Lg Case Study

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LG Electronics Mobile Communications Company (LG), the 3rd largest mobile phone manufacturer trailing behind Nokia and Samsung, was late to penetrate the smartphone market and slow to innovate upon its entry. With only a 1% share of the lucrative smartphone market, LG has failed to come up with a hit model to compete against rivals such as Apple’s iPhone or Android phones made by Samsung and HTC. According to Jeff Pu, an analyst at Fubon Securities in Taipei, “The entire industry is moving towards smartphones right now. LG has always been strong in the feature phone sector, but not smartphones, so that’s something it has to work towards.” Thus, LG lagged behind in the smartphone market. 2. Problem Identification The below par performance in a profitable smartphone market has resulted in a record handset loss for 2nd quarter 2010 which totalled 120 billion won ($101 million), compared with profit of 620 billion won last year. In light of the symptom stated above, it leads me to believe that LG’s smartphone portfolio is weak which is defined as the marketing problem. According to Neil Mawston, Director of Wireless Practice at Strategy Analytics, “LG’s profitability has been heading from positive to negative for the last three or four quarters. LG has a weak portfolio in the sub-segments such as smartphones and in 3G devices. Other manufacturers such as Samsung, Apple, RIM and Nokia have been taking share from LG.” Furthermore, it is known for at least two years that LG’s smartphone portfolio is weak as LG lag behind their fierce competitors such as Apple in refreshing its range and offering a serious smartphone proposition. The record handset loss was the largest loss since LG started tracking the division’s financials in 2002 and it also drove down overall operating profit by 90% to 126 billion won. The net income fell by 33% to 856.4 billion won. After the

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