Michael Ahn, U.S. president and CEO, LG Electronics
And lately, it seems
we’re not alone. Just this past June (2004), LGE topped BusinessWeek’s
Information Technology 100 List and was coined “The Next Big Player” on
the cover of TIME magazine.
Perhaps the real evidence, however, is in the numbers. In 2003, the South
Korean manufacturer reported sales of U.S.$40 billion. More recently, the
company reported that net profit almost doubled in the second quarter of
this year, helped by the record sales and robust demand for its mobile
handsets and home appliances. Sales for the quarter saw an increase of
25 percent over the same period last year.
Although LGE has clearly stated that its intentions are global, the company
has taken some pretty aggressive actions this past year toward the U.S.
appliance industry, starting with the establishment of a North American
headquarters early this year and the appointment of Michael Ahn, a 28-year
industry veteran, as U.S. president and CEO. Combine that with a marked
presence at every major trade show this year, an innovative TV refrigerator
that is still making headlines across the U.S., and a multi-year North
American marketing budget that allots $100 million for 2004 alone, and
it is easy to see why U.S. appliance companies are taking notice.
APPLIANCE recently interviewed Mr. Ahn to find out what makes this electronics
giant tick and what its plans are for the U.S. appliance market.
LGE’s recent move to establish a North American Headquarters put
three core businesses—Digital Display & Media, Digital Appliances,
and Mobile Phones—under your leadership. What has been your strategy
in managing these businesses?
A: LG has established a new organizational structure for LGE North America,
which combines all of our core business groups under the leadership of
myself, as president and CEO for LGE North America. This has helped to
maximize synergies across our various divisions, brands, and operations
as we position LG as a premium brand in the U.S.
Furthermore, managing our core businesses is about continuing to build
the brand’s awareness overall through aggressive marketing campaigns
with an equally committed focus on each division’s mission to bring
the most innovative products to market.
Q: What is the greatest challenge you face as president of LG Electronics
A: The U.S. marketplace is challenging because there are so many well-established
brands. As a result, it requires a significant investment in both product
development and marketing to succeed. That said, we are dedicated to establishing
LG as a leading brand in the U.S.
Personally, this is a very exciting new role for me. Under my leadership,
there are significant opportunities for growth with display and digital
video products, information technology products, mobile phones, and digital
appliances in North America and abroad.
LGE’s global vision is to rank among the top three electronics,
information, and telecommunication firms in the world by 2010. What is
LG’s specific goal for the North American market?
A: Our goal in North America is the same as it is worldwide—to become
one of the leading players in the industry. By looking at the North American
market independently—thinking globally, but acting locally—and
interacting with our consumers here, we are able to successfully develop
and market products that appeal to our retail customers.
Over the past few years, we’ve stepped out from the behind the “OEM
scene” to bring to market our own LG-branded products with digital
appliance and mobile phones, and most recently we’ve done this
with our digital displays and media products. We have put a heavy focus
and bringing to market our unique and proprietary technology, as well
as a real value proposition to our existing and future customers.
What is LGE’s goal
for the North American major appliance segment, and what strategies
will you implement to ensure success?
A: Since our entrance into the U.S. market more than 20 years ago, we have
seen demand for our products grow significantly. We believe this growth
is a testament to the quality of our products in terms of functionality
and design, as well as growing recognition of the LG brand. Also, Korean
products are increasingly being recognized as innovative, high-end, and
LG has made significant strides over the past few years and is no longer
considered a second-tier market player. We’ve achieved product leadership,
and we’re proud of that—which is why our branding campaign
emphasizes “Life’s Good.” Furthermore, we are elevating
our marketing strategy to establish LG as a top-tier global brand.
We will continue to invest heavily in research and development in order
to bring to market appliances that truly enhance people’s lives.
Design and technical features are equally important, and we are focusing
on both in order to become one of the top-selling appliance producers
in the U.S. Additionally, we are marketing LG much more aggressively
U.S. with a multi-year $300-million branding campaign. For the first
time, appliance commercials on network and cable television will join
aggressive print campaign.
Q: Will LGE acquire any businesses or brands to strengthen its share
in the North American market?
A: We have no immediate plans to acquire any businesses or brands, as we
plan on doing this organically. We currently have very strong relationships
with many different manufacturers, and we will continue to explore alliances
that we believe will benefit both parties and lead to even better products
for our consumers.
Q: Do you think leading U.S. appliance players are prepared
for the competition LGE and other foreign companies are bringing to the
A: While LG is a relatively new player in this arena, we are as well-established
overseas as the leading U.S. manufacturers are in the U.S. Speaking from
this position, I can say that we have never rested on our laurels, but
instead have worked to bring even better technologies and innovations
to market, regardless of the competitive environment. So, while I can’t
judge whether established U.S. appliance producers are or are not ready
for competition, there is no denying that those who remain stagnant will
be challenged by LG and any other company—American or foreign—that
introduces product innovation.