10. LG faces a important decision

Hi, Guys. We won in the Markstrat simulation. I really appreciate your efforts.

This week I have seen an article about GE. Let me explain current situation. Recently, GE, which is pressured to divide company by shareholders because of depression of business performance, is planning to sell their white goods business although GE has been a hundred years in this business industry. GE found this business in 1907, and this business is involved in GE industrial, which is one of six affiliates of GE. The company’s main products are refrigerator, laundry machine, air conditioner, dish washer, and so on. GE has the second largest market share in the industry, 20 percents.

So some international companies which are Gimens(Germany), Haier(China), and LG(Korea), are expected to try to buy the company. According to this situation, New York Times said that LG and Samsung are reckoned to take over the company. The reason why GE is planning to sell this company is that the revenue from this company is much smaller than total revenue from the all GE companies, also GE concerns sales decreasing affected by U.S. depression. GE’s net profit in the first quarter of this year is reduced 16 percents than same period in the last year. In addition, the price which is fixed for many years is a challenge for GE.

As our team presenting about LG, I have known that LG is trying to get large market share in the U.S. appliance, and this is a chance to LG. As buying the company, LG can get a large amount of market share. However, there is another view about buying the company. Because the selling product and market could be overlapped, the benefit of buying the company could be not beneficial as much as they thought.

LG has increased in the U.S. market, and they still trying to get huge market share in the market. Also, they released new product recently. It is time to consider their future in the U.S. market. It could be helpful; also it could be poison for them. I think this decision will hugely affect their future.

Reference:

http://www.hankyung.com/news/app/newsview.php?aid=2008051592671&sid=010504&nid=005&ltype=1

http://cafe.naver.com/jh060605.cafe?iframe_url=/ArticleRead.nhn%3Farticleid=16793

http://www.newstomato.co.kr/news/etomato_news_read.asp?no=8592

Posted by 20300121 (Kim, Jae-Yoon)