LG Plans to Triple Productivity by 2010

LG Electronics (LG) announced today at IFA International 2008 in Berlin, Germany, its goals and strategies for the display business. LG is already a tier one maker in the global flat panel display market, and the objectives are intended to reinforce its position, as the company plans to increase its display sales to $20 billion, a 30 percent growth, and to triple its productivity by 2010.

 

"Competition has intensified since the flat panel TV industry has fully matured," said Simon Kang, president and CEO of LG Electronics Digital Display Company, during a press conference at IFA. "However, we are confident that focused, localized marketing activities emphasizing our products, which embody the perfect harmony of design and technology, will separate us from our competitors."

 

In order to achieve its goal of rising the overall display sales to $20 billion by 2010, LG has come up with a four-part approach. The company intends to uphold its image as a premium brand, to increase returns on invested capital, as well as to maintain product leadership and expand its business portfolio.

 

The South Korean manufacturer has been focusing on brand marketing activities, which allowed it to establish itself as a premium brand, offering products that include both a stylish design and advanced technology. The company said it would invest $500 million through 2010 and that it would take a segmented, regional approach.

 

The marketing focus will be set on six regions of North America, Central and South America, Europe, China, the Middle East and Africa as well as CIS. The company also plans to reinforce its partnerships with premium distributors as well as centralize brand marketing activities for developed markets like North America and Europe.

 

LG said it would maximize the return on invested capital through outsourcing, innovative manufacturing technology, as well as through an advanced supply chain management system; and in order to achieve this, its plans include allocating its own talent and human resources into higher value-added areas, while outsourcing strategies will give it a competitive advantage on cost.

 

A cell production system will also be introduced, allowing the company to increase the manufacturing volumes of some of the products, as well as to come up with small quantities of niche products; the result will be the tripling of the productivity in the following two years. While an assembly line manufacturing means that a large number of people are working on various stages of an individual product, cell assembly means that a single person can assembly a TV from start to finish. LG also plans to control its supply network in real-time and to improve network visibility from supply to distribution, which will allow it to advance its global supply chain management.

 

To set product leadership, the South Korea-based manufacturer will create products able to offer differentiated value, all based on customer insights, and for this it plans to invest $1 billion on research and development in this area by 2010. The company will also operate a diversification of its product line-up based on consumer preferences as well, while the R&D network will be reinforced through the leverage of partnerships with sister brands like LG Display, LG Innotek and LG Digital TV Lab.

 

LG also plans to develop new models that will reinforce its business to business segment, and it will concentrate on the selling of products designed for public place use, such as hotels and airports, mainly for North America and Europe. Another growth engine is considered to be the broadband TV and in this regard, the South Korean giant and some of its partners will offer a wide range of content direct to TV via the Internet, which includes 3D graphics or high resolution movies.

 

The first half of 2008 brought sequential growth to the company, although a global economic downturn was registered during this period. The giant manufacturer achieved ambitious goals and objectives in its LCD and PDP businesses and, compared to the first half of 2007, LG’s LCD TVs marked a 100 percent growth in sales volume, while its PDP TVs grew 45 percent compared to the same period last year.