Why Did Jo Joo-wan, President of LG Electronics, Hold the Vision Declaration Ceremony?

Chairman Koo Kwang-mo Reflects Commitment to Innovation
Accelerating Structural Reforms in Other Key Affiliates as Well

On the 12th, Jo Joo-wan, President of LG Electronics, announced a new vision and a major shift in the business portfolio under the theme of a "Smart Life Solution Company," which is interpreted as reflecting the will of Koo Kwang-mo, Chairman of LG Group. Starting with LG Electronics, other key affiliates are also expected to accelerate their efforts to improve their organizational structure.

At the press conference that day, President Jo explained the background of holding the vision declaration ceremony, saying, "A month ago, we reached a consensus on the mid- to long-term strategy with the holding company. Although we have been discussing the mid- to long-term strategy with the holding company, we have not been able to communicate it through such an occasion. I thought it was necessary to share detailed and important parts from the perspective of where and how to win with the mindset of 'changing even what cannot be changed.' I also thought it was necessary to share the strategy with customers and the public and show our determination to achieve this strategy."

This means that the content of LG Electronics' organizational change was reported at the "First Half Strategy Report Meeting" held in May under the chairmanship of Chairman Koo Kwang-mo. The strategy report meeting is a forum to review the mid- to long-term strategic directions of major LG Group affiliates or business divisions and discuss future growth engines at the group level. At that time, Chairman Koo reportedly ordered, "We must fundamentally enhance competitiveness through change."

Koo Kwang-mo, Chairman of LG Group. [Photo by LG]

Thus, the vision declaration ceremony of LG Electronics is significant in that Chairman Koo, who has been promoting qualitative growth through 'selection and concentration,' publicly demonstrated his commitment to innovation.

In recent years, LG Electronics has focused on restructuring underperforming businesses. In 2021, it boldly exited the "perennial deficit" mobile phone business, and in June last year, it completely wound down the solar panel business within the BS Business Division. During this process, voluntary retirement was implemented again this year following last year, based on the management's judgment, including President Jo, that finding a breakthrough was difficult amid ongoing profitability deterioration.

Since his appointment as CEO of LG Electronics at the end of 2021, President Jo Joo-wan has focused on adjusting the business portfolio with an emphasis on profitability. In particular, since October last year, he has operated a war room task force and succeeded in improving performance and organizational structure. This was to secure an appropriate level of profit and promote sustainable growth despite prolonged economic uncertainties.

These efforts have greatly contributed to LG Electronics' strong performance. In the second quarter, LG Electronics recorded sales of 19.9988 trillion KRW and operating profit of 892.7 billion KRW. The sales figure was the highest ever for a second quarter, and the operating profit was the second highest. Based on the first half, sales ranked second and operating profit third in the company's history. LG Electronics posted sales of 40.4147 trillion KRW and operating profit of 2.3901 trillion KRW in the first half of this year. Sales exceeded 40 trillion KRW for two consecutive years, and operating profit surpassed 2 trillion KRW for three consecutive years. This is a visible result of efforts to fundamentally improve the business structure despite the global demand downturn.

President Jo aims to grow LG Electronics into a 100 trillion KRW company by 2030, leveraging three major growth engines. He emphasized, "The market in the second half of this year does not seem as favorable as the first half, but unlike home appliances, which have been the core of existing businesses, intangible businesses, B2B, and automotive electronics, which are becoming new momentum, are expected to continue growing. Please watch how LG Electronics will make a quantum leap based on the three major growth engines at this clear turning point."

A full-scale "reshuffling" is also expected to begin, centered on major LG Group affiliates. LG Chem plans to accelerate the replacement of its core business from petrochemicals to three new businesses (batteries, eco-friendly materials, and new drugs). It has also started asset sales and workforce reallocation due to business restructuring. No Guk-rae, head of LG Chem's Petrochemical Business Division, recently sent an email to employees emphasizing, "We will proactively carry out structural reforms for marginal businesses."

Chairman Koo Kwang-mo is also sparing no investment in future growth businesses such as ABC (Artificial Intelligence, Bio, Clean Tech), committing 54 trillion KRW over five years domestically. The group's sales, which were 138 trillion KRW in 2019, the first year of Chairman Koo's tenure, are expected to exceed 200 trillion KRW this year.

This content was produced with the assistance of AI translation services.