LG 2006 Annual Report Download - page 14

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CREATING VALUE
LG Electronics is a global leader in many consumer
electronics categories, some of which are the most
competitive in the world. The unrelenting demands for
product innovation and downward price pressures mean
that only the strong survive in this industry. We have an
ambition to be in the global “Top 3” consumer electronics
and telecommunications companies by 2010. If we
achieve this goal of being “Top 3” in shareholder returns,
protability, growth, revenue, and market share – in that
order – then we will become one of the shapers of the
industry, creating value for our shareholders, customers,
and our people.
I am condent that we will get there. To do it, though, is
going to require an obsession from our people with what
creates real value. To harness this passion, our strategy
will be anchored along 6 dimensions:
Achieve 20% ROIC by 2010 – We must focus our
strategies on those things that create value for our
shareholders. The high investment requirements,
coupled with the ever-increasing competitive nature
of consumer electronics, oblige us to lock in on
strategies that will improve margins, drive supply chain
efficiencies, and efficiently utilize our global network
of assets. Growth is wonderful, but we cannot pursue it
at the expense of profits and shareholder returns. We
are now a $38.5 billion company, growing more than
10% per year. Not many companies around the world
can claim such performance. Going forward, though,
I want to make sure that we are also one of the most
protable companies, one with shareholder returns that
our competitors envy.
Optimize the business portfolio to become “Top 3”
– Today, we operate in over 100 countries, across
30 product categories. In some of these, we enjoy
undeniable leadership. In those where we do not, we
must quickly assess how to improve our position or
make plans to exit.
Serve the “polarizing” consumer market – Across most
consumer categories, we see a distinct “polarization”
occurring. And those companies stuck serving the
“middle” lose out without clear differentiation. We need
to focus on creating premium, aspirational products to
win at both ends of the market.
Innovate in design as well as technology – Consumer
electronics is no longer about utilitarian “brown goods”
and “white goods”. In all product categories – from
handsets to washing machines – consumers expect the
latest in technology features, packaged in designs that
make them passionate about these products.
Invest in building a clear, global brand identity – Our
brand is now one of the most recognized consumer
electronics brands across the world. However, we must
continue to invest to build a brand with a clear identity,
one which creates a real emotional bond with our
consumers.
Develop a truly global, unsurpassed talent pool –
Focusing our strategy on shareholder value, developing
products that create consumer value – these things
are not possible unless we have the most talented and
motivated employees globally. We want to make LG
Electronics the employer of choice around the world, a
LG ELECTRONICS
CEO MESSAGE