses are increasingly using is E-Collaboration, the use of technology to support workflow, knowledge management, social networking, e-learning and collaboration. LG most likely uses virtual teams since there are employees in various countries like South Korea, China, Poland and the United States. The integrated collaboration environments improves work performance and allows sharing and flow of information. Considering the immence amount of technology involed in its industry, LG may also be using knowledge managment systems and wiki to capture, organize collaorate and share information. Finally, a company this size has to have an Enterprise Resource Planning (ERP) system in place to help facilitate the business practices. For LG, this integrated software that controls the various departments in the company is the Supplier Collaboration System. It allows all suppliers, forwarders and customers to review shipment processing, import trade, electronic certification, price estimation and vendor information management.
The type of IT LG Display uses is the Top-down silo, where all the IT command and control are in the IT function. Although cuts down cost, this centralized approach discourages innovation. Fortunately, its philosophical approach of Early IT Adopters encourages the development and use of IT and allows employees to experiment with new and emerging technologies in hope of finding a few that can provide significant competitive advantage.
Monday, September 21, 2009
Ethical, Social Responsibilities & Risk Management
In terms of ethical responsibility, in the LG Display official site, one can find the complete company Code of Ethics guidelines, where it details regulations into six parts:
- Responsibilities to and duties to customers, which regards to customer protection, privacy and fulfilling promises;
- Fair competition, regards to lawful usage of information and gaining competitive edge;
- Fair transactions, regards to fairness and enforcement of contracts;
- Basic ethics for employees, details employee dignity, protection of company property and issue of conflict of interest;
- Corporate responsibilities to employees, regards to health and safety fair treatment and human resources development;
- Responsibilities to the nation and society, details protection of stockholders’ interest, conforming to tax laws and environmental conservation.
In terms of its social responsibility policies, the company provides page on its environmental management where it details its vision, mission and strategies for compliance & corporate value, clean technology and sustainability. It incorporates a values system of ESH (Environment, safety and health).
On the corporate social responsibility page, the company itemizes four tasks:
- Matching grant system for all employees (matching employee donations for philanthropy);
- Providing student scholarships in science talents;
- Organizing environmental protection programs in demilitarized zone area;
- Global volunteer activities.
In order to improve its competitive edge so as to prevent Japanese and Taiwanese rivals from taking a larger share of the market, LG Display employed Oracle E-Business Suite R12 to not only increase business productivity and efficiency but also enhance risk management.
Company CEO
Young Soo Kwon
52 years old, Young Soo Kwon has served as the Representative Director, President and Chief Executive Officer since February 2007. Prior to joining LG Display, Mr. Kwon served as the President and Chief Financial Officer of LG Electronics. He also served as head of the Globalization team at LG Electronics' headquarters in Korea, as well as a financial officer at LG Electronics' overseas subsidiary in New Jersey. Mr. Kwon holds a bachelor's degree in Business Administration from Seoul National University and a master's degree in Industrial Engineering from Korea Advanced Institute of Science and Technology.
History
LG Display was originally formed as a joint venture by the Korean electronics company, LG Electronics and the Dutch company, Koninklijke Philips Electronics in 1999 to manufacture active matrixLiquid Crystal Displays (LCDs). The company was formerly known as LG Philips LCD Company but Philips sold off all its shares in late 2008. In December 2008, LG Philips LCD announced its plan to change its corporate name to LG Display upon receiving approval at the company's annual general meeting of shareholders on February 29. The company claimed the name change reflects the company's business scope expansion and business model diversification, the change in corporate governance following the reduction of Philips' equity stake, and LG's commitment to enhanced responsible management. The company has eight manufacturing plants in Gumi and Paju, South Korea. It also has a module assembly plant in Nanjing and Guangzhou in China and Wroclaw in Poland. LG Display became an independent company in July 2004 when it was concurrently listed on the New York Stock Exchange (NYSE) and the Korea Exchange (KRX).
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