Life may not be too good at LG Australia who is facing cuts as LG establishes a “War Room” to handle the economic crisis the Company has admitted.
LG Australia has taken to churning out global press releases as a response to local issues. While senior management of consumer electronics Companies including the CEO’s of Sony and Panasonic talk openly to the media LG Australia is remaining tight lipped about issues they are facing in the Australian market.
During the past week Carl Rose the CEO of Sony and Steve Rust the CEO of Panasonic along with senior executives of Samsung has talked openly about price rises, the market and new products.
Requests to LG have resulted in no interviews other than the syndication of global press releases relating the “current business environment”. They have also admitted that they have established an LG “War Room” to cope with the crisis”.
They have also hinted that there could be personnel cuts in Australia with the Company admitting that all 82 LG subsidiaries in the world including Australia have been ordered to “cut costs”.
In their latest release the Company has said that they aim increase – its investment in R&D, marketing, branding and design however there is no indication of what they will do in Australia.
“Every company — not just LG — has been affected negatively by the economic downturn,” said CEO Nam. “The poor performance of many global companies in the last quarter of 2008 was a wake-up call that we needed to take drastic actions, not just safe ones.”
In an effort to minimise their problems LG has reorganised its business portfolio to focus on areas with longer-term growth potential and profitability. Partnerships will continue to be a key element of the company’s marketing activities to elevate its brand position.
LG will continue to invest in future growth engines such as solar power, commercial air conditioners and business (B2B) solutions, all sectors LG expects will expand and become increasingly profitable once the economy is back on track.
Crisis War Room
At the end of 2008, LG Electronics established a Crisis War Room (CWR) to bring together LG’s five business units, eight regional headquarters and executives to implement and manage the company’s aggressive business plan. In just three short months the CWR — with the collaboration of each of the company’s business units and company divisions such as supply chain management, marketing, procurement, human resources and finance — has identified and developed 11 key action items.
Saving Costs
LG is targeting a reduction in expenses of KRW 3 trillion in 2009. This company-wide initiative, which includes headquarters and all 82 subsidiaries around the world, also applies to manufacturing and indirect costs.
LG’s efforts to improve its cash flow has already resulted in reduced inventory, increased liquidity, optimized supply chain management and a more consolidated, efficient purchasing process overall.
