Production And Material Management

LG Electronics
LG Electronics (Korean: LG 전자, KRX: 066570, LSE: LGLD) is the world's
second-largest manufacturer of Television sets[1] and third-largest producer of mobile
phones.

With its headquarters in the LG Twin Towers in Yeouido, Seoul, South Korea,
LG Electronics is the flagship company of LG Group, one of the world's largest
electronic conglomerates.

The company has 75 subsidiaries worldwide that design and manufacture

televisions, home appliances, and telecommunications devices. LG Electronics owns
Zenith Electronics and controls 37.91 percent of LG Display.

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Executive Summary
By 2005, LG was a Top 100 global brand, and in 2006, LG recorded a brand
growth of 14%.Its affiliate, LG Display, is now the world's largest plasma panel
manufacturer.

The LG brand is a major global force in electronics, information and

communications products. In Thailand, LG Mitr Electronics distributes these cutting-
edge products which are either produced locally or imported from Korea. In addition,
some products are produced in Thailand for export. The product line encompasses
home appliances, audio-visual, information technology and mobile phone product
categories .
LG has products tailored for every market segment, and the popularity of the
brand among local consumers is at its highest level ever. The company segments its
target groups into the lowed, Mid-range and high-end markets. Under a new policy set
by its parent company, the company’s focus has moved towards the high-end market,
a strategy which is helping the brand expand its growing customer base even more.

As a leader in developing technology, LG products respond to the demands of

consumers. The image of LG is top-of-the-line products based on modern technology.
Fast-changing lifestyles in Thailand go hand-in-hand with the increasing demand for
electronic goods. Thailand has developed significantly in terms of technology and
culture, and this has led to fast growth in the electrical appliance market. However,
there is room for a lot more expansion in this sector, especially in the high-end
segment which is a byproduct of the linkage between the eastern and western cultures.

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THE HISTORY OF LG ELECTRONICS

ESTABLISHMENT 1958

When LG Electronics was established in 1958

under the name ‘Goldstar’, the Korean electronics
industry was at its infancy. At that time, it was
considered reckless to start an electronics business in
such a poor environment. However, LG Electronics’
Founder and Chairman, Koo In-hoe, established the
company with the belief that the electronics industry
must be established to improve the welfare of the nation.
Thus, year of 1958 is considered as the birth of Korean
electronics industry, since the launch of LG Electronics
was the very start of the Korean electronics industry.
On November 15, 1959, one year after LG
Electronics’ establishment, the company created living
history, which the nation’s electronics industry can
never forget. Korea saw the development and production LG Electronics’ plant in Yeonji-dong, Busan, the birthplace
of the country’s first radio. This invention heralded the of Korea’s electronics industry
start of the Korean electronics industry and the prelude
to the broadcasting era.
LG Electronics faced numerous difficulties after developing its first radio. The company’s
customers preferred foreign- made radios, apart from which the domestic economy worsened, thus
leaving the market immature. However, as demand for radios increased explosively after 1962, LG
Electronics exported its products to the USA, Hong Kong, and other nations for the first time, to
acquired the company’s own technologies.
Beginning with radios, LG Electronics put the Korean electronics industry on track by
developing and producing various
electronic appliances such as automatic telephones, electric fans, refrigerators, monochrome TVs, air
conditioners, and washing machines. Especially, the first monochrome TV in 1966 provided the
momentum for the gradual growth of the Korean electronics industry into a highly advanced
technological industry.

PRODUCTION OF THE FIRST KOREAN-MADE

RADIO Nov 15. 1959
Korea’s first radio was a vacuum-tube-type radio. With the development of
this product, the word ‘electronics’ finally entered Korea’s popular lexicon
and raised the general public’s awareness of the electric and electronics
industries. At the time, the radio was a big event covered by the entire
Korean media.

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Korea’s first radio, ‘A-501’. PRODUCTION OF THE FIRST KOREAN-MADE BLACK &
WHITE TV Aug 1. 1966

LG Electronics manufactured its first Black &

White TV seven years after the company
developed its first radio. It was a remarkable R&D
achievement despite the lack of technologies at
that time, and provided the momentum for the
acceptance of electronics products in people’s
lives. It also marked a milestone in the growth of
the Korean electronics industry.

Korea’s first B&W TV, ‘VD191’.

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ACHIEVEMENTS
LG Mitr Electronics Co, Ltd was established in 1969 under the name of Banjongmitr
Co, Ltd. It was set up to distribute electrical appliances under the V Star trademark.
The company formed a roduction joint venture with Gold Star Co, Ltd, the original
name of LG Electronics, and changed its name to old Star Mitr Co, Ltd in 1989. It
was renamed LG Mitr Electronics Co, Ltd in 1995 as part
of the parent company’s policy to have all groups take
the LG name.
In 1989, LG Mitr Electronics Co, Ltd set up a
manufacturing plant for TV sets and VDO players (the
first of its kind in South-east asia) in Thailand. Its
production facility, located on a 30-rai area of Petch
Kasem Road, Soi 120, in Samut Sakorn province, is well
equipped with modern equipment and is supervised by
well-trained staff from its parent company in Korea.
Currently, this facility has an annual production capacity
of 400,000 colour TVs and 25,000 projection TVs.
In 1997, LG built a factory to manufacture
household appliances to distribute locally. The facility was later turned into a regional
production base and some of its output is shipped to other countries in Asia and
Europe. The household appliances manufactured at this factory include washing
machines, air-conditioners and vacuum cleaners. At present, the annual production
capacity of washing machines is one million units.
Through the use of advanced technology, LG washing machines have been the
best seller in Thailand for four consecutive years.
In 2002, an air-conditioner production facility was launched on a 15-rai area, at
Pluakdaeng district, Rayong province, with an investment of over THB 400 million.
At present, its production line has a capacity of 200,000 units per year, with plans to
increase to 500,000 units per year in 2005.

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GLOBAL NO.1
PRODUCTSLG Electronics has been leading the industry in the domestic home
appliances market for several decades with revolutionary products. LG
maintains leadership by continuous R&D efforts, customer-oriented
services, and strong sense of business mission. Today, products created by
LG Electronics are renowned for their quality in the global market. In
various highly competitive parts of the world, LG Electronics is leading
markets with a variety of hi-tech digital products.
Helped by the competitiveness of its innovative products, including
optical storages that have been No.1 in the world for six
consecutive years and air conditioners that have
swept the global market for five
consecutive years, LG Electronics
products are reaping acclaim from
customers all over the
world. The company’s
products have become
No.1 globally because of
world-recognized
technological edge
and quality, and friendly
and appealing local
marketing strategies.
This paper takes a close look at them. You will find here the immense
power and vision of LG Electronics.

LG’s businesses include manufacturing parts to assemble, importing finished products from
Korea, and distributing and exporting LG electrical appliances. Its product line is divided into three
categories: digital appliances (washing machines, refrigerators, air-conditioners,
vacuum cleaners and microwave ovens); digital display & media (colour
TVs, PC monitors, projection monitors, PDPs, DVD/Audio and
CD/DVD ROMs), and telecommunications equipment and
handsets (mobile handsets).
The digital appliance division is the most acclaimed by
customers. It includes washing machines which include
single-tub, twintub and front-load types. The products
incorporate the latest TurboDrum Direct Drive technology
which entails passing power directly from the motor to the tub.
This technology results in less vibration and noise and extends the
machine’s life cycle. In addition, LG applies Nano Silver Technology
to its new models of washing machines to control and eliminate germs.

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Refrigerators can be divided into one-door, two-door and side-by-side models. LG plans to
promote the side-by-side model aggressively this year because it uses door cooling technology from
a digital cooling system. This technology enables the refrigerator to set a temperature in each section
through the use of a smart sensor. Nano Silver and Nano Ball technologies are also applied to hi-end
refrigerators to increase their ability to control and eliminate germs and odours.
Air-conditioners from LG are known for their performance and durability, and the brand has
held the number one position in the world for four consecutive years. Through the use of the latest
technology, LG air-conditioners are more than just air-conditioners and air purifiers. LG Art Cool
air-conditioners use NANO plasma technology which can eliminate 0.01 micro particles.
LG vacuum cleaners are built to respond to the customer demands. LG’s Cyking vacuum
cleaner was developed to be a premier product by using top-of-the-line technology including a Bio
Tank coated with Nano Silver Ion and an SRM motor.
Microwave ovens incorporate Intellowave technology, a process that disperses heat to every
part of the food.
The Digital Display & Media product line focuses primarily on the high-end market. It
includes an array of television models with different designs and advanced high-resolution
technology including LCD-DLP projections, PDPs and Lafinion CRT flat TVs. All of these products
are equipped with XD engine chips, a recent LG innovation that delivers realistic high definition
pictures similar to those displayed by films.
Other LG audio-visual products include DVD players, DVD recorders and DVD home
theatre
systems incorporating high technology and cutting-edge designs.
Popular around the world for both CDMA and GSM systems, LG mobile phones are the
latest products from the Korean company now available in Thailand. The GSM-compatible G7100
model is the first model in Thailand featuring a 270-degree pivotal screen, a builtin camera and flash.
Plans are afoot to expand LG’s presence in mobile phone market in Thailand with exciting new
products for both systems.
Other LG products found in Thailand are in the IT category, including monitors and storage
devices such as CD drives, DVD drives and DVD-combo drives.

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AIR CONDITIONERS
Sales of air conditioners (brand name: Whisen) manufactured by
LG Electronics reached 10.5 million units in 2005 alone, making it the
world’s bestselling brand for six consecutive years. The total sales
volume of Whisen reached 4.1 million units in 2000. For three
consecutive years, Whisen’s sales enjoyed more than 10 million units
yearly, as it continued to climb from 4.9 million units in 2001, 6.7
million units in 2002, 8 million units in 2003, 10.12 million units in
2004, and 10.5 million units in 2005. LG Electronics grabbed 19.6% of
the world’s air conditioner market estimated to have a total size of 60
million units.
LG Electronics expanded sales in the USA and European markets,
and finally achieved the highest market share in the world in 2000. In
2004, LG became the market leader in 43 countries.
The secret behind LG Electronics’ global leadership for six consecutive years is, first, its
acquisition of top-notch technologies. By significantly innovating the main components, such as
compressors, heat exchangers, and fans and by reducing the noise to the lowest level, the product has
acquired world-wide popularity.
Second, the company pursued
a policy to foster core parts in
business. Since 1996, LG has been
conducting Six Sigma campaigns
across the board, and has thus been
able to ensure the stable supply of
components.
Third, the company
implemented local culture-oriented
marketing strategies that eventually
brought a remarkable success. LG
conducted research studies on local
markets and consumers, and pursued
locally appealing strategies.

MICROWAVE OVENS

The LG Electronics’ microwave

ovens have claimed the world’s No. 1 market
share for four consecutive years from 2002 to
2005. In 2002, LG Electronics manufactured
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12.1 million microwave oven units, grabbing 23% of the global market. In 2003, it sold 12.69
million units to record a 23.3% market share, and gained 23.5% and 21.7% market shares in 2004
and 2005, respectively, giving the company the No. 1 position in the market for four consecutive
years.
The secret behind LG’s solid victory against world-class companies is outlined as follows.
First, the company secured core technologies through active R&D efforts. For instance, LG secured
the technology for analyzing properties of electronic systems within the cavity, and for creating
circular waves to enable consistent heating. The company’s development of speed cooking
technology using both microwave and light enabled the ovens to cook in the shortest time possible.
Second, LG accurately defines and reflects market and customer needs in product
development. LG determined and reflected distinctive differences in design preferences by region in
product development, and also analyzed cuisine cultures by region, allowing specialty recipes to be
cooked with one touch.
Third, LG ensured price competitiveness through cost reduction. With the help of continuous
innovations, the company achieved maximum production efficiency from minimal production lines.

VACUUM CLEANERS

In 2003, the LG Electronics’ vacuum

cleaners ranked No. 1 in the world in the canister
cleaner sector, which accounts for half of the world’s
cleaner market. Production size in the canister
cleaner market in 2003 was around 30 million units
(excluding upright-type cleaners in North America)
and LG Electronics sold approximately five million
units, or 15.8% of the total, making the company the
market leader in this area.
LG Electronics’ success factor lies in sales.
In particular, over 90% of the company’s total sales
were accounted for by LG’s own brand, thus
drastically reducing OEM products.
The secret behind LG’s leadership in
vacumm cleaners is outlined as follows. First is significant product differentiation specifically
tailored to regional markets. LG introduced products with very appealing colors to Hispanic
customers in North America, and intensively sold highly durable products in the CIS region.
Second, the company penetrated the market with premium products that greatly improved
hygienic features and convenience of use. For instance, Cyking which was introduced to the global
market under the Global One Brand strategy, has attained over 100% growth in sales annually,
although it is two or three times more expensive than other brands. This case demonstrates the
company’s global technological leadership in cleaners.

OPTICAL STORAGE
LG Electronics ranked No. 1 in the global optical storage
market for eight consecutive years. The company entered the

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world market with Korea’s first 1X CD-ROM drive in 1990. In 1998, the company rose to the top
global rank.
The secret behind LG’s leadership in optical storage products is, first, the company’s ‘First-
Developed, First-Released’ strategy. By implementing this strategy, LG emerged as a major supplier
of leading global PC makers.
Second, the company acquired its disctintive technologies and maintained product
competitiveness. LG developed technologies for core components such as optical pick-up and DSP
chips. With LG’s world-class product development capability, it produced DVD writers to respond
to multiple standards.
Third, LG’s multi-product/mass production strategy worked effectively. The company
developed and released CD-ROMs, CD-RWs, DVD-ROMs, DVD-COMBOs, the world’s first super
multi-DVD writers, etc, by equipping itself with a perfect lineup of products. LG Electronics is even
working to further expand the ratio of premium products such as slim notebooks and bolster the
development of next-generation HD products.

CDMA MOBILE PHONES

In 2003 and 2005, LG Electronics
seized the No. 1 share in the global
CDMA mobile phones market. In 2003, it
supplied 21.3 million units of CDMA
mobile phones or 21.6% of the global
CDMA market, thus seizing the No. 1
spot. In 2005, LG supplied a total of 30.4
million units, grabbing the global
leadership again with a 21% market
share.
Global leader in the CDMA
mobile phones comes from the
company’s successful partnerships with
strategic consideration. By partnership
with world-advanced mobile operators
such as Verizon Communications, the
largest CDMA service provider in the
USA, and Vodafone of the UK, the
company also introduced various
customized mobile phones.
Second, LG widened its market
presence with advanced technologies. In
July 2003, the company released the VX
6000 Camera Phone, and successfully
penentrated the US market. In the Indian
market, LG posted a market share of over
50% by early stabilization of service
networks and by ensuring timely product
supply. In the Chinese market, LG
targeted young customers with refined
designs and top-notch functionalities. In

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Chile, LG successfully cornered 46% of the market. As indicated by all these developments, the
company’s explosive growth continues around the world.
Third, cost innovation and securing of product quality were the basis of LG’s achievement.
The company focused on securing product quality by expanding the sales of premium products, and
through cost innovation activities based on standardization and common use. As a result, LG’s
folder-type mobile phones were declared the Best Buy in the Netherlands, and its VX 6000 model
was featured by Business Week magazine of the USA as the magazine’s choice for the best camera
phone.

Television
The company is the second largest
maker of TV sets in the world. With every
design of his television sets, LG has won
multiple awards that recognize not only in
design but also in its high-performance
multimedia and entertainment in addition
to its high quality and durability. The
company has announced that it is likely to
become the first producer of TVs for 2012
because it will sell a substantial amount of
equipment to try to overtake arch-rival
Samsung.

Microwave Oven and Toaster from LG

This oven and toaster combination by LG is made for less cluttered
countertop. Toaster can toast 2 slices vertically which makes it easy to
clean, and also comes with a cover. Oven-toaster is available in
stainless steel, and high gloss white and black.

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TELEVISION

Among the technical developments that have come to dominate our lives, television is surely
one of the top ten. In the United States, more than 98% of households own at least one television set
and 61% receive cable television. The average household watches television for seven hours per day,
which helps to explain why news, sports, and educational entities, as well as advertisers, value the
device for communication.

The device we call the television is really a television receiver that is the end point of a
broadcast system that starts with a television camera or transmitter and requires a complicated
network of broadcast transmitters using ground-based towers, cables, and satellites to deliver the
original picture to our living rooms. The U.S. television picture, whether black and white or color,
consists of 525 horizontal lines that are projected onto screens with a four to three ratio of width to
height. By electronic methods, 30 images per second, each broken into these horizontal lines, are
scanned onto the screen.

History
The development of the television occurred over a number of years, in many countries, and using a
wide application of sciences, including electricity, mechanical engineering, electromagnetism, sound
technology, and electrochemistry. No single person invented the television; instead, it is a
compilation of inventions perfected by fierce competition.

Chemicals that are conductors of electricity were among the first discoveries leading to the TV.
Baron Ȯns Berzelius of Sweden isolated selenium in 1817, and Louis May of Great Britain
discovered, in 1873, that the element is a strong electrical conductor. Sir William Crookes invented
the cathode ray tube in 1878, but these discoveries took many years to merge into the common
ground of television.

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Paul Nipkow of Germany made the first crude television in 1884. His mechanical system used a
scanning disk with small holes to pick up image fragments and imprint them on a light-sensitive
selenium tube. A receiver reassembled the picture. In 1888, W. Hallwachs applied photoelectric cells
in cameras; cathode rays were demonstrated as devices for reassembling the image at the receiver by
Boris Rosing of Russia and A. A. Campbell-Swinton of Great Britain, both working independently in
1907. Countless radio pioneers including Thomas Edison invented methods of broadcasting
television signals.

John Logie Baird of Scotland and Charles F. Jenkins of the United States constructed the first true
television sets in the 1920s by combining Nipkow's mechanical scanning disk with vacuum-tube
amplifiers and photoelectric cells. The 1920s were the critical decade in television development
because a number of major corporations including General Electric (GE), the Radio Corporation of
America (RCA), Westinghouse, and American Telephone & Telegraph (AT&T) began serious
television research. By 1935, mechanical systems for transmitting black-and-white images were
replaced completely by electronic methods that could generate hundreds of horizontal bands at 30
frames per second. Vladimir K. Zworykin, a Russian immigrant who first worked for Westinghouse
then RCA, patented an electronic camera tube based on the cathode tube. Philo T. Farnsworth and
Allen B. Dumont, both Americans, developed a pickup tube that became the home television
receiver by 1939.

The Columbia Broadcasting System (CBS) had entered the color TV fray and battled with
RCA to perfect color television, initially with mechanical methods until an all-electronic color
system could be developed. Rival broadcasts appeared throughout the 1940s although progress was
slowed by both World War II and the Korean War. The first CBS color broadcast on June 25, 1951,
featured Ed Sullivan and other stars of the network. Commercial color television broadcasts were
underway in the United States by 1954.

Raw Materials
The television consists of four principle sets of parts, including the exterior or housing, the
audio reception and speaker system, the picture tube, and a complicated mass of electronics
including cable and antennae input and output devices, a built-in antenna in most sets, a remote
control receiver, computer chips, and access buttons. The remote control or "clicker" may be
considered a fifth set of parts.

The housing of the set is made of injection-molded plastic, although wood cabinets are still
available for some models. Metals and plastics also comprise the audio system. The picture tube
requires precision-made glass, fluorescent chemical coatings, and electronic attachments around and
at the rear of the tube. The tube is supported inside the housing by brackets and braces molded into
the housing. The antennae and most of the input-output connections are made of metal, and some are
coated with special metals or plastic to improve the quality of the connection or insulate the device.
The chips, of course, are made of metal, solder, and silicon.

Prismatic scanning disc mount made by C. Francis

Jenkins in 1923.
(From the collections of Henry Ford Museum &
Greenfield Village.)

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To the surprise of most people, television transmission began almost 25 years before the end
of World War II. John Logie Baird, in England, and C. Francis Jenkins, in the United States, both
made public demonstrations of television in 1925. Unlike post-war electronic televisions, these early
systems used mechanical scanning methods.

Jenkins made significant contributions to optical transmission research during the 1920s.
During 1922-23, he constructed mechanical prismatic disc scanners to transmit images. These
scanners focused and refracted light through prisms ground into the edges of overlapping glass discs.
As the discs rotated, a point of light scanned horizontally and vertically across a light-sensitive
surface. This generated electrical signals necessary for transmission. In 1922 Jenkins sent facsimiles
of photographs by telephone, and the following year transmitted images of President Harding and
others by radio with an improved scanner. Unlike television, however, these first tests only sent still
pictures.

Jenkins publicly broadcast moving images with his equipment in 1925. His first 10-minute
broadcast showed in silhouette the motions of a small operating windmill. By 1931, he had
experimental television stations operating in New York and Washington D.C. He sold receiver kits to
those wishing to view his telecasts and encouraged amateur participation. With other companies,
Jenkins contributed to a small, short-lived mechanical television "boom." By 1933, however, the
poor image quality of mechanical scanning convinced larger manufacturers to pursue the possibilities
of electronic technologies, and the mechanical television era ended.

Erik Manthey

Design
The design of the television requires input and teamwork on the part of a range of design
engineers. Audio, video, plastics, fiber

Diagram
of a television
receiver.
optics,
and electronics
engineers all
participate in
conceptualizing a
new television
design and the
technical and
sales features that
will set it apart. A
new design of television may have one or many new applications of technology as features. It may
only be a different size of an existing model, or it may include an array of new features such as an
improved sound system, a remote control that also controls other entertainment devices, and an
improved screen or picture, such as the flat black screens that have entered the marketplace recently.

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Conceptual plans for the new set are produced by the engineering team. The concept may
change and be redrawn many times before the design is preliminarily approved for manufacture. The
engineering specialists then select and design the components of the set, and a prototype is made to
prove out the design. The prototype is essential, not only for confirming the design, appearance, and
function of the set, but also for production engineers to determine the production processes,
machining, tools, robots, and modifications to existing factory production lines that also have to be
designed or modified to suit the proposed new design. When the prototype passes rigid reviews and
is approved for manufacture by management, detailed plans and specifications for design and
production of the model are produced. Raw materials and components manufactured by others can
then be ordered, the production line can be constructed and tested, and the first sets can begin their
ride down the assembly line.

The Manufacturing
Process

Housing

 1 Almost all television housings are made of plastic by the process of injection molding, in
which precision molds are made and liquid plastic is injected under high pressure to fill the
molds. The pieces are released from the molds, trimmed, and cleaned. They are then
assembled to complete the housing. The molds are designed so that brackets and supports for
the various components are part of the housing.

Picture tube

 2 The television picture tube, or cathode ray tube (CRT), is made of precision glass that is
shaped to have a slightly curved plate at the front or screen. It may also have a dark tint added
to the face plate glass, either during production of the glass or by application directly to the
inside of the screen. Darker face plates produce improved picture contrast. When the tube is
manufactured, a water suspension of phosphor

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chemicals is allowed to settle on the inside of the face plate, and this coating is then overlaid
with a thin film of aluminum that lets electrons pass through. The aluminum serves as a
mirror to prevent light from bouncing back into the tube.

Glass for picture tubes is supplied by a limited number of manufacturers in Japan and
Germany. Quantities of the quality of glass needed for picture tubes are limited, and the
emergence of large-screen sets has created a shortage in this portion of the industry. The large
screens are also very heavy, so flat-panel displays using plasma-addressed liquid crystal
(PALC) displays were developed in the 1980s. This gas plasma technology uses electrodes to
excite layers of neon or magnesium oxide, so they release ultraviolet radiation that activates
the phosphor on the back of the television screen. Because the gas is trapped in a thin layer,
the screen can also be thin and lightweight. Projection TVs use digital micro mirror devices
(DMDs) to project their pictures.

A shadow mask with 200,000 holes lies immediately behind the phosphor screen; the holes
are precisely machined to align the colors emitted by three electron beams. Today's best
picture tubes have shadow masks that are manufactured from a nickel-iron alloy called Invar;
lesser quality sets have masks of iron. The alloy allows the tube to operate at a higher
temperature without distorting the picture, and higher temperatures allow brighter pictures.
Rare-earth elements have also been added to the phosphor coating inside the tube to improve
brightness.

The electrons are fired by three tubular, metal electron guns that are carefully seated in the
neck, or narrow end, of the tube. After the electron guns are placed inside the tube, the
picture tube is evacuated to a near vacuum so air does not interfere with the movement of the
electrons. The small opening at the rear of the tube is sealed with a fitted electrical plug that
will be positioned near the back of the set. A deflection yoke, consisting of several
electromagnetic coils, is fitted around the outside of the neck of the picture tube. The coils
cause pulses of high voltage to direct the scanning electron beams in the proper direction and
speed.

Audio system

 3 The housing also contains fittings for speakers, wiring, and other parts of the audio system.
The speakers are usually made by a specialized manufacturer to the specifications of the
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television manufacturer, so they are assembled in the set as components or a subassembly.

Electronic sound controls and integrated circuitry are assembled in panels in the set as it
travels along the assembly line.

The electrons are fired by three tubular, metal electron guns seated in the neck, or narrow end, of the
picture tube. After the electron guns are placed inside the tube, the picture tube is evacuated to a near
vacuum so air does not interfere with the movement of the electrons. A color selection filter with
200,000 holes lies immediately behind the television screen; the holes are precisely machined to
align the colors emitted by three electron beams.

Electronic parts

 4 When the picture tube and the audio speakers and attachments are assembled in the set,
other electronic elements are added to the rear of the set. The antennae, cable jacks, other
input and output jacks, the electronics for receiving remote control signals, and other devices
are prepared by specialty contractors or as subassemblies else-where on the assembly line.
They are then mounted in the set, and the housing is closed.

Quality Control

As with all precision devices, quality control for the manufacture of the television is a rigid process.
Inspections, laboratory testing, and field testing are performed during the development of prototypes

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and throughout manufacture so the resulting television is not only technologically sound but safe for
use in homes and businesses.

Byproducts/Waste

There are no byproducts from the manufacture of the television, although many other devices are a
part of the television "family" and are often produced by the same manufacturer. These include the
remote control, computer monitors, video recorders (VCRs), laser disc players, and a host of devices
that may require compatible design and components. Specialized televisions are produced for some
industries, including television studios and mobile broadcast facilities, hospitals, and for surveillance
applications for public safety and use in inaccessible or dangerous locations.

Wastes may include metals, plastics, glass, and chemicals. Metals, plastics, and glass are isolated and
recycled unless they have been specially treated or coated. Chemicals are carefully monitored and
controlled; often, they can be purified and recycled, so disposal of hazardous wastes can be
minimized. Hazardous waste plans are in effect in all stages of manufacture, both to minimize
quantities of waste and to protect workers.

The Future

The future of television is now. High Definition Television (HDTV) was developed by the Japanese
Broadcast Corporation and first demonstrated in 1982. This system produces a movie-quality picture
by using a 1,125-line picture on a "letter-box" format screen with a 16 to nine width to height ratio.
High-quality, flat screens suitable for HDTV are being perfected using synthetic diamond film to
emit electrons in the first application of synthetic diamonds in electronic components. Other
developments in the receiver include gold-plated jacks, an internal polarity switch on large screens
that compensates for the effect of Earth's magnetic field on image reception, accessories to eliminate
ghosts on the screen, the Invar shadow mask to improve brightness, and audio amplifiers. Liquid
crystal display (LCD) technology is also advancing rapidly as an alternative to the cumbersome
television screen. Assorted computer chips add functions like channel labeling, time and data
displays, swap and freeze motions, parental channel control, touch screens, and a range of channel-
surfing options.

Digital television of the future will allow the viewer to manipulate the angle of the camera,
communicate with the sports commentator, and splice and edit movies on screen. Two-way TV will

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also be possible. Current screens may be used thanks to converter boxes that change the analog
signal that presently energizes the phosphors on the back of your television screen to digital signals
that are subject to less distortion—and are the language of computers. Computer technology will
then allow a world of manipulation of the data as well as broadcast of six times as much data.

The future of television manufacture may be anywhere but in the United States. Thirty
percent of all televisions manufactured by Japanese companies are made in factories in Mexico. The
factories themselves will soon be producing hybrids in which the television, computer monitor, and
telephone are a single unit, although this development will take further improvements in
compatibility between machines that speak analog versus digital language and the creation of PC-to-
video bridges. Proof of the possibility of this integrated future exists now in Internet access that is
now available through television cable converters and the living room TV screen.

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INTERVIEW
Premium marketing to the masses: An interview
with LG Electronics India’s managing director
In This Article
 Exhibit: Biographical sketch of Kwang-Ro Kim
 Exhibit 1: LG Electronics leads in market share
 Exhibit 2: LG Electronics' presence in India

Many foreign companies have tried—and failed—to make a deep impression on

the Indian market in recent years.
LG's first attempt to enter it (in the early 1990s, as Lucky Goldstar) floundered as a result of
difficulties the company encountered working with local importers. But since 1997, following the
Indian government's green light for a state-of-the-art white-goods factory at Greater Noida, in the
state of Uttar Pradesh, the South Korean chaebol has scarcely glanced back.
LG Electronics India, a wholly owned subsidiary of the Seoul-based parent, bet big on India,
and the gamble is paying off. LG's share of the Indian market (by volume) is currently 29.4 percent
in refrigerators, 26.5 percent in color TVs, 35.8 percent in washing machines, and a crushing 38.0
percent in microwave ovens. A second factory, at Ranjangaon, near Pune—India's first facility for
manufacturing GSM1 handsets—has been turning out white goods and mobile phones since October
2004. LG's Indian market share in GSM handsets is now 6 percent and rising.
The company's ambitions don't stop there. LG Electronics India has set itself a revenue target
of $10 billion by 2010—five times the present level—as it positions itself to attack the fast-growing
Indian information and communications markets. Within five years, it also plans to make India a hub
for exports to other parts of Asia and to Africa and the Middle East.
LG's hectic pace in the subcontinent has
left other multinationals and local rivals
struggling to figure out the secrets of its success.
Skeptics may wonder whether its competitive
price strategy will hold, but few doubt its long-
term commitment to go on growing in India and

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to transform its Indian operation from a useful bit player into a significant contributor to the
company as a whole.
Kwang-Ro Kim, the managing director of LG Electronics India since 1997 and a much-
traveled veteran of LG's expansion around the globe over the past three decades, has played an
important role in the company's Indian success story. Kim's earlier experiences have shaped the
nature and direction of the group's passage to India. At the subsidiary's Greater Noida headquarters,
near Delhi, he talked with Pramath Raj Sinha, a principal in McKinsey's Delhi office, about LG's
early commitment, its willingness to
empower local employees, its focus on R&D,
and its ability to develop a strong and far-
flung distribution network.
The Quarterly: Can you explain
how LG came to set up operations in India in
1997?
Kwang-Ro Kim: It was a
natural decision for us, given India's
population and the likelihood that the country
would become a priority region in the way
China has become. From the outset, LG was
determined to commit a lot of money to the
Indian venture, but when we came here in the
early 1990s local regulations forbade
foreigners from making independent
investments. We therefore tried to work
through exclusive importers or agents.
Around the end of 1996, the rules changed,
and we were able to go ahead on our own.
This has given us the freedom we need.
Compare our situation with that of another South Korean company, which established a joint venture
three years before we set up shop in the country but does not appear to be able to exercise its full
strength, because of the need to work with a local partner.
The Quarterly: Has LG's experience in other markets provided insights that you applied in
India?
Kwang-Ro Kim: LG has accumulated experience in a number of overseas markets,
stretching back over 30 years. When I joined the group, in 1974, South Korea was still a poor
country, a small market with around 45 million consumers. The only way to make the company's

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income grow was to export, to push aggressively outside our home base. Over the years, LG has
made many mistakes in overseas markets, learning through trial and error, and it was that experience
we brought to India. We knew it was important, for example, not to downgrade the Indian market
and instead to treat it just as seriously as we would any developed market. That meant preparing a
full strategy and emphasizing good-quality products, the best technology, the best network, and
access to the best people. We have seen many Japanese and Chinese companies arriving in India, but
like other foreign-owned businesses they typically put one foot in the water to see if it is warm or
cold. They have doubts. They lack determination. One of our competitors, for example, recently
shifted its factory to Thailand and is now supplying all its products to India from there. What's been
different about us is that we made a full commitment—a very big investment—from the start,
including setting up two full-scale manufacturing facilities.

The Quarterly: Having production in India presumably puts you in a strong position to

tailor goods to the local consumer. Has that helped?
Kwang-Ro Kim: Yes, and so has the way we invest in and trust our employees. When
that competitor left for Thailand, for example, we tried to recruit some of its engineers but decided in
the end not to hire them. In the ten years those people had been working for that company, we
discovered, they had done little to improve the products it was trying to sell to the local market. It
turned out that this company's R&D department back home had been doing most of the work, with
only a few modifications carried out here. It's true that LG imports the basic technology from South
Korea, but in India we are responsible for 90 percent of the subsequent R&D work; only 10 percent
gets done in South Korea. We spend a billion rupees 2 a year here on research. That commitment is
something we've learned in other developing markets.
The Quarterly: So the local management has a lot of autonomy?
Kwang-Ro Kim: Absolutely. Local empowerment is a very important part of our
strategy, and I would say that 99 percent of our decisions are made independently. At the moment,
we have only 20 Koreans here in India—most of them in R&D—out of a total workforce of 2,700.
The expatriates are called in only when there is a problem, and they are generally seen as
consultants, or advisers, to the business. No Korean works in the administrative branch offices we
have set up around the country. And even at the corporate level, in India every decision is made by
Indian employees.

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The Quarterly: What kind of things do you have to refer to South Korea? Don't you find
that product managers back home tend to dominate and seek to prevent you from taking quick
action?
Kwang-Ro Kim: The South Korean parent monitors our sales and profit commitments
and makes sure that we are meeting them. And we had to get permission from South Korea for the
investment in our new factory near Pune, for example. But a decision to invest in existing operations
can be made locally. We do have product managers in South Korea, as you suggest, but in my
experience they don't interfere in the way that their counterparts at some US and Japanese companies
do. I visited one Japanese factory recently and learned that the designers there have to send their
drawings back to Osaka for approval. The process can take six months or more, which means that the
company is late bringing products into the market.
The Quarterly: Can you give us an example of how empowerment has worked to your
advantage?
Kwang-Ro Kim: Three years ago, we invested in a new refrigerator production line
and needed to buy a vacuum-foaming machine, one of the most expensive pieces of equipment for
this $20 million project. We could have sourced the equipment in South Korea, but our local
employees thought it might be better to buy from Italy. So we agreed. We sent them to Milan several
times to check the machinery—no Korean went on any of the trips—and they eventually made the
decision to buy there. Apart from being the right one commercially, this had an obvious effect on
their attitude. When the machine arrived, they worked night and day to install it—they hardly went
home. They felt real ownership and took full responsibility for implementation.
Another example is our policy of making salespeople responsible not just for sales but for
profits too. The salespeople therefore need to know the costs of the business—something we readily
make available to them. Many companies are reluctant to do this. But when our people know that
they are accountable for profits, they understand that they have to control their marketing expenses
and other costs.
A final example would be our decision to sponsor the Indian national cricket team. We know
that football and baseball are important in other parts of the world, but as Koreans we had no idea
what sport was popular in India when we first arrived. Our employees decided that this was the right
thing to do and thus we associated ourselves with cricket.
The Quarterly: Is the policy of empowerment a general LG philosophy or your own idea?
Kwang-Ro Kim: Generally, LG has a philosophy of empowerment. But this system of
profit responsibility is something we have devised especially for India. I have noticed over the years

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that empowerment results in more hard work and innovation at the workplace, thus adding to the
company's productivity.
The Quarterly: How did you find people you could trust, particularly in the early years?
Kwang-Ro Kim: I strongly believe that if you trust people 100 percent, their
dedication will be 100 percent. If they think you trust them only 50 percent of the time, that will be
reflected in their performance. That said, we have a very good IT system, and that is important. I
trust the human beings, I trust the system, as it acts as a check and balance. And we have good
rewards—people can earn bonuses of up to seven times their salary in every six-month period. But
what's more important is that human beings like to be free; they want to be allowed to be innovative.
The Quarterly: What if people don't perform? Do you get rid of them?
Kwang-Ro Kim: We always give people at least three opportunities, and we do not
move people from one place to another just because they do not perform. We try to treat them like
family. What's most important for success is passion. On the whole, the Indian employee is well
educated, but to succeed in our business we don't need geniuses—just average brains and big hearts
with a lot of passion.
The Quarterly: Many foreign companies are daunted by the sheer size of the country. What
have you learned about distribution in India?
Kwang-Ro Kim: India is a heterogeneous nation, and it is important to have planning
and resourcing specifically for each region. We therefore identified various strategic locations where
we thought it would be viable to set up administrative branch offices to handle local business, to
make decisions, and to act as independent profit centers. All the critical departments of the company
are represented in these branch offices: accounts, logistics, customer service, marketing, and sales.
These branch offices are distinct from the retail outlets where LG products are actually sold. The
latter consist of a mix of our own branded shops in some large towns—shops where you can buy
only LG items—and independent, multibrand stores for consumer electronics and consumer
durables, where LG products compete with products from other companies.
The locations we chose for both the branch offices and the shops were determined by the
likely demand for our products and the viability of operating there. To me, for example, it was
always obvious that if we could develop a presence in the interior, in rural areas—where 70 percent
of the Indian population lives—we would have an advantage. In the beginning, our people used to
tell me, "You can't go tour that location; it's not safe." Before we opened our branch office in remote
Rourkela, for example, they said that even Indians can't go there because of the security situation.
But after three years we finally went ahead and discovered that Rourkela is a big town with lots of

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buying potential on account of the steel plant located there. The same arguments were used about
Guwahati and Jorhat, where we also have branch offices.
LG has been prepared to go up-country. Away from the cities, we are growing at a rate of 50
percent. People tell us we have been one of the quickest, most aggressive companies when it comes
to building our network—we now have 2 branch offices in almost every big state in the country, or
49 in all. We are spread more widely across the country than most local companies that have been in
business here for 30 years.

The Quarterly: What can you tell us about the

Indian consumer?
Kwang-Ro Kim: Indian customers are
more complex than those I have encountered elsewhere.
In contrast to consumers in Latin America, for instance,
they are less easy to satisfy. Indeed, anyone who
believes that Indian consumers are only interested in
price misunderstands this market. They are very smart
and want a quality brand at a reasonable price. Note
that I didn't say "lowest price." We have competitors
with products that are 10 percent cheaper, and if the
lowest price was all that counted they would be number
one. Take televisions. In more developed countries,
people might want to buy a set and keep it for only three
years—but Indians are looking for a model that will last
ten. The fact that it is a bit more expensive doesn't matter, provided the quality and service are good.
The Quarterly: What percentage of your products do you export now? Will that figure
increase?
Kwang-Ro Kim: At the moment, less than 10 percent, but by 2010 we expect exports
to account for 30 percent of our production, mainly to neighboring countries like Bangladesh, plus
the Middle East and Africa. We now export a little to Mexico and even to Panama, but because of
the geographical distance it is hard to make this profitable.
The Quarterly: Is China a bigger export base than India?
Kwang-Ro Kim: LG's Chinese operations are ten times bigger in terms of volume than
our operations in India—we have many factories in China—and exports amount to around 70

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percent of what is produced. But too much investment in one country is dangerous, so LG decided
that India should also be an export operation. It's a good opportunity for India and one that the
country needs to exploit generally, in other sectors as well, if it is to escape poverty. We had a
similar situation in South Korea after the Korean War, as did the Japanese. Without exports it will
be impossible for India to feed one billion people properly.
The Quarterly: A lot of foreign business executives complain about bureaucracy and
government regulation in India. What has your experience been?
Kwang-Ro Kim: For many people, bureaucracy in India means something bad, but I
see a positive side to it—namely, the stability that it brings. India's governments have changed many
times over the years, but because of the strong bureaucracy the basic policies are stable. The
authorities are also responsive. Take, for example, the budget announcement earlier this year by Mr.
Palaniappan Chidambaram, India's finance minister, imposing a special additional duty on foreign
components for finished products. This move, around the time we were completing our new GSM
mobile-phone- manufacturing plant, seemed to discourage investment in the country. It was actually
our Indian employees who took the lead by protesting through the newspapers and by meeting
officials to explain how the proposed duty could affect jobs, and in the end the government accepted
our suggestions.
To see how successful consumer product multinationals are addressing the
Chinese market, read "Marketing to China's consumers."
The Quarterly: Are there any other obstacles?
Kwang-Ro Kim: Indeed. As you know, there are problems with the electricity supply,
the roads, and the infrastructure generally. But I believe that the Indian government is doing its best
to put this right. And that takes time. I like to say to people that these kinds of obstacles give us an
advantage in some ways. Marketing books point out that when you are evaluating a certain area for
investment, an obstacle represents an opportunity, since without obstacles it is also easy for your
competitors. In India, we at LG enjoy the obstacles. This is a country where expatriates often find it
difficult to live, and to survive, which is why many Japanese executives, for example, come here
without their families. Koreans, on the other hand, always come with their families. This not only
provides encouragement but demonstrates the sort of commitment needed to succeed.
The Quarterly: Where do you see LG Electronics India going over the next five years?
Kwang-Ro Kim: Up till now we have done a good job in consumer electronics and
home appliances, and our market share is above 30 percent—in some cases, above 40 percent. That
is a solid foundation. We now want to build on it to develop a strong position in communications,

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which means mobile phones, and in information, which means desktop and notebook PCs. In these
two areas, we also want to be number one. PCs and mobile phones are the fastest-growing segments
in India at the moment.
In consumer electronics, a 40 to 45 percent market share is probably the limit, so we are now
focusing on building a range of premium products that in the future could represent 10 percent of our
earnings. We do not yet manufacture these products here, because the volumes are not big enough,
but I think that future growth will be strong. We are already assembling LCD monitors here.
The Quarterly: Would you say that your revenue targets are very ambitious?
Kwang-Ro Kim: At the moment, we are a $2 billion company in terms of sales. We
want LG Electronics India to be a $10 billion business by 2010. That is our dream. We may end up
being only a $7 billion or $8 billion business, but by aiming to climb Mount Everest you will easily
scale a smaller mountain.
The Quarterly: A lot of foreign companies start out with the sort of ideas and aspirations
you have talked about, but most of these companies find that they cannot achieve such aspirations in
practice. Why?
Kwang-Ro Kim: Thinking and implementing are different. Everybody knows that
getting up early in the morning and running is good for your health. But how many people actually
do this? As I said, many companies hesitate, but LG has been successful because it has been positive
and aggressive from the beginning. 
About the Authors
Pramath Raj Sinha is a principal in McKinsey's Delhi office

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Sponsorship
LG Electronics sponsored the English football club Leicester City and Weyside Rovers
(Guildford) from 2000 until 2002. LG Electronics currently sponsors the English football clubs
Fulham F.C deals pulled together at that time by the ex-Marketing Director John Bernard, who now
works for the competition, Sony Ericsson.
LG also sponsor the Fremantle Football
Club (an Australian Football League team),
the Costa Rican football club: Liga de
Alajuense, the Australian club National
Rugby League team Cronulla Sharks, and
the Argentinian club Boca Juniors.

LG is one of the leading sponsor of

Cricket. It sponsors the International
Cricket Council, world's governing body
for cricket and other cricket tournaments
like Cricket World Cup. It also sponsors
ICC Awards.

During the period 2001–2003 the company sponsored the snooker Grand Prix. During these
years the tournament was known as the LG Cup.

LG now also sponsors London Fashion Week and the LG Arena in Birmingham.

In 2008 LG became sponsors of the Extreme Sport 'FSO4 Freeze' festival and in January
2009 LG became a Global Partner and Technology Partner of Formula One. This electronics
company is now an official supplier to Virgin Racing, as well as Lotus Racing and engine
manufacturer Cosworth.

In addition to this LG in cooperation with local electronics retailer BAKOND and Ministry of
Education of Azerbaijan Republic is sponsor of Azerbaijan's most popular intellectual TV Show –
LG Knowledge Academy . So far more than 30 000 students from all over Azerbaijan participated in
LG Knowledge Academy. In 2009 after huge success organizing committee decided to start second
season of game (2009–2010).

LG sponsored the LG Mobile World Cup texting competition.

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Awards and Accolades

In 2008, LG won 11 red dot design awards, 11 iF product design awards, and 13 Innovation
Awards at CES, where the 50-inch PG6000 1080p Plasma HDTV was “Best of Video Display.”

In 2009 LG has won 15 Design & Technology honors at CES including the CES 'Best of
Innovations' in the Wireless Communications Category for LG Dare(VX9700) and Home Appliances
Category for Steam Laundry Pair:SteamWasher with Allergiene Cycle and SteamDryer(WM3001H).
Seven 2009 products have been awarded with iF product design awards and another seven received
red dot design awards.

Two LG washing machines have also achieved Asthma and Allergy Friendly Certification
based on the Allergiene Steam cycle. The Asthma and Allergy Friendly Certification Program is a
science based Certification mark that is awarded to products that are proven to be more suitable for
those suffering from asthma and allergies. The Allergiene cycle of the LG washing machines has
been proven to be capable of reaching thermal killing temperatures for the house dust mite, and also
that any allergen present will be removed following washing.

More recently LG's LUV300B Kompressor vacuum cleaner has also been certified as Asthma
and Allergy Friendly. Vacuum cleaners that are certified as Asthma and Allergy Friendly have been
scientifically tested for their ability to remove allergen from carpets and have also been assessed for
particle generation during vacuuming.

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Conclusion

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Bibliography
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director_1666

 http://www.lg.net/about/history/history01.jsp

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 http://www.lg.net/about/overview.jsp

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