The company is promoting long-term strategy through Agile Ability to adapt in rapidly changing business environments
Zhou highlighted the positive progress achieved through innovative business models, such as the webOS-based subscription and advertising services business and the content business, which demonstrate LG's flexible response to evolving market demands. “Amidst unprecedented market uncertainty and a changing competitive landscape, we need a radically different level of strategy and careful execution,” he stressed.
Compared to two years ago when LG first presented its Future Vision 2030, the global market recovery is seeing long delays, while geopolitical risks, such as shifts in trade policies in major countries, are becoming more pronounced. The competitive model with Chinese companies is also shifting from price-based competition to a more sophisticated focus on technology.
As part of Vision 2030, LG aims to expand its current appliance-focused business into the mobility and commercial spaces. By leveraging decades of customer understanding, know-how and technology expertise, the company seeks to transform into a smart living solutions provider that connects and enhances customer experiences.
“Despite the difficult environment, there are still great opportunities,” Zhou added. “By focusing on delivering differentiated value to customers, we will achieve continued growth.”
Transforming business models to meet market demands
LG is increasing its market presence through new business models such as subscription-based services and an online brand store. By leveraging the company's strengths, the subscription business combines devices and services to provide greater convenience and flexibility, moving beyond price-driven competition. Customers can use the products for a duration that best suits their needs and receive enhanced care services, allowing LG to maintain closer customer relationships and generate recurring revenue.
LG is also enhancing its competitiveness by enhancing on-site care services and diversifying sales channels. This year, the company is expanding the service to
In 2024, LG's revenue from subscription services rose more than 75 percent year over year, exceeding the company's original target (
The company's data-driven online brand store is also growing at a rapid pace, with sales rising more than 80 percent year-over-year during last November's Black Friday period.
Expanding the platform-based services business through webOS
The platform-based services business, which is transforming the company's business structure into a highly profitable model, aims to increase its revenues more than five times by 2030, eventually accounting for 20 percent of LG's total operating profit. This business model leverages the hundreds of millions of LG products sold worldwide as a platform to generate revenue by providing customers with personalized content, advertising and services.
A prime example of LG's current success in this area is its advertising and content business based on the company's webOS smart TV operating system. Last year, its webOS-based advertising and content business exceeded its revenue target of
Starting this year, webOS will become a comprehensive content platform for various devices and solutions, including IT products and vehicle infotainment systems. It will also expand its scope to include AI-powered digital out-of-home (DOOH) solutions for advertisers, evolving into an “integrated media advertising platform” that provides different content experiences across diverse indoor and outdoor spaces.
To this end, LG began consolidating its existing display businesses “including TVs, signage, monitors and laptops” through an organizational reorganization at the end of last year. The company is also exploring several opportunities to secure additional capabilities through mergers and acquisitions (M&A) and partnerships.
Accelerating growth in B2B heating, ventilation and air conditioning (HVAC).
To accelerate growth in the B2B segment, the company is focusing on its heating, ventilation and air conditioning (HVAC) business, which is expected to expand rapidly in the age of artificial intelligence. LG has established a dedicated business division, namely LG Eco Solution (ES).to take its existing heating, ventilation and air conditioning (HVAC) business to new heights. LG's HVAC business, along with LG's automotive components and smart factories, will play an important role in driving the company's B2B business to greater success.
LG HVAC boasts a comprehensive portfolio of highly efficient, high-performance solutions that utilize the company's industry-leading core technologies. Its modern products range from residential air conditioners to commercial air conditioners for buildings, schools and public institutions; Heating solutions designed to replace fossil fuel boilers; And advanced cooling technology, which is now being applied to improve energy efficiency in data centers that are the pivotal backbone of artificial intelligence infrastructure. In addition, in key markets, LG is accelerating the establishment of a comprehensive local business structure that includes R&D, production, sales and maintenance, and has the ability to develop region-specific solutions.
By 2030, LG expects its B2B business to account for about 45 percent of the company's total revenue. B2B revenue accounted for nearly 27 percent of total revenue in 2021, a number that rose to 35 percent by the end of last year.
Take bold R&D initiatives to address major future trends
The company is also revamping its future technology R&D portfolio to align with key strategic directions: maximizing business potential, expanding platform-based services business, accelerating B2B business, and rapidly commercializing new growth engines. More than 75 percent of LG's advanced R&D efforts will focus on business technologies aligned with the company's medium- to long-term strategies, and on securing pivotal technologies in promising future areas.
LG will continue to focus on enhancing core technologies across eight core technologies: software, system-on-chip, artificial intelligence, robotics, materials and parts, standards, next-generation computing, and cloud/data. Specifically, the company will implement CEO Zhu's “3B” strategy of “build, borrow and buy” by strengthening internal capabilities, leveraging external expertise and acquiring technologies. This approach includes forming partnerships with global technology giants as well as promising startups and academia in order to establish technological leadership. In addition, LG will enhance R&D efforts in future areas with high potential, such as quantum computing and space technology.
CEO-led task force system To enhance structural competitiveness
In addition to transforming its business portfolio, LG is focusing on strengthening its structural competitiveness “represented by quality, cost and delivery” to meet increasing global competition.
This year, LG is creating a new CEO-led review system to advance these efforts. Each business division and key organization will form a task force to secure leadership in products and technology, manufacturing efficiency, R&D, and operations, with CEO Zhou personally overseeing their progress. The primary objectives of each task force include securing product and technology innovations, enhancing manufacturing capabilities and improving research and development capabilities.
LG is also making careful preparations to improve its ability to respond strategically to external uncertainties. Working with internal and external experts, the company formulates predictive scenarios of key issues and develops “rules of the game” to determine optimal responses. This forward-looking approach is expected to reduce the impact of external factors on the business and uncover new opportunities.
Sustainable investment in future growth
While it expects the business environment to continue to face significant uncertainty in the coming years, LG is committed to maintaining its strategic investments. These investments are intended to secure the core competitiveness of the business and sustain future growth, and will be “maximized” based on strategic priorities.
In addition to investing in facilities and R&D, LG is actively exploring the strategic allocation of investment resources for equity investments and mergers and acquisitions to accelerate the company's growth. Earlier, LG announced its plan to inject more
on LG Electronics, Inc
LG Electronics It is a global technology and consumer electronics innovator with a presence in almost every country and an international workforce of over 74,000 people. LG's four businesses, Home Appliance Solutions, Media Entertainment Solutions, Vehicle Solutions, and Environmental Solutions, combine to generate global revenues of more than
