During a press conference in Las Vegas, the company defines its direction and management policy of “pushing the boundaries”.
LAS VEGAS, Jan. 12, 2024 /PRNewswire/ – William Cho, Chief Executive Officer of LG Electronics (LG), and key company executives outlined LG's strategies to achieve its ” Vision for the Future 2030″ in front of Las Vegas, Nevada, United States.
The CEO opened the session by emphasizing that LG has identified three key inflection points – electrification, servitization and digitalization – that will ultimately transform the business and customer experience. The company's goal is to address challenges such as ongoing market and supply chain uncertainties and accelerate growth by building a high-performing, results-oriented organization with a winning mentality.
“If 2023 was the year we set the direction for new changes, we will make 2024 the year we really accelerate them,” Cho said. “Future Vision 2030 is the promise we make to the market and our customers, and as a company we will strive to deliver on this promise. »
Announced by the CEO last year, “Future Vision 2030” is LG's long-term goal to transform itself into a “smart home solutions company” capable of connecting and expanding the customer experience across different spaces, including At home, at work, mobile and virtual.
Strengthening future competitiveness through investments
CEO William Cho has made “Breaking the Limits” the key phrase and underlying philosophy of the company's 2024 management policy. Having already identified three priority areas for its future growth – a blueprint non-hardware business, business-to-business expansion and new business development – LG will now focus on further refining its portfolio.
First, the company will maximize the potential of its future growth drivers by increasing investments based on the company's strategic priorities. This year, the company is expected to more than double its investments and invest $8 billion* in research and development and other key areas to strengthen its competitiveness.
Key high-growth, high-profit companies will also benefit from greater investments in 2024. These include business-to-business companies such as automotive components, heating, ventilation and air conditioning (HVAC), integrated devices and dynamic digital signage, as well as activities around the webOS platform. LG will continue to invest in new businesses such as electric vehicle chargers and robotics and has already announced plans to invest more than $40 billion* by 2030 to transform its portfolio for quality commercial growth.
In addition, starting this year, LG will actively pursue external growth opportunities such as mergers, acquisitions and partnerships and implement strategies to revitalize its internal growth engines. In addition, there will be a focus on innovative technology areas that create added value for customers, such as AI and Mixed Reality (MR).
The CEO identified the new overseas sales and marketing venture as a valuable asset that will help LG overcome its limitations. The new organization has already played an important role in LG's global success, accounting for about two-thirds of the company's total sales. The foreign sales and marketing company implements special strategies that take into account the unique characteristics of each region and market. His efforts helped maximize the company's performance worldwide and played an important role in strengthening the capabilities and growth of LG's international subsidiaries.
Achieve “Triple 7” goals of growth, profit and value
With its three key growth drivers of platform-based services businesses, business-to-business businesses and new business, the company aims to achieve its “Triple 7” objective: a compound growth rate and operating profit ratio of 7% or greater, and an enterprise value that results in an EBITDA Odds of 7 leads.
Last year, the company posted impressive results thanks to the growth of its business-to-business business despite a decline in market demand. Over the past five years, the compound annual growth rate of LG's business-to-business business has been well above double digits, with the compound annual growth rate of total revenue reaching approximately 8%.
LG's vehicle components division has also become an important business area for LG, achieving annual sales of $8 billion* in its tenth year of existence. The global transition to electric vehicles is expected to increase demand for high-quality electric vehicle parts, one of the vehicle components division's key areas of expertise.
Based on the three pillars of automotive infotainment, electric drive and vehicle lamps, rapid and continuous growth is expected for the vehicle components sector. Starting in 2024, the company will focus primarily on securing software-defined vehicle capabilities, expanding its electric vehicle parts customer base, and strengthening its leadership position in smart lamps. In order to meet the increasing number of new orders, the company will invest in expanding its production capacities in Central America, South America and Europe.
The HVAC business, another important part of LG's business-to-business portfolio, is growing rapidly in the emerging markets of Asia and Central and South America, while in developed markets such as Europe and North America there is demand for highly efficient and environmentally friendly products is strong, it continues to discover new possibilities.
LG's HVAC business aims to leverage the competitiveness of its technologically advanced components such as motors and compressors to expand its product range. After establishing a consortium for advanced heat pump research in Alaska, USA, last November, LG plans to set up a research and development base in Europe this year. The company also intends to expand its business by introducing differentiated air conditioning products such as a dedicated outdoor ventilation system.
LG recognizes that the business-to-business sector is less directly affected by the economy than the business-to-consumer sector and actively supports its business-to-business activities to maintain stable sales and profits. The company has announced plans to expand its business-to-business business and aims to increase revenue to more than $32 billion* (double current levels) by 2030 through the introduction of a variety of new value-added solutions.
LG will also accelerate the evolution of its overall business model by engaging in areas beyond hardware, such as: B. Content, services and subscriptions to complement its product-focused home appliances and TVs. By leveraging hundreds of millions of LG products already in use around the world as platforms, the company hopes to continue generating sales and profits.
As part of this shift in focus, the home entertainment devices division aims to become a media and entertainment platform company and accelerate the growth of its webOS platform business. The home entertainment devices division is rapidly strengthening the foundation of its platform business by extending the reach of the webOS ecosystem to smart monitors, automotive infotainment systems and other TV manufacturers. LG expects the webOS platform to become one of the most promising growth engines in the near future.
The Home Appliances and Air Quality Improvement Solutions division, whose success plays a leading role in supporting the transformation of LG's entire organization, is also developing a smart home solutions product that combines services and subscriptions. The ultimate goal of the Home Appliances and Air Quality Improvement Solutions Division is to realize its vision of “Home without chores, more valuable time,” which goes beyond home appliances and makes home life smarter and more convenient than ever before.
Subscription services, which include daily services that complement LG's home appliance products, experienced rapid growth in South Korea. Expansion of the subscription business overseas is underway, with strategic markets in Asia being the first outside Korea to benefit from the numerous benefits.
The share of LG's total revenue that comes from its non-hardware businesses – such as B. Content and service businesses based on the WebOS platform and home appliance subscription businesses – have more than doubled in the last five years.
In addition, LG will aggressively pursue the commercialization of intangible assets such as its essential standard patents in core technology areas, including communications, media, mobility and IoT connectivity. In addition, as part of its recent restructuring, the company has created new business units to commercialize its expertise in building smart factories.
LG will also ensure that it capitalizes on high-potential growth opportunities with a high level of commercial synergies. For example, LG NOVA will increase its startup funding fund to over $100 million by the end of 2024, enabling the company to contribute to the discovery of new technologies and solutions to fuel future innovation and drive new business segments.
LG's recently established electric vehicle charger segment is evolving into a comprehensive electric vehicle charging solution provider with advanced charging units and control solutions, remote diagnostics and maintenance capabilities, as well as car battery diagnostics, and a robust production and sales infrastructure. In the North American market, the company has completed the construction of a charger production line in Fort Worth, Texas, USA.
In the area of digital healthcare, the company is further developing its telemedicine activities in collaboration with Amwell and will also explore the feasibility of services in areas such as prevention, diagnosis, care and recovery. In the field of virtual reality, another promising business area, LG is preparing to commercialize MR devices. At the end of 2023, the company established an eXtended Reality division within the home entertainment device division and continues to work with various technology partners on augmented reality solutions.
In addition, the Company's Office of the Chief Technology Officer, which leads the development of future technologies, conducts intensive R&D programs to strengthen the Company's competitiveness and discover important new technologies. The CTO focuses specifically on eight technology areas: Software, Systems-on-Chip, AI, Robotics, Materials and Parts, Standards, Next-Generation Computing and Cloud Computing/Data.
Accelerating digital transformation through data-driven practices and next-generation PRE investments
Through digital transformation, LG will provide its customers with FUN experiences – First, Unique, New – and further improve its customer-centric management system.
The company is making significant investments in information technology to drive digital transformation across the company. Additionally, LG is developing a next-generation enterprise resource planning (ERP) system to seamlessly integrate and connect the company's business processes and systems. Intellytics Customer 360, a customer data platform that enables integrated management of data collected across various customer touchpoints, is rolling out globally starting this year.
LG's digital transformation efforts extend beyond innovating the customer experience to improving the efficiency of the value chain from purchasing and manufacturing to delivery and sales. Last year, LG increased productivity and efficiency to a value of more than $240 million* by applying digital transformation to every value chain.
Transform into a high-performing organization and spread the values and philosophy of “Life is Beautiful”.
When CEO William Cho speaks to his employees, he often quotes the famous American management scholar Peter Drucker: “Culture eats strategy for lunch.” » Mr. Cho believes that a strong organizational culture is essential to translate strategy into good performance.
During the “CEO FUN Interview” with employees last December, Mr. Cho outlined the company's vision for 2024, which includes becoming a high-performing organization. “To achieve this, we must closely align our mission, vision and goals and focus relentlessly on implementation,” he said.
Under the brand promise “Life is Beautiful”, various integrated brand activities will be launched this year, covering marketing, environmental, social and governance (ESG) and corporate social responsibility (CSR). The company will spread the values and philosophy that support the slogan “Life is Beautiful” with bold optimism while injecting youthful dynamism into the brand. LG, which describes itself as imbued with “bold optimism,” is an innovative company that dares to face obstacles, believes in looking for ways to improve even in difficult times, and finds solutions by serving its customers and the market listens and pays attention to them.
Visitors can experience the company's latest innovations at CES 2024, January 9-12, at the LG booth (#16008 at the Las Vegas Convention Center). For more information about LG products unveiled at CES 2024, see the CES 2024 press kit.
*Exchange rate: 1,250 KRW per USD.
Images are available at the following address: www.lgnewsroom.com/2024/01/lg-ceo-and-key-executives-share-plan-to-achieve-future-vision-2030-goal
About LG Electronics Inc.
LG Electronics is a global innovative technology and consumer electronics company. The company is represented in almost all countries and employs more than 74,000 people worldwide. LG consists of four business segments: Home Appliances and Air Quality Solutions, Home Entertainment, Vehicle Components and Business Solutions. LG is a leading manufacturer of consumer and commercial products ranging from televisions and home appliances to air quality solutions, monitors, cleaning robots and automotive components. Its premium brands LG SIGNATURE and LG ThinQ are well-known names worldwide. Visit www.LGnewsroom.com for the latest news.
SOURCE LG Electronics Canada
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