The contretemps illustrates the cultural rearrange under trail at LG. The company, once mid the most Korean of Korea's chaebol, or conglomerates, is pushing to change its administration and become in fact global. Boden is one of five Western veterans of IBM (), Hewlett-Packard (), Procter & Gamble (), Unilever (), and absent that Nam has lured into the regulatory suite.
The foreigners now put a house of LG's directorship and have charmed over pitch positions including purchasing, supply-chain management, and human being resources. Nam didn't unavoidably have in mind to charge a bunch of back-talking cranks, but he knew LG needed change. The company's Korean conduct gang had built an engineering powerhouse that excelled at manufacturing and selling good-quality, low-priced TVs, chamber phones, refrigerators, and scores of other products: Since 1976, when Nam started as a trainee in LG's export department, sales had soared 300-fold, to $44 billion in the end year.
And in many respects, LG has hunger been global: By terminating year, more than four-fifths of its revenues came from overseas, and nearly 60% of its manufacturing was pretence Korea. SETTING TRENDS But by the period Nam took over the peerless grind in January 2007, LG was coasting. It had become a top-five consumer-electronics jock globally but had few hits. Nam believed the train needed to be a trendsetter if it wanted to grow rich in the Digital Age.
To disenchant things up, he asked headhunters to acquire prime facility from multinationals worldwide, in any case of nationality. "It's normally through contest that great ideas arise," says the 59-year-old CEO. The foreigners have been asked to regiment the hodgepodge of processes and systems that LG has developed around the world.
Its purchasing, for instance, was done by four distinctive subject units and was division in the midst factories and subsidiaries in 110 countries. "I'm feel attracted to a conductor, getting [2,000 purchasing officers] to vocation in concert to reach secure music," says Tom Linton, a 20-year experienced of IBM who joined LG as its head leading procurement appointee in January. Nam says Linton's efforts to reshape the purchasing arrangement have already saved the business hundreds of millions of dollars. LG's reserve restrain was just as chaotic.
Didier Chenneveau, a Swiss who in March relinquish HP to become LG's prime supply-chain officer, inherited more than 10 warehouse-management systems, five transportation operations, and four computer systems to supervisor the development of parts and finished products. His aim is to unite them into a unmarried worldwide structure by 2010. Until now, "a lot of things were driven by sterling devotion and commitment of the people," says Chenneveau. The foreigners haven't been completely welcomed by Korean managers.
"The biggest be anxious was the thought of Western executives stately a road of outlook that might not ply in our Confucian culture," says marketing foreman Choi Seung Hun. "The spectacle of communicating with my oversee in English gave me a headache," adds Lee Kyo Weon, a purchasing manager. Both Choi and Lee, though, claim the newcomers have made an creation to span the cultural gap; and it helps that an interpreter is always on hand. Boden was the outset exotic interchange agent.
A year ago, Nam hired the seasoned of Pfizer () and Johnson & Johnson () to ease whack LG into a perquisite brand. The problem, Boden says, was that LG's marketing was uninspiring. So he's aiming to give the disgrace a more hep personification with high-end products such as a room phone co-branded with forge outfit Prada and washers costing $1,500-plus.
He's also fascinating a more organized procedure to marketing by hiring a sole agency-London's Bartle, Bogle, Hegarty-to handgrip advertising worldwide. Early show suggests Nam's globalizing attack is paying off. Despite a cease in consumer spending in the bow wave of the Wall Street meltdown, analysts reveal LG should dispatch record results this year. Its operating clean up jumped 138%, to $2 billion, in the anything else nine months of 2008 on sales of $36 billion, up 20%.
It's unclear, though, whether LG's upmarket kind scheme will sweat in increasingly troubled times. "The big evaluate will be how LG copes with the risks posed by the far-reaching slowdown," says Park Kyung Min, principal number one at store chief Hangaram Investment Management. Nam's transpacific executives forewarn the company will prosper even as the restraint slows. Nam, they say, is passive to spend what it will take to break into the surmount tier of global brands.
In November, for instance, the establishment announced a five-year deal to superimpose Formula 1 racetracks with the LG logo. Although it will payment LG tens of millions of dollars annually (Boden declined to give details), he vows to jam ahead. "We are making a statement," Boden says, "even though things will be tough.".
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