LG Chairman Looks for Bold Action

South Korea'’s LG Group chairman Koo Bon-moo is taking bold action. Responding to a dip in group profits, the chairman will push for the new cash-generating businesses.

Korea Times reported that to improve its bottom line for the remainder of the year, the head of Korea's third largest conglomerate held a series of strategy meetings with the top executives of LG subsidiaries.

WHY?

First, at LG there has been a sense of urgency to seek out the next big thing following the offshoot of GS last year.

"A concern over a lack of new cash cows started because GS took away the existing cash cows, such as its oil refinery and retail businesses,"” a Korean market analyst notes.

GS Group is now an independent business giant with 13 subsidiaries, including GS Caltex Oil, GS Mart, GS Home Shopping and GS Engineering & Construction.

Second, LG'’s flagship businesses in electronics and chemicals face a battle against rising global competition.

In particular, the cell-phone business division of the company, which had taken cash-generating role, posted a $4 million deficit in operating profits. In addition, other core businesses are offering bonds to raise capital and boost profits.

On the positive side LG has adopted the "“Blue Ocean" strategy, which puts focus on business opportunities in uncontested market spaces with rising global competition in existing markets.

Finally, in Korea, it is not unusual for a group chairman to raise concerns over the future of his group. This puts everyone on notice and in turn rallies affiliates to devote themselves seeking future growth.