LG Corporation's strategic planning and strategy-in-action implementation

Strategy in Action and Contemporary Issues in Strategic Management

Overview of LG Corporation

LG Corporation's strategic planning process

Change management

The concept of strategy-in-action

The implications of strategy-in-action

Enhancement of LG's strategic capability by influencing the strategy in action

First Phase. Common understanding

Second Phase: LG's strategic intent

Third Phase .Success indicators

Fourth Phase: Supporting the strategic objective

Fifth Phase. Strong leadership

Sixth Phase. The Catalytic actions

Seventh Phase: Sustenance of momentum

Why the traditional approach will always reign over the strategy-in-action approach at LG

The Myths that surround the traditional approach

Bias of reification (reification fallacy)

Bias due to control

Bias due to linearity

Business related bias

Role of leadership and employees in strategic planning process

Conclusion

Abstract

In this paper, we develop a position paper for the purpose of enhancing LG Corporation's strategic capability by means of an effective strategy-in-action. We then evaluate the corporation's strategic planning processes and then suggest any necessary improvements with proper justifications. We then justify why strategy-in-action would not best suit LG corporation when compared to the traditional approach.

Overview of LG Corporation

LG Electronics Inc. was founded in 1958 and has its headquarters in Seoul, South Korea. The corporation produces electronics, telecommunication and chemical products and has subsidiaries; LG Electronics, LG Telecom, LG Display and LG Chem. The company operates in over eighty countries. The Corporation was founded by Koo in-Hwoi when he established Lak-Hui Chemical Industrial Corp in the year 1947. In the year, 1952, Lak-Hui (currently called LG Chem) which is pronounced "Lucky" became the pioneer Korean company to enter the business of plastics. After some time, the company expanded to form GoldStar Co., Ltd. (in 1958) which is currently referred to as LG Electronics (Tracked,2011). The GoldStar subsidiary was responsible for the production of the first radio in South Korea. In 1995, the corporation in its attempt to compete well in the global and western market got renamed to "LG" which is an abbreviated form of "Lucky Goldstar." Since 2009, the company has associated the letters LG with a catchy tagline that says "Life's good."

LG Corporation's strategic planning process

Strategy is defined as the process of determining the fundamental long-term goals as well as objectives of a given enterprise. This is coupled with the adoption of the appropriate courses of action and allocation of the necessary resources integral for realizing the stated goals (Chandler, 1962).The strategic plan that has been laid down by LG entails the adoption of a series of moves that would see the corporation being among the five best and most sort after electronics brands in Middle East and Africa. Their vision is to venture into totally new marketplaces and proceed to win the hearts of the consumers by providing them with what they need. They are focused in conquering new markets that are promising but unexplored (neglected).Such markets include Algeria, Angola and Sudan among others. Their plan is to use a new marketing strategy which replaces traditional dealers with power retailers who are increasingly commanding more market share just like for Carrefour

Change management

Change management is one of the key issues that must be handled by every company in order to remain profitable. This is through the employment of a productive workforce irrespective of the changes in organization dynamics. The process of implementing change is never an easy one. It is however necessary. The employees of a given company are usually comfortable with a particular way of doing things as it makes their job easier by repetition. This therefore means that companies such as LG must be involved in active change management processes that must be part of their strategic planning. Change management must be encapsulated in their strategy-in-action plans. The change management at LG should be carried out using Kotter's (1996) techniques. The change is to be implemented at LG using Kotter's 8-step model of change as a result of its demonstrated success.

The concept of strategy-in-action

Several organizations do have some sort of a strategy. Despite this, most of them do fail. This is as a result of the strategies being implemented improperly as a result of a missing framework. The framework of which is an architecture that is integral for the process of strategy conception up to the point when the strategy is implemented and the achievement of its sustainability. The concept of implementation as opposed to that of strategy design is not so present in the various extant strategy literatures. There is an element of dichotomy in this domain. The various articles that deal with leadership do lack strategy implementation moves. He work of Bartlet and Ghosalt (1994) have however come close to the subject of discussion. Their effort is however not on strategy implementation but is on the management of change. It is worth noting that most of the literature on effectiveness and strategy do ignore the element of human factor. An exception which is rather valiant is noted in the work of Hamel (1996) which does provide the right principles but with the lack of a process and model. What lacks in the approach used by most corporations such as LG is an approach that can be used to bridge the gap that exists between the formulation of the strategy and the implementation of the strategy. The methodology that is appropriate for bridging this gap is strategy-in-action which has been praised as the most systematic and scientific approach which helps in the formulation of comprehensive strategies.

The implications of strategy-in-action

The traditional approaches to organizational strategy are still dominant in the contemporary business environment. They are however not sufficient in the complex and dynamic global marketplace. There has been a major paradigm shift in terms of management and formulation of corporate strategies. The 21st century has seen ideological and geopolitical issues receding into the dark while issues related to humans have taken top priority. The current business leaders need to adopt a more advanced method of empowerment. This is where the concept of strategy-in-action comes in handy. Since it can be used for effective change management and the maintenance of corporate culture in order to increase productivity

Some companies however blend both aspects of traditional and traditional to organizational strategy in order to encourage systemic innovation (Innovation Point, 2004).

Enhancement of LG's strategic capability by influencing the strategy in action

The strategy in action that is to be used in influencing LG's strategy-in-action is to involve activities that influence the whole of LG's organization structure. It is to involve all the seven phases of strategy in action

Fig 1: Strategy in action pyramids

Sustenance momentum

Catalytic action

Strong leadership

Supporting the strategic objective

Indicators of sucess

Time Time

Work on strategic intent

Common understanding

Source: Zweifel and Tapas (1999)

First Phase. Common understanding

LG Corporation should strive to ensure that a shared and common understanding percolates through its organization structure. The strategy-in-action process basically commences with a group of about fifteen to twenty five leaders and thinkers who are the major stakeholders from all the relevant organizational sectors who come together in order to arrive at a shared understanding of the present situation. They too have the key elements that must be addressed by the strategy. The stakeholders should not comprise of only the top management but also the middle level management who are selected front-line individuals who may include board members, shareholders, and representatives of suppliers as well as customers. The selected group must be small enough in order to be effective and intimate while being large enough to ensure that all of the relevant views are included. It is important that the people who are often ignored by the top management be the one who attend these sessions for strategic analysis. Prior to the commencement of the initial strategic session, it is important that an elaborate background paper is drafted by and independent expert in order to maximize its objectivity. The purpose of the background paper is the establishment of main issues that are relevant to the process of establishing a common understanding. The main purpose of the first session is to serve the work of protecting the results that are obtained for the purpose of protecting business-as-usual as well reveal the elements that are missing, the opportunities and obstacles for convergence and synergy. The LG union and the management should spend a couple of weeks in the formal discussion of the existing competitive landscape and the contemporary business environment. The other thing that should be discussed is the need to have the front-line workforce to develop top notch competencies and be empowered to handle the problems. The professionalism of the workforce should be evaluated at this stage.

The most important thing in this phase is that all the participants should listen and learn a lot prior to jumping to a conclusion. The employees must also be very careful about their beliefs as well as biases. Therefore, a shared understanding is crucial and must therefore be created in a continuous basis. This is because the process of implementing strategies involves the clearing of obstacles which might result in the creation of misunderstanding. The shared understanding is crucial in order to build strength and enough confidence necessary for the implementation of strategy and to necessitate evolution.

Second Phase: LG's strategic intent

In order to remain competitive, LG has to stick to its long-term vision which should act as stabilizers to the corporation in times of uncertainty. The vision in this case refers to as a statement of the things that can be achieved by the corporation. The concept of strategic intent is very crucial to the operating of a corporation since it acts as a magnet that pulls the present corporate dynamics and activities to the future. Any given strategic intent should be formulated in a manner that the corporation's remain with a large vision that can energize the workforce at all times. The formulation of new strategic intent options can help LG in capturing new markets while remaining competitive within the uncertain economic environment since it present anew purpose to the corporation.

Third Phase .Success indicators

LG should make use of indicators of success in order to level of achievement of strategic intent. The indicators must however be chosen wisely since they are bound to heavily influence the lives of people at LG. LG Corporation should use indicators such as increasing the level of mobile telephony penetration in Africa.

Fourth Phase: Supporting the strategic objective

The fourth phase is concerned with the refining of strategic objectives. They are a major source of momentum for the corporation that does help in the provision of the missing link in order to achieve the laid down strategic intent. They do offer the corporation new and improved vantage points as well as pathways that are necessary for ensuring the gaining of competitive advantage for maximum profitability. It is important that LG Corporation treat each of the strategic objectives in order to ensure that the goals are reached. Each and every strategic objective is independent but works in synergetic manner with the rest. It is important that there clear communication within the organization structure as well as appropriate resource allocation in preparation for the realization of the strategic objective of conquering new markets in Africa and Middle East.

Fifth Phase. Strong leadership

The fifth phase of strategy-in-action that must be used in order to influence the strategic plan for LG Corporation is leadership. It is important that the establishing and empowering strong leadership takes a lot of time (Schein,1985, 1992). There are two major types of leadership. The background empowerment and the leaders. LG Corporation must ensure that it prepares itself for the changes that may occur as a result of conquering new markets. The corporation must make its workforce ready for the changes that can occur as a result of mergers and acquisitions (M&as) as it conquers new markets (Tetenbaum,1999). It has been demonstrated it several articles that M&a can have serious consequences on organizational culture. LG Corporation must be ready for establishing strong leadership and change management strategies that can counter the negative impacts to the organization culture. Kavanagh & Ashkanasy (2006) successfully investigated the positive influence of leadership as well as change management strategy on the culture of an organization and on employee acceptance of change during a merger

Sixth Phase. The Catalytic actions

The catalytic actions are responsible for altering the business environment. The acquired environment could either transform or inform the strategic processes in an organization through the provision of a rapid feedback mechanism to a certain strategy. The catalytic actions are to be responsible for taking care of the deficiencies in the existing services and programs while eliminating duplication of various efforts in order to save on corporate resources. They also create convergence with the firms' the existing initiatives.

The Myths that surround the traditional approach

There are certain myths that people do hold regarding the traditional approach to organization strategy. Most strategies do fail as a result of the managers falling prey to certain unrecognized biases and assumptions which are unexamined. These assumptions are then responsible for the filtering of critical information which results in the damaging of productivity as well as creativity that are existent in potent form in most organizations. The following roadblocks have been noted to prevent the successful implementation of organization strategy;

Bias of reification (reification fallacy)

Reification means making something concrete. There is a bias that is associated with reification of facts such as the thought that a strategy is a perfect blueprint that is complete in its prescription of a roadmap and plan for the achievement of a particular goal. The term strategy however, doesn't deserve its intended name if it is not highly adaptive and evolutionary in its deployment.

Bias due to control

Most managers and executives do believe quite often that they are fully in charge of everyone in the organization sand therefore all their wishes must be implemented. This is where they go wrong since they as the planners of the strategic process do think that the process can be controlled unilaterally using a top down approach. The best approach is usually bottom-up whereby the people at the top take time to filter out the most vital information that flows in the organization from the bottom.

Bias due to linearity

The tendency of most planners to believe that a strategy is a linear, step-by-step process is totally false. This is because strategy operates like life itself; complex, often messy and highly unpredictable. What strategy requires is careful control in out of control moments.

The hard or soft bias

There is a belief among planners that issues related to a person are soft while the ones regarding business dealings are critical. This is wrong since the planners cannot ignore the people because they are the hardest to deal with. They should therefore empower the people and then watch their progress keenly.

Business related bias

This form of bias comes into play whenever planners erroneously believe that business culture is quite unique as compared to other organization cultures. They go ahead into believing that the strategic process and logic that is used by various governments as well as Non-Government -- Organizations (NGOs) are different from the ones used by business entities. The truth however is that the vantage point is the same for all forms of strategy.

Bias due to insecurity

This form of bias results whenever the management fails to pay close attention to the ecology of the entrepreneurial relationships around them. They therefore concentrate their efforts on the internal values of the business without regard to the external forces that surround the organization.

Role of leadership and employees in strategic planning process

From the analysis of the two strategies, it becomes very clear that the strategic planning process must include all the employees of a given corporation. It is therefore important to make the strategy clear to the employees (Bradford, 2008). In order for any organization strategy to succeed, all people must be involved in order to assist the organization in achieving and sustaining a desirable level of competitive advantage. Most organization however fails to educate their people on the strategy or how to unleash their creativity. This has led the power of the people to be constrained and ignored. This factor when coupled with the lack of empowerment results in very huge losses in productivity. It is important for people to be involved in the strategic planning process. USOPM (1999) clearly outlined the need of having a human resource management process that is strategic in order to achieve alignment with the organizational mission. The source of information regarding the efficacy of empowering employees is Kanter (1979)

Conclusion

LG Corporation should embrace the traditional approach since it is stable and time tested and can therefore be used in the exploration of new markets. Once the company has fully captured its required market share in different regions of the world, then it can adopt the strategy-in-action approach.