LG Electronics Inc. is a multinational electronic company, with the headquarters in Seoul. The Company employs over 82 thousand people in its 119 branches distributed all over the world. LG Company specializes in home entertainment, mobile communication, vehicle compartments, home appliances and air solution. LG, just like other companies, is affected by factors that can be described as either internal or external business environment. The company has control over its internal environment while the external factors are those that the company does not have control over. This paper seeks to use SWOT and PESTLE concepts to analyze the internal and external factors affecting LG Company.
SWOT analysis is a tool that can be used to assess what a company can or cannot do. In addition, SWOT analysis also focuses on the potential opportunities and threats associated with a company. In other words, through SWOT analysis, company executives can assess whether or not the company can achieve its objectives (Panagiotou 10).
Global position: LG Electronics remains a global brand in the electronic industry with over 114 subsidiaries distributed all over the world. The fact that the Company is multinational means it is a highly recognized brand. Most customers around the world find LG products to be simple in design, easy to use and most importantly, with reliable and innovative technology.
Wide covering distribution system: LG has several distribution partners around the world that makes it easy to distribute its products to as many customers as possible. The company uses a pool strategy to ensure a fast stock rotation. The Glo-cal strategy (being global and acting local) has been the reason behind LGs marketing success (Park, Lee, Suh et al 25)
Diverse product lines: LG Electronics operates a diverse product line that includes electronic televisions, sound systems, cameras, mobile phones and many more. The product categories include both white and brown goods.
Involvement in Corporate Social Responsibilities: Corporate social responsibility is a noble thing for any company to be engaged in. LG electronics has a reputation for being involved in community projects with the aim of improving the lives of its customers and conserving the environment.
Brand Equity: LG electronics has been presence in the electronics industry for a long time. This, along with its sophisticated product strategies has made it possible for LG to have a strong brand equity.
Product management: LG has an extensive presence in products of various categories, ranging from white to brown. With this diverse operation, LG Company may find it difficult to focus on single product lines. Because of this challenge, LG has been trailing behind other products in the sale of its television and refrigerators.
No cash cows: LG company does not have a single product that it can use as a cash cow to fund its operation. However, rival companies like Samsung have smartphones and smart television products that have been doing very well in the market, hence acting as the companys cash cow (Park, Lee, Suh et al 21).
Improving lifestyle: The growing urban population in many parts around the world is likely to increase the demand for electronic products like LG (Panagiotou 10). With the increase in disposable income, people tend to have increased desire for technological products. The demand for home appliances and electronic products is likely to be increased by the migration trend that has seen many people move from rural to urban areas.
Partnership: LG electronics have been involved in partnership before and this could be intensified as a way of improving technology and reaching more customers.
Stiff competition: The electronics industry is already crowded with many companies, all of which are trying to outdoor each other (Park, Lee, Suh et al 15). LG faces direct completion from companies like Samsung, Sony, Apple Inc., and other companies that deal in similar products.
Government directive on energy conservation: Most governments around the world are today favoring policies that support the use of renewable sources of energy. LG and other electronics companies are increasingly being forced to use technologies that promote energy conservation.
Poor economic performance: Macroeconomic setbacks such as recession and unemployment crisis can have profound effect on the sale of electronic and home appliances.
Just like SWOT analysis, PESTLE analysis is a concept that is often used by companies to assess the environment in which they operate. Most commonly, companies use the PESTLE analysis to assess the situation just before they launch a new product (Abhishek 36). PESTLE analysis focuses on political factors, economic factors, sociocultural factors, technological factors, legal factors and environmental factors.
Political Factors: political factors such as trade policies, trade agreements, and tax regulations can have direct impact on the sales volume of a company (Park, Lee, Suh et al 22). LG has always adopted the policy of operating in high duty import tax-incentive places. Additionally, LG Company operates in politically stable regions such as China, Europe and parts of Africa.
Economic Factors: LG Company has had a rise in its revenue since 2007 making it possible for the company to expand in its product range. The rise of middle class in most cities around the world has also been a factor responsible for the growth of the Company (Panagiotou 9). LG can take advantage of the rising middle class, especially in places like China and parts of Africa, to increase its sales volume (Park, Lee, Suh et al 21). The other factors that LG needs to consider before making investment decision in a country is the GDP figures. Places with high GDP tend to be much better investment opportunity areas because of high disposable income.
Social Factors: Social factors such as employee welfare can have great impact on the performance of any company. LG Electronics Company works on the principle of safety for its employees. The rising level of rural-urban migration in most countries around the world is increasingly changing the demand for technological products. LG has adopted a marketing strategy that presents its product as a symbol of high lifestyle status, hence making it one of the most demanded electronic models by the growing middle class around the globe.
Technological Factors: Technology has been changing at a faster pace of the past decade. Electronic companies must keep pace with the modern technological development in order to remain relevant in the highly competitive industry.
Legal Factors: Every company must operate under the law of the jurisdiction under which it operates. Being a multinational company, LG has to operate within the legal framework of all the countries where its subsidiaries are distributed.
Environmental Factors: Environmental factors can have serious impacts on the performance of a company. For instance, warm temperatures can increase the demand for air conditioning electronics and refrigerators.