The other side of LG's success story

Our reporter Hendarsyah Tarmizi, along with other nine Indonesian journalists, visited South Korea recently at the invitation of LG Electronics. Below are his stories about the company's business vision and production activities.

In the advertising world, slogans remain an important tool to capture the attention of the people and hook them to become your customers.

These days, however, the slogan is not solely used to sell products and services, but also to sell business philosophy and vision of a company to its employees.

LG Electronics is, for example, among the few that have taken the advantage of the power of words through catchy slogans to promote its business agenda and corporate culture to its employees.

At LG's headquarter in Seoul and its two production divisions in Gumi and Changwon, outside the Korean capital, visitors will easily notice numerous slogans painted using bright red.

Huge and catchy slogans proclaiming "Great Company, Great People" or "Let's Win the New Game" are, for example, distinctively painted at the entrance of the two production division's offices in the towns.

In the lobby, meeting rooms or down in the toilets, other catchy slogans are hung, including "Fast Execution", "Fast Innovation", "Fast Growth", "No 'No' Challenge", "We, Not I" or "Fun to Work".

While most companies outside the advertising industry still pay no attention on to such creative works, LG uses them as an integral part of the company's working program to fulfill its ambitious agenda to become the number three electronics company in the world by 2010, and the number one by the end of this century.

"With the slogans, we can improve the self-confidence of the employees, promote solidarity among them and more importantly promote awareness of the employees about our business goals more effectively," LG's vice president Park Hyeong-Il said.

Creating the catchy slogans is certainly not a side job for the company. It hired a major marketing communications company from Australia to do the task.

For LG, using the slogans is not only less costly than organizing workshops to introduce the company's business agenda to its employees, but it produces better results. The impact is quite amazing because with such slogans, the employees are also aware where the company is heading.

"To be a winner, we have to be innovative in every field," Park said.

LG Electronics is pursuing its 21st century vision of becoming a true global digital leader, making its customers worldwide happy through its innovative products, and to become one of the top three electronic, information and telecommunications companies by 2010.

For those who are not so familiar with the business, the company's goals could be too ambitious given the fierce competition in the market. Moreover, electronics giants such as the Dutch Royal Phillips, Japanese Sony Corp. and Sanyo Electronic Co. Ltd., and Korean rival Samsung Electronics certainly have similar agendas.

Samsung, for example, has set a target to lead the digital convergence revolution. Like LG, Samsung aspires to be one of the top three electronics companies in the world both in terms of quality and quantity by 2010.

But to LG's senior executives, their ambitions are realistic, given the company's proven track record over the past two decades during which the company has proven itself as a winning team in the global market.

LG was named Gold Star when the company first opened its business in 1958. The company was the first Korean company to produce transistor radios, refrigerators, TV sets and washing machines during the period 1959 to 1970.

After many achievements in the following years, in 1995 Gold Star changed its name to LG Electronics, which would later become one of the world's major high-end electronics producers, making premium air conditioners, plasma TVs and LCD TVs, washing machines and refrigerators, equipped with Internet and LCD displays.

LG began its overseas investment in 1980 when it opened its first sales subsidiary in Germany. At present, the company has more than 70,000 employees in 76 subsidiaries worldwide, including 19 in Europe, four in Commonwealth of Independent States (CIS), seven in the Middle East and Africa, 15 in China, 16 in the Asia-Pacific, and five in North America.

In 2004, overseas subsidiaries contributed about US$32 billion -- or about 86 percent -- to the company's total sales of $37.7 billion.

At present, the company is the world's largest producer of air conditioners, DVD players, CDMA handsets, optical storage devices and canister vacuum cleaners. Its joint venture, LG Phillips LCD, is the world's top maker of liquid crystal displays for TVs.

With its huge turnover, LG has been ranked by the New York- based Business Week magazine as one of the world's top three technology companies and tenth in current sales.

LG Electronics runs its business through four business divisions -- Mobile Communications, Digital Appliance, Digital Display and Digital Media.

In 2004, the Mobile Communications Division released a broad spectrum of new products to maintain its leadership in the mobile communications market. The division launched the world's first terrestrial Digital Multimedia Broadcasting (DMB) handsets, fingerprint recognition handsets for improved security, as well as diet and diabetes monitoring handsets, pioneering mobile health care.

The Digital Appliance Division produces air conditioners, refrigerators, washing machines, cooking appliances and vacuum cleaners. The home appliances produced by this division are mostly sold to high-end market segments. Its premium air conditioner sets and washing machines are popular both in the U.S. and Europe.

The Digital Display Division is known throughout the world for its highly advanced technology in digital displays, such as plasma TVs, LCD TVs and LCD monitors.

Although these premium products are largely sold in the U.S. and Europe, sales in developing countries such Brazil, Russia, India, China and Indonesia are on the rise.

The Digital Media Division produces notebooks, disc recorders, and several other products such as Telematics, MP3 players and DVD recorders.

LG Electronics' success in the global market is partly due to the company's ceaseless efforts to expand its production facilities and strengthen its research and development.

The company is spending heavily on its production facilities and on research and development to achieve its core objectives. It allocated up to US$3.1 billion in 2005, a 40 percent increase from 2004, to focus on the areas of mobile handsets, DTVs and flat-panel displays.

The organization currently operates 12 R&D centers outside Korea, including in Russia, Germany, India, the U.S. and France, along with five design centers in Milan, Italy, Tokyo, New Jersey, Beijing and New Delhi.

The company plans to further its R&D manpower by recruiting an additional 3,000 people, a 15 percent increase from 2004, as part of its long-term strategy to have 30,000 people involved in R&D by 2007. The company's R&D department in Korea alone employs more than 3,500 people.

Future research activities and investment will be directed toward next-generation core technologies such as home network systems, car infotainment and mobile AV products.

Besides strong R&D, the company's success is also possible thanks to its ability to adjust to customer demands in different countries.