LG Mobiles

SWOT & PESTLE ANALYSIS

16f8072
ABDUL KAREEM16F-8072
ADEEL TAHIR16F-8227
RIDA IFTIKHAR16F-8141
M. ZEESHAN TANVEER16F-8290
M. UMAIR DASTAGIR16F-8292
 PESTLE/PESTEL ANALYSIS

LG mobile phone industry is a South Korean Multinational company with its headquarters in
Seoul and a part of the LG group. It is a leading global brand in consumer electronics, home
appliances and mobile communications. Since they are global leaders, they have to deal with
several risks and challenges while operating in foreign countries.
Some of the challenges that LG can come across in Pakistani Market are described through
the following forces of pestle analysis.

Political Factors:
Currently Pakistan is a politically unstable country. Changing policies in every (new)
government’s tenure can damage the long term plans of International Companies like LG
which is the actual problem faced in all businesses.
The tax duty on the import of smart phone is more than Rs.1500 for one phone and it
increases a little every year that can also cause some problems for International Company to
adjust in the market of Pakistan.
Political relationships and trade pacts between nations also have a major influence on
international businesses. It is easier for LG to conduct its business in countries with which
South Korea has friendly relations or a trade agreement. In this way, the political factors can
have a deep impact on the profitability of international brands like LG.

Political disruption in these countries can disrupt the supply chain and operations of the
companies in this market. Moreover, for an international company like LG, the geopolitical
changes and other threats like terrorism also pose big risks.

Pakistan has witnessed a spectacular rise in mobile industry over the past few years,
especially after the introduction of 3G/4G, the mobile industry has become even more
promising. Unfortunately, with these developments in the market growth, parallel import or
grey market of cell phones has also been observed and its numbers are increasing too. Parallel
import or Grey product is defined as; “A non-counterfeit product imported from another
country without the permission of the intellectual property owner”. Grey products are
cheaper than as compared to the regular products because they are non-tax and non-duty paid.
That can also be a big threat for any International Brand in Pakistan.

Political stability remains fragile in Pakistan. The current government is ridden by corruption
scandals, a fragmented political scene, security issues, and uneasy relations with neighboring
countries (e.g. India, Afghanistan). That’s another serious threat for an International brand
like LG to conquer and operate in the market of Pakistan.

Economical Factors:
Pakistan usually have a price sensitive market so the proportion of low cost smart phones
continues to grow. People here mostly lie in middle class and lower class. So they don’t
prefer expensive phones. They will for sure prefer mid-range phones rather than high-range
phones. They will go for those smartphones which will give them, most features with low

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price. Just like Q-Mobile, that’s why they have the leading market share in Pakistan. So LG
has to look at these facts too. LG will have to target these people too in order to establish and
stable themselves in the markets of Pakistan. 60% of Pakistanis use more than 1 phone so
Dual sim phones like Q-Mobile, Samsung, Vivo etc. are more preferable. 35% of the
smartphone users in Pakistan carries a low cost phone with them for safety reasons So LG
must consider this point too while launching any phone in Pakistan.

Sociological Factors:
With the rapid increase in the technology, consumers are demanding more features from the
companies to provide them with innovative features to satisfy their desire of attaining social
status. LG mobile phone industry is doing the same.
LG has not been introduced locally in Pakistani market and people are more comfortable in
working with local brands as they are easily accessible within the country. With LG
introduced locally in Pakistan, people can be provided with its accessories in a convenient
manner with low prices since people of Pakistan demand low cost mobiles with all the
experience of an expensive mobile.
Aggressive marketing approach is adopted by companies to expand into new markets and to
stimulate new opportunities. Unfortunately, no active programs are arranged by LG to
establish their brand in the markets of Pakistan. This is the reason that the company is not
offering a complete range of products in its first brand shop in Lahore, as it does globally.
Now a days companies use extensive TV Ads to make people aware of their products. Q-
Mobile, Huawei, Samsung and other brands are continuously using extensive TV Ads to
spread awareness among people about their upcoming new smartphones. Unfortunately, LG
has badly failed in this regard. Hiring Celebrities as their Brand Ambassadors is another way
of capturing market and making people aware of the company’s product. Unfortunately, they
didn’t opt for a Brand Ambassador. By hiring a brand ambassador, it would become easier to
target the ambassador’s followers.
The company is not offering a complete range of products at its first brand shop in Lahore,
as it does globally.
The newly emerging brands such as Xiaomi, Vivo, Infinix, and OPPO are offering
smartphones with great specs at more affordable prices to customers in Pakistan. So LG have
to come up with innovative features to attract its target market.
Famous mobile brands such as Samsung, Apple, Q-Mobile, Huawei have a strong place in
Pakistani market due to one particular feature which distinguishes it from the rest e.g. with
the increasing selfie trends, OPPO has introduced OPPO F1 selfie expert with 8MP front
camera.

Technological:
In 21st century no company can succeed without technological innovation. Other than all the
aspects of business, technology is exceptionally important for the companies to remain
competitive. These days, technological changes are occurring at Fast pace. New technology
arrives and it replaces the old ones. Every Brand is in a race to leave behind its competitors
technologically. LG has to invest a lot in innovation to compete its competitors. LG has to

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make extensive use of technology not only to attract customers in Pakistan but also to
establish itself in Pakistan.
Technological innovation has become important for business success in the 21st century.
From marketing and sales to customer service and all the aspects of business, technology has
become indispensable if a business wants to remain competitive. Technological changes are
occurring at a fast pace. New technologies come and make the old ones obsolete. Every brand
is in a race to keep ahead of the competitors technologically. LG has also invested in
innovation and therefore is ahead of several others on several fronts. Its flat panel televisions
have been a hit. Apart from technological innovation and quality, the brand has also been
able to offer its customers great products at affordable prices. Technology has become an
important determinant of profitability and competitiveness and apart from operations, in the
area of marketing too, LG has made extensive use of technology to reach its customers and
followers.

Legal:
One of the most prominent factor which is affecting LG legally in Pakistan is that LG
mobiles are not launched in Pakistan. So local dealers which are not authorize with the PTA
(Preferential Trade Agreement) bring LG phones through grey trading (Grey Markets) which
make them avoid taxes and allow them to sell LG phones on cheaper rates. But to maximize
their profit they replace the original parts of phone with the replica or some kind of cheaper
version of them so that they can double the profit by lowering the price and increasing cost to
profit margin. This damages the LG image at big time when user don’t get what he is paying
for. If the government lower the taxes a bit and revisit their polices then may be the dealer
will pay of the taxes and bring the authorized variant of phones.

Environmental:
A poor business environment and a difficult political landscape might deter investors. The
World Bank’s Doing Business 2016 survey ranks Pakistan 138th out of 189 economies. The
country’s specific weaknesses include the tax environment, contract enforcement, and
adequate power supply. LG can have to face these challenges too.

Brand image and brand equity depends upon sustainability. Sustainability and sustainable
growth are the factors which leads to faster growth and a better image of the brands.
Its competitors like Apple, Samsung are continuously investing in environment and
environmental awareness where they are focusing to improve the environment as well as to
provide the maximum benefits to the community. LG is lacking behind in this aspect. LG has
to consider these factors in order to compete with these big market vendors.
LG has to invest in environment and environmental awareness as a part of its sustainability
and CSR program. In Pakistan, none other company has made people aware about
environment so LG can grab this opportunity to establish itself with a better image.

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