LG Announces Restructuring

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David Keene - LG Electronics today announced a corporate restructuring that will see the elimination of one of its five business operations next month. But the move, for which the term “elimination” is perhaps misleading, is unlikely to alter LG’s position in the digital signage market, a position that has been increasing, not decreasing, in recent months as LG has launched a variety of new products including its new SuperSign Elite, and SuperSign Premier-s software/hardware packages for digital signage for both the SMB, and enterprise segments.

LG said in a press release today that it will “dissolve” its business solutions unit as part of the restructuring effort. The business solutions division had produced flat-screen display products for corporate customers and automakers. Flat-screen monitors, which had been part of the division, will be moved into the remaining home entertainment division. The four remaining business divisions include home appliance, air-conditioning and energy solutions, home entertainment, and mobile communications.

At press time today, it was unclear if LG’s recent digital signage market initiatives would change… but more than likely they are just being moved to a different division for efficiency reasons. In fact, this move of the “commercial AV” and digital signage from a stand-alone unit to under the wing of the “consumer AV” unit, mirrors almost exactly the move by Samsung earlier this fall– when Samsung moved all its commercial AV and digital signage marketing to under the Samsung consumer division. As I’ve said in these pages many times, the consumer tail more often wags the commercial AV dog in today’s economy, so its no surprise that in an industry sector dominated by mass-produced flat panels, these kinds of restructurings take place at regular intervals.

Globally, LG has now created two teams to handle overall management and global marketing. These will report to directly to chief executive Koo Bon-joon, a member of the founding family, who succeeded Nam Yong in October, following significant losses in the mobile phone sector.

The global restructuring is the first major step taken by Bon-joon since being named CEO. In the U.S., as reported earlier today, LG Wayne Park was named new the president of LG Electronics USA. The 28-year LG veteran replaces James Shad, who is leaving the company next month, after two years with organization. Park said the reorganization here will result in the formation of two separate U.S. sales and operations organizations for the home entertainment and home appliance business units.

Jay Vandenbree has been named head of the LGEUS home entertainment business unit. He had been senior VP of sales since May 2010. He joined LG in September 2009 as senior VP/U.S. go-to-market operations.

Sam Kim was named head of the LGEUS home appliance business unit. Kim joined LG in 1988 and has extensive North American experience including serving as head of the U.S. OEM appliance division, as well as key product management positions in the U.S. and Canada.

Since January, Kim has served as North American regional business leader for refrigerator products.

Below is the official Press Release from LG:

11/30/2010
LG ANNOUNCES CORPORATE RESTRUCTURING TO ADDRESS CURRENT AND FUTURE CHALLENGES
Company Expects Completely Integrated Organization Concept to
Lead to Even Faster Decision Making
SEOUL, Nov. 30, 2010 – LG Electronics (LG) today announced a number of restructuring commitments as part of its ongoing transformation process to overcome the current challenges and to accelerate future growth. The restructuring is aligned to three main priorities - to establish business unit-centered complete operating system to ensure speed and accuracy in decision-making, enhance development of advanced technology and reinforce new business organizations with a clear eye to the future and strengthen the company’s business fundamentals by accelerating innovation.
The Business Innovation Office will be established and overseen directly by Vice Chairman Bon-joon Koo. It will be responsible for elevation various company core competencies such as Six Sigma, services, procurement, etc. CMO is disbanded while Global Marketing Division is renamed as Global Marketing Office to promote LG Brand and strengthen subsidiaries’ sales capability.
To give more emphasis to individual products, the Business Solutions (BS) Company will be dissolved, with the monitor and solution business units transferring to Home Entertainment (HE) Company. In consideration of their business characteristics, Home Entertainment Company’s digital storage (DS) business unit, Mobile Communications (MC) Company’s PC business unit and Business Solution Company’s car business unit will become independent units and report directly to the Vice Chairman.
To strengthen its existing business and develop new capabilities, the Home Appliance (HA) Company will elevate its component business with the establishment of a compressor and motor business unit. A separate healthcare business team will drive growth in this category and a separate commercial water business team will be created to drive the water business forward.
The Air Conditioning (AC) Company will take on the new name of Air Conditioning and Energy Solution (AE) Company that will take on future growth opportunities in the environment space such as solar and LED lighting

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