LG and Flexibility Strategy (Ch 8)

Strategic Flexibility

The strategic flexibility of a firm is its capability to adapt to changes in the external environment. The organization has to identify major changes in the environment, quickly change commitment of resources to new courses of action to counter the change, and to identify markers in order to restore to previous commitments when the external environment is back to the initial state.(Source)

One of the ways a firm can organize for flexibility is to enter into strategic alliances with other firms. This allows for more flexibility than would exist if the firm had to buy another firm, or commit to a large purchase. The strategic alliance allows the firms to execute against an agreed strategy if - at the time - it is mutually beneficial.

Here are results of a few selected strategic alliances that LG has engaged in:

Designer Smartphone with Prada:

 "LG Electronics worked together with the world famous luxury brand company PRADA
and signed an exclusive deal for cooperative marketing. The luxury brand "PRADA
Phone" was the result of the combined efforts of LG Electronics' advanced technology
the classic, luxurious design of PRADA. In addition, both companies agreed to cooper-
ate in more general areas such as manufacturing, advertising, and marketing."

 Technology-Enabled Solutions for HVAC Systems with Siemens

"LG Electronics and SIEMENS signed an MOU on joint development to build a technological and marketing partnership, and are collaborating to develop standard control solutions for commercial air conditioners."

Enhanced Audio for Smart Devices with Mark Levinson Audio System

 "LG Electronics and MLAS (Mark Levinson Audio System) are collaborating on a variety of products including music phones, home theater systems, and LCD TVs. Tuned by Mark Levinson, an audio master, these products feature superior balance of low, middle, and high sounds. The listeners will feel as if they are right in the middle of the venue where the music is being played."