3/3/2010 12:14:00 PM
Analysis: LG's UK power vacuum
The departure of three top execs from LG Mobile over the
last few months has left senior management fire power within the
UK arm looking thin on the ground.
Although LG UK saw year on year growth to double digit share
during 2009, it is understood the company had not hit the high
targets set by its Korean parents.
Meanwhile, fellow Korean manufacturer Samsung is racing ahead,
having overtaken Nokia's UK share several times last year.
Samsung has been doing a 'tremendous job', and there has always
been intense rivalry between Samsung and LG, says CCS Insight
analyst Ben Wood.
Now LG is looking to increase its global handset sales by 20% in
2010, with sources saying the manufacturer needs someone who is
'dynamic' and able to 'take the company to the next level', to
rise to the challenge in the UK.
LG needs to grow its UK share, which is currently at around 10%.
One source close to the company says: 'The global strategy is to
be in the top three - for this, they need to be in the UK top
three and they need someone who will make this happen.'
Last year, LG COO Ward Crawford was appointed to the newly
created role as the manufacturer looked to give the UK local
power and make it a stronger brand.
But that strategy seems to have changed. Sources said the three
exits - Crawford, as well as sales and marketing director John
Barton and head of marketing Jeremy Newing - may signify the
Korean manufacturer pulling the power back to its home country.
Samsung and LG work similarly in that both businesses are
controlled from a base in Seoul, South Korea rather than
devolving responsibility out to the regions. The source adds:
'They [Korean LG base] had given up some control, but it is very
much a market run outside of Europe.'
And Samsung's volumes are growing. Meanwhile, Strategy Analytics
analyst Neil Mawston, says: 'LG's volumes are booming but their
profits are dipping - they have been pricing down. I suspect most
regions have been doing different things but globally, they have
cut prices to gain share and that strategy may be reaching a
Samsung's margins are also frozen, says Mawston, but LG is under
pressure to keep up with Samsung and that is taking its toll.
This comes at a time when LG's mobile arm is rethinking its
marketing strategy to gain share and consolidate its brands such
as TV with mobile. The manufacturer is aiming to link its mobile
product branding with other electronic goods, such as flat screen
DVD players and music equipment.
It will also strengthen its smartphone range with 20 new models
this year, targeting a double digit market share globally in the
smartphone sector in 2012.
Releases for 2009 include the LG Mini GD880 and its first Android
phone, the InTouch Max GW620, part of the InTouch Max range.
However, it has a tough time ahead, with Samsung's Wave already
looking like a major 2010 winner. Samsung is also targeting
smartphones this year.
Mawston says: 'LG needs to manage the structure. It feels like
cost control measures are perhaps not as strong as they might be.
Look at Nokia - it slashes prices year after year,
quarter after quarter. LG needs a structural tweak and a cultural