Accounting

Global Operations Unit 3 Individual Project BUS610: Economics for the Global Manager Project Type: Unit 3 Individual Project July 22, 2012 Global Activities In 1958, founded in South Korea was the LG Corporation, Inc which was originally named Gold Star. It was until the 1960’s when Gold Star made its first refrigerators, televisions, air conditions and washing machines. In the late 1960’s LG explored overseas and decided to exploit their products internationally by putting their first international office in New York. Sock Exchange had Gold Star listed by 1970.Gold Star had grown to become a billion dollar company at a fast past. In 1977 they had recorded hundred billion dollars in sales; and when the 1980’s kicked in they were global subsidiary in Thailand, Mexico, England and the United States. Progressively Gold Star was growing in quantity and quality, and began claiming rank as a leading worldwide industry (www.lge.com, 2010). In the mid 1990’s the World Trade Organization or known as the WTO was created, at that time the WTO was going through a transformation. With these transformations Gold Star quickly responded with referendums, they changed their name and their mission statement. Gold Star was the leading company in the electronic industry for thirty-seven years; they changed their name to LG Electronics, Inc and begin their new era. LG Corporation established major growth and extended out by acquiring Zenith Electronics Corporation. Zenith during that time was the main home appliance manufacture in the United States. By 1997, LG had situated itself amid the world's top three air-conditioning suppliers, and was now gallantly advancing near a 'Global LG' enterprise (www.lge.com, 2010). Even in today’s world with the fast growing technology LG Corporation has grew to be a true international leader. It is the largest producer in electronics in the world ranking in the top three in technological producers. As of the financial statements for LG Global dated August 2009, the LG Corporation has surpassed 27.638 in Won (www.lge.com, 2010), or 24 Billion in USD (www.x-rates.com, 2010). Economic concepts Globalization is practiced throughout the LG Corporation; LG participates in international trade to help improve their distribution of goods and their effectiveness in production. LG Corporation wants to strength areas like their viability and they want to create profitability. They have been able to achieve this with supporting eminences in a globalized marketplace. In doing so, the LG Corporation has established itself as a monopolistic company, by being the world leader in the electronics industry (www.lge.com, 2010). Comparative Advantage Comparative advantage is where a country can produce goods and/or services at a lower opportunity cost (Perloff, 2007). LG has been able to achieve its global positioning with the help of comparative advantage. This can be accomplished with the LG Corporation because as of 2000 South Korea's "average wages were about 38% of US average wages" (www.imf.org, 2010). The LG Corporation choose to develop their comparative advantage in the areas of production and management activities in its support services, R&D and marketing to improve their productivity and reduce costs thus increasing their opportunity costs (www.lge.com, 2010). Competition Competition can be found in every market, as it the contention amid companies striving for the same market and customers (Perloff, 2007). Raw material cost has increased along with competition in the marketplace due to the economic struggles. Even during the economic struggles LG Corporation has been dedicated to their cost-saving measures, and still LG was able to improve every sector of operations like R&D, marketing, customer service and customer support. Moreover, the mounting exchange rate alongside additional major currency has resulted in an 18% increase from their previous year sales, again beating out the competition (www.lge.com, 2010). Economic and Political Polices Business decisions are made every day by, decisions that are based off of economic and political polices that effects the overall business. Amongst economic policies that would affect LG’s business decisions are: * Structural composition of the economy * Capital market * Business cycle * Nature of the economic system * Socio-economic infrastructure LG is a successful company because it notices the factors that affect the company and makes the type of changes that would help get the maximum profits with minimum cost. Factors that determine LG economic environment is: * Mobility of labor * Cost structure * Product demand Some of the potential political policies that could affect LG’s business decision are: * Government ideologies * Political party philosophies * Political stability * Bureaucratic influences * Foreign polices A lot of pressure is added to a country when dealing with the political polices. LG being the size that it is as a global company has to pay close attention to the political polices within the countries it’s established in. Using technology to its strategic advantage When it comes to technology LG uses it to have a strategic advantage in the global marketplace. They have 3 central competencies in technology to which they have a strategic advantage; they are: Advanced technologies, Proprietary technologies and Design Excellence (www.lge.com, 2010). LG has its presents in every product division; mobile communications and consumer electronics. Their vast portfolio is a strategic advantage that allows LG to bring a variety of solutions to market to address consumer demands; for example, the "TV Refrigerator with Weather and Info Center" (www.lge.com, 2010). Impact of globalization Globalization is the process of augmenting the interdependence and connectivity of the world's marketplace; and is the increasing political and economic amalgamation of nations as a result of free trade, investments, mobility of labor and information dissemination (Perloff, 2007). LG Corporation is an international enterprise that has been the center of globalization progression. With the great advantages of technology it makes it easier for consumers to communicate, travel and purchase international Therefore in today's marketplace, globalization is crucial to the survival of an industry (Perloff, 2007). References: International Money Fund (2010) Republic of Korea and the IMF. Retrieved from http://www.imf.org/external/country/KOR/ind LG (2010) Global operations. Retrieved from http://www.lge.com/ph/about-lg/corporate-info/global-operations/index.jsp Perloff, J. M. (2007). Microeconomics (4th ed.). New York: Pearson Addison Wesley