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LG targets KRW 3 trillion in cost savings February 10, 2009

Posted by aikservices in Cost Cutting, Korea, LG Electronics.
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LG Electronics announced efforts to weather the world economic slowdown, including plans to reduce its costs by KRW 3 trillion. Despite the weaker demand, LG said it will continue to invest, and may even raise its spending, on R&D and marketing. The company has intensified its efforts to increase market share despite the volatile economic situation. To achieve this, LG has reorganized its business portfolio to focus on areas with longer-term growth potential and profitability. Partnerships will continue to be a key element of the company’s marketing activities to elevate its brand position.

LG will continue to invest in future growth engines such as solar power, commercial air conditioners and business (B2B) solutions, all sectors LG expects will expand and become increasingly profitable once the economy is back on track. At the end of 2008, LG Electronics established a Crisis War Room (CWR) to bring together LG’s five business units, eight regional headquarters and executives to implement and manage the company’s business plan. In three months, the CWR has identified and developed 11 key action items. Business units have been instructed to establish task force teams to take responsibility for managing the cost-saving initiatives. The company-wide cost-cutting initiative also applies to manufacturing and indirect costs. Globally, LG has been working to further improve its procurement system, which includes everything from raw materials to investment in facilities, financial services and recruitment. LG’s efforts to improve its cash flow has already resulted in reduced inventory, increased liquidity, optimized supply chain management and a more consolidated, efficient purchasing process overall, the company said.

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