LGE Strategic Alliances and Human Resource Management
Chaebols is defined by business structures that consist of firms operating a diverse number of industries, but the group is controlled by a dominant family. The business group accounts for a large percentage of the economy – LG Electronics (LGE) is an example of one of this corporate structure. We will discuss how LG has impacted the South Korean economy as well as outline the positive and negative characteristic of chaebols and the South Korean economy. We will identify LGE’s human resources strategy, and how they deal with diversity. I will also explain one of LGE’s strategic alliance and its global objective.
The Organization and the Purpose of Chaebols
LG Electronics was established in 1958 as GoldStar. They produced products like radios, TV’s, refrigerators, laundry units, and air conditioners. There advanced digital expertise and technological expertise has catapulted them to become one of the industry leaders in technology. LG continues to reinforce their vision of become a global leader in digital by creating innovative products and ensuring superior customer service. The company, continues to unveiled new products, new technologies that continues to reinforce their status as one of the global leaders. LGE is s the world’s second largest manufacturer of television sets with forty-five percent of sales coming from the home electronics division of the company. Twenty-two percent of sales come from the home appliances division and twenty percent of sales come from mobile communications which they are ranked as the third-largest producer of mobile phone.
LGE headquarters is located in Yeouido-dong, Seoul, South Korea. LGE’s CEO is Bon-joon Koo became Vice Chairman of LG Electronics on October 1, 2010. He was born in 1951 he is the grandson of In-hwoi Koo, the founder of the LG Group. LGE revolutionary product selection as towered them into leadership ranking and with five business units and more than one hundred operations locations worldwide, with total sales of fifty thousand two-hundred eight billion Korean Won. LG’s mission is to continue to create innovative and premium with an objective of becoming the top innovative electronics company in the world. A chaebol is a firm controlled by a family with several affiliate firms operating in different industries with no separation of ownership and management. Founder families dominate and control the business. The business accounts for a large portion of that country’s national economy. According to (Einhorn & Kim 2014) chaebol, account for 85 percent of gross domestic product, and they employ only 13 percent of the workforce. The other 87 percent of the country’s workers are self-employed or work for small and midsize companies with much slower rates of growth. The management format of this business entity is a paternalistic style in which employees are expected to be extremely loyal and devoted to the company. Chaebol businesses are an integral part of the Korean economy and the business unit and government establish a relationship that is reciprocal.
Positive and Negative Characteristics of Chaebols for Local, Global, and South Korean Economy
Chaebols are successful because they import capital into the economy which has a positive impact on the global economy. They also simulate the marketplace by creating new products and developing new product lines for the economy. They foster an environment they embraces buying and merging corporations by establishing new domestic and international market places. Chaebols tend to avoid making decision to ensure the growth and long term state of the organization. Chaebol allow for swift decision making, is usually done from a long-term perspective, because decisions are made with long term strategies in mind. Chaebols create opportunities for employees to transfer into other affiliates positions. Chaebols have a diversified portfolio and large economies of scale and large investment pool.
Negative characteristics of chaebols are that management tends to make decisions for their own benefit and all other stakeholder interests are ignored. Chaebols often hinders innovation and creativity. Heightened risk because they tend to over-invest in declining economies in which causes them to have a higher debt to equity ratio compared to other business models. Negative decisions have a larger impact on the economy. Lack of core competencies, sabotages fair competition, and chaebols creates an atmosphere for monopolies to exist. This creates a market that discourages free and fair marketplace engagement. Chaebols also tend to foster injustice, influencing of governmental officials, as well as engaging in corrupt practices. Many view chaebols as a microcosm for fraud, corruption, price-fixing and competition damaging practices.
Chaebols has resulted in significant contribution to the economy with unprecedented development for the Korean economy. Chaebols still account for larger a portion of the country’s Gross Domestic product (GDP). Chaebols have a heighten effect on the Korean economy because of their over dependence on the group revenue. If a chaebol makes a bad decision, it has a direct impact on the entire Korean economy. Korean official have tried to reduce the impact of chaebols after the financial crisis of 1997, but financial reliance on chaebols still permeates the Korean economy.
Characteristics of LGE’s Human Resources Strategy and Diversity
LGE has committed its efforts that steer global initiatives to strengthen human resources (HR) for the competitive marketplace. LG restructured the old HR strategy which consisted of members keeping controlling shares, and enacted a more worker focused vertical. Which workers and managers embraced a goal focused working environment. In 2006 LG implemented a Global HR system from Oracle, which enabled LG to intertwine HR strategies with business goals. This enabled management the ability to monitor performance against specific objectives. LG developed staffing requirements which included recruiting, changing roles, succession, education and training. These imitative created an environment the fostered improve people and performance.
Key components in the new HR process were respect and diversity. LG has over eighty-six thousand employees and fifty-eight percent are working overseas. They are all incorporating females to their diversity numbers because females now represent almost twenty-five percent of the workforces and of that percentage seventy-three percent of the female employees are employed overseas. LG is trying to transform the hiring practices, but still suffer an imbalance when analyzing the diversity at its headquarter locations. LG’s is trying to utilize its HR system gives them better insight on workforce statistics. Management personnel can review workforce numbers and supporting information, as well as employee performance levels. This HR system allows management the opportunity to make informed HR decisions, and staff employees from within by using the HR system.
LGE’s Strategic Alliance
LG and Dolby Laboratories joined forces to collaborate an alliance in which LG would incorporate Dolby’s Mobile on an LG smartphone. LG will incorporate Dolby Mobile technology into their range of LG’s smartphones. The alliance was a joint venture to improve performance on LG’s handsets. The collaboration created twenty phones with a focus on increasing the quality of audio on mobile devices. Dolby Laboroteries has seen increases all but 2013 which they saw a rapid decline in revenue – so the collaboration was successful for both parties.
Conclusion
This essay address LG as chaebol business structure, and the impact of this business structure had on the Korean economy. Chaebols promoted diversity reduced costs, economies of scale, ad large investment possibilities. Negative aspects of chaebols were initiatives hampered innovation and creativity, had a negative impact on the economy if the business mad a bad business decision, promoted corruption and hinder fair competition. The paper outlined the corporate structure, and how their HR strategy contributed to diversity. Finally I addressed a strategic alliance and the global objective.

References
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