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Company Strengthens Long-Term Strategy with Agile Adapting to Rapidly Changing Business Environments
Cho highlighted the positive progress achieved through new business models, such as the subscription service business and webOS-based advertising business, which reflect LG’s quick response to the evolving market needs. . “Amidst unprecedented market uncertainties and changing competitive conditions, we need very different strategies and efficient operations,” he said.
Compared to two years ago when LG first introduced its Future Vision 2030, the recovery of the global market has a long delay, while environmental risks, such as changes in business policies in countries the bigger they are, the more visible they are. The competition paradigm with Chinese companies is also shifting from price-based competition to a more sophisticated focus on technology.
As part of its Vision 2030, LG intends to expand its existing service center business into travel and business areas. Using decades of customer understanding, knowledge and technical expertise, the company seeks to become a provider of lifestyle solutions that connect and enhance the customer experience.
“Despite the difficult environment, significant opportunities still exist,” Cho added. “By focusing on delivering differentiated customer value, we will create continued growth.”
Changing Business Paradigms to Meet Market Demands
LG is increasing its market presence with new business models such as subscription-based services and an online store. By leveraging the company’s strengths, the subscription business combines tools and services to provide comfort and convenience, surpassing the competition in terms of pricing. Customers can use the products at a time that best suits their needs and receive improved maintenance services, which allows LG to maintain close customer relationships and generate revenue on a regular basis.
LG is also strengthening its competitive strength by improving on-site maintenance services and diversifying sales channels. This year, the company is expanding the service to
By 2024, LG’s revenue from subscription services has risen more than 75 percent year-on-year (YoY), exceeding the company’s original target (
The company’s data-driven online store is also growing at a rapid pace, with sales up 80 percent YoY during November’s Black Friday.
Extending Services based on the Business platform with webOS
The platform-based service business, which contributes to the transformation of the company’s business structure into a high-profit model, aims to increase its revenue by more than five times by 2030 “which ultimately accounts for 20 percent of LG’s operating profit. This business model uses the hundreds of millions of LG products sold worldwide as a platform to make money by providing customers with tailored content, advertising and services. .
A prime example of LG’s current success in this area is the advertising and content business based on the company’s webOS smart TV operating system. Last year, the webOS-based advertising and content business surpassed its revenue goal of
Starting this year, webOS will become a comprehensive content platform for various devices and solutions, including IT products and car infotainment systems. It will also expand its scope to include AI-powered Digital Out of Home (DOOH) solutions for advertisers, becoming a “integrated content marketing platform” that provides differentiated content experiences in different indoor environments. and outside.
To this end, LG began to consolidate its display-based businesses “including TVs, displays, monitors and laptops” through a reorganization at the end of last year. The company is exploring various opportunities to secure additional capacity through mergers and acquisitions (M&A) and partnerships.
Accelerating Growth in B2B Displayed HVAC
To accelerate the growth of the B2B sector, the company is focusing on its heating, ventilation and air conditioning (HVAC) business, which is expected to grow rapidly in the AI era. LG has created a dedicated business unit, the LG Eco Solution (ES) Company.to boost its existing HVAC business. The HVAC business, along with LG’s automotive division and the factory’s smart business, will play an important role in driving the company’s B2B business to greater success.
LG HVAC boasts a full range of high-efficiency solutions that utilize the company’s industry-leading core technologies. Its latest products range from residential air conditioners to commercial air conditioners for buildings, schools and public institutions; heating solutions designed to replace petrol boilers; and advanced chiller technology, which is now used to improve energy efficiency in data centers “the key backbone of AI equipment. In addition, in key markets, LG is accelerating the establishment of a local business plan , which is permanent and includes R&D, production, sales and maintenance, and has the ability to develop unique solutions in the area.
By 2030, LG expects its B2B business to account for 45 percent of the company’s total revenue. B2B revenue made up about 27 percent of total revenue by 2021, a figure that rose to 35 percent at the end of last year.
Taking Bold R&D Steps to Face Future Megatrends
The company is also revising its future R&D technology operations to align with key strategic directions: expanding business capabilities, expanding platform-based service businesses, accelerating B2B businesses and selling new engines of rapid growth. More than 75 percent of LG’s advanced R&D efforts will focus on enterprise technologies that are aligned with the company’s long-term strategies, and maintain the company’s most valuable technologies. compare future fields.
LG will continue to focus on strengthening core technologies in eight core technologies: software, system on a chip, AI, robotics, materials and components, standards, next-generation computing and cloud/data. In particular, the company will implement CEO Cho’s “3B” strategy “Build, Borrow and Buy” by strengthening internal capabilities, using external knowledge and acquiring technologies. This approach involves establishing ties with global technology giants as well as promising startups and academics in order to ensure technological leadership. In addition, LG will continue to strengthen its R&D efforts in potential future fields, such as quantum computing and space technology.
Task Force management led by the CEO Improving Structural Competitiveness
In addition to transforming its business, LG is focused on strengthening its competitive structure “represented by Quality, Cost and Delivery” to cope with the growing global competition.
This year, LG is establishing a new CEO-led review process to drive this effort. Each business unit and headquarters will form a task force to maintain leadership in products and technology, production efficiency, R&D and operations, and CEO Cho will personally oversee the development of see. The main objectives for each operating group include maintaining product and technology improvements, improving production capacity and improving R&D capabilities.
LG is also making careful preparations to improve its ability to strategically respond to external uncertainties. By working with internal and external experts, the company creates scenarios for key data and develops a “playbook” to identify the right answers. This proactive approach is expected to reduce the influence of external factors on the business and discover new opportunities.
Fixed Investments In The Next Generation
Although it expects that the business environment will continue to face significant uncertainties in the coming years, LG is determined to maintain its strategic investments. With the aim of maintaining business competitiveness and securing future growth, these investments will be ‘upgraded’ based on prior information.
In addition to investing in service facilities and R&D, LG continues to evaluate the allocation of investment strategy for equity investments and M&As to accelerate the company’s growth. Earlier, LG announced its injection project
About LG Electronics, Inc.
LG Electronics is a global developer of technology and consumer electronics with a presence in nearly every country and more than 74,000 international employees. LG’s four companies “Home Appliance Solutions, Media Entertainment Solutions, Automotive Solutions and Eco Solutions” are combined for worldwide revenue.
