Cultural and Global Influence: Evaluating Organizational Effectiveness in Lg

Subject: Management
Pages: 7
Words: 1918
Reading time:
7 min
Study level: PhD

There is no secret that, for a successful operation, it is not enough to have diligent employees and efficient leadership; for a company to achieve considerable success in a certain sphere, the company’s organizational environment must be in chord with not only the rest of the affiliates and its headquarters but also the specifics of the local culture. For a multinational company, the disregard for the culture of the state in which the company affiliate is located comes at a price. Hence, for a successful work of a multinational enterprise, it is necessary to set the organizational culture in its affiliates by the specifics of the local culture and traditions. To understand the difference between the types of organizational culture within different affiliates of the same organization, it will be reasonable to consider such an example as the LG Corporation. Known all over the world, LG According to Hult et al., “Globalization trends render the task of revisiting the nature of the marketing organization within international companies an imperative” (Hult et al., 2007, 58). Therefore, the need to learn the mechanisms of corporate culture within multinational organizations appears.

Given the fact that the world-renowned LG is a Korean company, it is most logical to start the observation of its corporate values and organizational culture from the Korean headquarters. However, it is necessary to mention that the long-practiced strategy of organizational culture, which the company has been executing in Korea for the fifty years of its existence, has finally worn out its welcome. In the light of the globalization that has swept the entire world, it was most reasonable to change the existing strategy so that it would correspond to the global standards. In addition, it was necessary to take into account the existing affiliates and their policy. Finally, LG had to adjust to the fast-changing multicultural world of the XXI century. That said, it was obvious that the company needed a more flexible policy and better cooperation between its affiliates. As a result, the corporate organizational strategy has changed to a matrix structure, which allows controlling both the functions and the product at the same time. Hence, the coordination of the company’s actions is executed in a much more efficient manner, mostly because of the increasing need for smartphones production in Korea:

In Korea and Japan, where broadband Internet access is widely available throughout the country, mass demand for smartphones has only begun to appear. In the case of Europe and the US, however, broadband Internet access is not as widespread as in Korea or Japan; this drove the need for devices with highly functional mobile Internet access in these markets. (Park, Lee, Suh & Sim, 2012)

According to the recent news, there has been a huge reorganization in the Korean company affiliate. As the existing sources claim, the Korean department is going to take a different, more integrated approach, incorporating the elements of a multinational corporate structure and the traditional Korean approach. Thus, the new approaches are going to be tested with traditional values remaining intact. It is important to mention that the given step is rather bold for the Korean division since the Korean culture presupposes that the traditional is always prior to the innovative.

However, while the Korean division of the LG feels quite uncertain in the world market, its affiliates in Europe and the USA have already been established in the existing world scene, structuring their mini-organizations according to the target market, the market environment and the business culture of the state. To start with, the European division of LG has a lot to be said about. It is quite impressive that a Korean company that has always considered its traditional corporate values the key to its instant success has recently decided to change its policy towards organizational effectiveness improvement. As Yang, Yoon, Lee & Kim explain, at present, the LG corporation tries to break new grounds in most European countries, such as France: “LGE concentrated promotion efforts on Chocolate Phone and the Cyon black label series, a strategy consistent with the European market that traditionally values design” (Yang, Yoon, Lee & Kim, 2009, 39). It seems that the Korean department of the LG Company has hit the chord with its European affiliates and has finally reached its harmony. The given situation stands in sharp contrast to the previously observed one. After surviving the crisis of ideas, the Korean managers in the LG Corporation realized that LG needed to take the directions other than the timeless classics of a strategy that is used to follow. Therefore, it seems that the case of LG is a very peculiar and rather non-typical for a company of such scale, since the innovations in the company organizational structure development came from outside of the firm, but not from its exact headquarters. However, when it comes to analyzing the negative aspects of the change that LG underwent, one must admit that the change was made not because the managerial realized that progress was inevitable, but rather because the existing strategy prevented from promoting a new line of mobile phones. Therefore, these were the obstacles in the way of the promotion campaign that made the LG Corporation members change their organizational structure towards a more flexible “matrix structure” (Shirreff, 2011).

However, France was not the only country that managed to offer an innovative approach towards the LG organizational structure and introduce a completely new way of improving organizational efficiency. At the given point, one can observe the tendency for the LG Corporation to take the European course for its further development. Partially, the given tendency can be explained by the fact that the course that the English affiliate of the company has taken is rather innovative. The company must seem to have started following the matrix structure as well as its French counterpart. As the existing evidence claims, the British affiliate of the LG Corporation has started paying closer attention not only to the current trends in technology, but also to the public that buys the new gadgets, therefore, analyzing the target market and understanding better what the next surge of demand might concern. At the same time, the company seems to have started exercising the development of a specific marketing mix, which shows that the organizational structure, which the company is currently trying to build, can be described as functional (Shirreff, 2011): “As part of its events portfolio, the electronics firm organizes activities ranging from roadshows and retail training programs to press events and exhibitions. To help achieve these aims, the company works with key agencies including Salt Events and Billington Cartmell” (Benneth, 2008, iii). However, the given case of the British affiliate influencing the entire chain can become the pivoting point in the history of the company’s development. While at present, the British department of LG Electronics is mostly preoccupied with the technological aspect of the changes, the shift from a functional to a matrix company organization will likely affect the company’s organizational structure on the level of intercompany relationships. Indeed, at present, the UK LG department is concerned with the technology issues: “Conformance testing is fundamental in leading-edge technologies, such as LTE, because it ensures that new handsets and data cards deliver both the applications and services anticipated by the end-user and the ability to work seamlessly with existing users and networks” (Pleet, 2009). It is clear, though, that the company is also broadening its horizons and trying to establish an efficient organizational structure, opening new opportunities for intercultural relationships for the members of the corporation: “This partnership is essential in highlighting our ongoing investment in building awareness of the LG brand. Powerboat F1 is one of the fastest-growing international sports and complements LG’s own philosophy of providing exciting, high-end, design-led technology” (Benneth, 2008).

However, to get the full picture of what is going on within the realm of the LG Corporation, one will also have to consider the Indian Department. Located in an Asian country, it also offers a unique perspective of what a corporate structure is supposed to be and in what manner its strategy must be implemented. The existing sources claim that the Indian department of LG Electronics conducts a slightly different policy than the rest of the LG affiliates. However, it seems that the Indian department of the LG Corporation is rather functional than the matrix. Aimed at solely promoting the gadgets developed by the LG Corporation, the affiliate does not pursue any other goals like bringing the company together or making it more authentic. It seems that the Indian LG department does not need any specific measures to keep their department unique and authentic; on the contrary, the company needs more interaction with Europe, Asia, and America, which the company strategy should be aimed at. In fact, LG India does manage to stay in touch with the innovations developed in the rest of the world. It was obvious that the attempt to win the hearts of the Indian audience signified the dominance over the Asian technology market in general. Moreover, instead of team-building exercises that are quite popular in the LG departments in the other countries, in India, the relationships between the company staff and the managerial are less flexible. Moreover, the Indian LG department seems to be much more devoted to its national working resources. As Saegal-Horn & Faulkner explain, “Local employees staffed most of the top management positions […] There were only a handful of South Koreans at the top, and most of them were in research functions” (Saegal-Horn & Faulkner, 2012, 367). The above-mentioned allows suggesting that in India, the LG Company uses the Hierarchy-community phenotype model of organizational structure (Park, Lee, Suh & Sim, 2012). According to the latter, the given model presupposes that a company follows a very strict and inflexible organizational structure in which promotion or a shift in responsibilities is quite unlikely. The given system stands in a striking contrast compared to the rest of the structures mentioned above, mostly because of the lack of flexibility and the focus on the product rather than on the company members. At the given stage of development, the only recommendation that can be given to the Indian department of the LG Corporation is to introduce a more flexible policy, since the current one can make employees less initiative and, therefore, impact the company development negatively.

Judging by the state of affairs within the affiliates of the LG Company, one must admit that organizational effectiveness depends heavily on the specifics of the organizational environments. After the change of the environment and the cultural specifics, the company can easily lose its integrity and cultural values, as well as a considerable amount of its clientele. However, it is also necessary to keep in mind that, due to the cultural peculiarities of a certain nation, one cannot run a company in Asia the same way (s)he runs it in the USA. Therefore, certain compromises have to be made for the sake of keeping the corporate values intact and at the same time taking into account the cultural specifics. As McCann put it, “Two critically important emerging qualities or dimensions of effectiveness – organizational agility and organizational resiliency – are defined and explored in terms of their implications for HR professionals” (McCann, 2008, 42). Translating their corporate values in the most accessible way for the target audience in all the countries in which the company operates, LG managed to develop a strategy that has been keeping the company afloat for several decades running.


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