LG Electronics hired several expatriate managers from Western countries like Ireland and Switzerland to help globalize its operations and bring new skills and perspectives. However, the experiment failed after 3 years as the expatriate managers struggled to integrate into LG's strong Korean culture and Confucian values. Their approaches did not materialize the expected revenue surge. LG's culture emphasizes collective harmony, respect for authority, and relationship-building over individual goals, making it difficult for outsiders to operate effectively. The failure demonstrates the importance of cultural fit and developing global competencies when utilizing expatriate managers.

1. Impact of LG Expatriate Managers
By
Shashank S H,
Prasidha & Sachin
1

2. BEFORE WE START
I. Who are Expatriates?
2
E. Cohen (1977) defines Expatriate Manager as someone managing
others ( including host country nationals ) on assignment in a foreign
country for a period of at least 6 months
II. Why does a company need Expatriates?
• Needed by companies expanding to new markets
(market share, Business performance etc.)
• Help Transfer Knowledge ,Skills & Technology
• To fill temporary shortages
• To create the “corporate glue” that binds an international
organisation together

3. CASESTUDY
3

4. OBJECTIVE
I. Rapid buildup and rapid termination of Expats
at LG.
II. Gain and lose of LG through their 3 years of
experimentation.
III. Study the Impact of Expats at LG.
IV. Lesson’s learnt from LG experience.
4

5. FLASHBACK
• Started in the year 1947 as ‘Lucky Goldstar’ in
South Korea.
• Grew under Confucian Culture.
• In the year 2007, Mr.Nam Yong took over as
the CEO of LG electronics.
• 60% of its manufacturing done outside Korea
and 4/5th of its revenue came from overseas.
• Ranked 5th globally and had market share of
6.8%.
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6. • Mr.Nam Yong wanted to bring LG to #1
position and to be the trendsetter in the
market.
• To pool in new talents and expertise across
the globe with different cultural background.
• To study the culture of different countries
and prepare a strategy to approach niche
markets.
REQUIREMENT OF EXPATS
6

7. • Dermot Boden - (Irish), CMO of LG electronics
- decided to give more sophisticated image,
( with high-end products such as cellphone co-branded with fashion house
PRADA and washing machine costing over $1500 or more )
- had organized approach & hired a single advertising agency in London
• Tom Linton – Chief Procurement Officer
- Reshaped the purchasing system, that save the company hundreds of
millions of dollars.
• Didier Chenneveau (Swiss) – Chief Supply Chain Officer
- Streamlined the Supply Chain that was quite chaotic.
- His Goal was to merge everything into a single global system
EFFECTS OF EXPATS
7

8. 8
Reasons
• Korean Culture
• Confucianism
• Geert Hofstede’s model of national culture
• Culture Shock
• Expected surge did not materialise (Revenue)
Termination of Expats

9. Korean Confucian Culture
• Confucianism also known as Ruism is an Ethical Philosophical
system developed from the teachings of the Chinese Philosopher
Confucius
• Korean Confucianism derived from the Chinese and probably
more influenced by it than the Chinese in way they do
business.
• Emphasis on :
1. Value of Collective Group Harmony
2. Respect for authority &
3. The all important nature of Networking and Relationships
" Make friends first and Client second"
• Though this precisely what is required in Global Business ,
Koreans find it hard to practice the same values in a Multi-
Cultural environment within their organizations as seen in this
case. 9

10. LG Management Philosophy
“Jeong-do Management”
• LG company follows the “Jeong-do
Management” derived from
Confucianism that emphasises on
- people oriented management
- constantly developing their
business skills & exploring new
business practices
However studies have shown & as seen in this case
Koreans are poor at cultural Integration particularly when it comes to
incorporating westerners in their corporate hierarchies (Weisbart, 2010)
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11. Cultural Dimensions
Geert Hofstede’s Model of National Culture
• High Power Distance
• Strict stratification as a norm
• Employees rely on instructions
from superiors
• Status Mixing is not
Encouraged
• Collectivism
• Difficulty in speaking to the boss
• Songsil- Sacrifice personal
interest
• Group Bonding- over look
mistakes
• Uncertainty Avoidance
• Inquisitive about personal life
• New ideas and Innovations
need time
• “Subtle and effective negotiator”
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12. 12
Cultural Dimensions
• Long Term Orientation
• Decisions and Negotiations
take Longer Time
• Strategies - Long Term Profit
and Growth
• Establishing a Relationship
prior to Conducting Business
• Nurturing Orientation
• Ethnocentric approach
• Expressing ones Real
Feeling is Not Encouraged

13. DHR International Seoul, Special Survey on Diversity in Korea, July 2013.
Results of Survey carried on Expats in Korea
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14. 14
Expected Surge Did Not Materialise
Total Worldwide Revenue of LG Electronics from 2009 to 2014
(in billion U.S. dollars)*
http://www.statista.com/statistics/220847/revenues-of-lg-electronics-since-2005/

15. 15
What would have LG probably lost during
& after 3 Yrs Experience with Expats ?
DURING
AFTER
• Culture Devastation
• Conflicts
• Teams Disruption
• The Secret is out
• Negative Impression
• Loss of Competitive Advantage

16. Lessons Learnt from LG Experience for Other Mangers
Managerial Implications
1.) Why do to think LG did not renew the contract of Expats & pursued a different
executive strategy using Korean executives or Why did the Experiment Fail ?
2.) What Skills do you believe Managers need to develop before entering into expatriate
experience?
3.) What do you think, LG - the company and the expatriate managers could have done
differently to enhance the likelihood of being successful in this venture ?
Result of “Global Management Myopia” – Global, Regional & Technological
Build “Multicultural” or Global Competencies or the ability to ADAPT
The DMIS & MBI Model – To Achieve Higher Performance
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17. Global Management Myopia
• Global Myopia - EXPATS like Boden ( Irish ) & Didier (Swiss) tried to impose Globally
accepted norms that they felt would improve business. Lost sight of local challenges &
opportunities upon which LG Company’s success was built
• Regional Myopia - “Ethnocentrism" a belief that one's culture is superior. Koreans felt their
management practices were superior losing sight of bigger opportunities facing the firm
globally
• Technological Myopia – Mangers also run the risk of getting carried away with advanced
technology - overlook, ignore & often offend the organizations most precious resource – “It’s
People”
Eliminating this Short sightedness can improve the efficacy of Mangers
entering into a Expatriate Experience
“Short Sightedness" - LG Expats as well as the Korean
counterparts failed to see one or more aspects of the
company’s larger objectives
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18. Developing the Right Skills
• Expatriate Mangers need to develop the right competence and Understand what works
• What differentiates Effective Global Managers is a not as much their managerial skills
alone but a Combination of Managerial + Multicultural competence
Managerial
Competence
Planning,
organizing,
coordinating,
controlling
Multicultural
Competence
Understanding
and working
effectively across
cultures
Global
Management
Skills
Integration and
application of
management and
cross-cultural
skills
.
Multicultural Competence – (“Cultural Intelligence” or “Global Mindset”)
• Multicultural component is more than just being polite or empathetic to people from other
cultures - it’s getting things done through people by capitalizing on cultural diversity
• The Effective Cross-Cultural Manager, needs to have an open-minded and active
learning approach to engage with the other cultures & break any Communication
Barrier that exists
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19. Multicultural Competence
Cognitive
Motivational
Behavioural
• Ability to motivate self &
people across cultures - Efficacy,
Perseverance. Goals & Effort
• Ability understand values,
beliefs, patterns & Harness it
into a team effort to achieve
the Overall GOAL
• How a Person understands &
acts in the world - Brain based
skills to carry out tasks
• Procedural Knowledge & Meta
Strategies
• People who are Cognitively
Strong are effective Risks Takers
& Inspires others Creativity
Facets Of Cultural Intelligence – (Earley,2002)
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20. Make ethical decisions
Span
Boundaries
Build community
through change
Mindful
communication
Creating and building
trust
Interpersonal skills
Attitudes and Orientations
Global Mindset
Cognitive complexity Cosmopolitanism
Integrity Humility Inquisitiveness Hardiness
Threshold traits
System
skills
Foundation Global knowledge
Level 1:
Traits
Level 2:
Attitudes &
Orientations
Level 3:
Interpersonal skills
Level 4: Systems skills
Building Blocks of Global Competencies
(Bird & Osland, 2004)
Provide a Picture of How
combination of the Skills,
Attitudes & traits helps in
Cross Cultural
Management
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21. MAP
Understand the
Differences
- Cultural Orientations
Framework
BRIDGE
Communicate across
the Differences
- Prepare
- Decenter
- Recenter
INTEGRATE
Manage the
Differences
- Build Participation
- Resolve Conflicts
- Build on Ideas
Value &
Utilise the
Differences to
achieve High
Performance
DMIS & MBI Model – To Achieve Higher Performance
Experience of Difference
Denial Defense Minimisation Acceptance Adaptation Integration
Ethnocentric Stages Ethnorelative Stages
Bennett’s DMIS (Development Model of Inter Cultural Sensitivity)
MBI Model - From Lane, Distefano & Maznevski (2000)
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22. What would you Recommend ?
(ii) Right Selection Criteria - Choosing the Right
candidates having the Knowledge and Experience
as well as the Right Competencies and Skill Set
( for example Korean American or Korean
Europeans to start out with, then bring in needed
expertise )
(iii) Invest in Extensive Cross Cultural &
Language Training
Investment made in trying to learn why things
happen the way they do eventually pays
dividends.
Education and Cross Cultural training prior to
taking up an expatriate post would prevent
bottlenecks & speed up the process. Also lead to
Competitive Advantage
(i) Identifying the Right type of
Orientation
A Geocentric Approach or Regiocentric
Approach ?
Global view / orientation that is applied
across the globe might not be best
approach as seen in this case where a
more “Regio-centric approach (if
operations are in Korea) and Polycentric
Approach in subsidiary units spread
across the globe
To LG the Company
To Mangers entering into Expatriate
Experience
• Build Global Competencies – Global Knowledge, Right Attitude & Orientations (Global
Mindset), Cross Cultural Interpersonal Skills & Systems Skills
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23. Lessons Learnt from LG Experience for Other Mangers
What are the
Ethical Implications ?
 When two or more cultures meet to conduct business it is Imperative
that each representative needs to be well informed about the social
mores, folkways and values of the business partner prior to any face-
to-face meeting
 Inability to Adapt or Adjust can result in cultural conflicts which have
devastating effects on the company and its performance as seen in this case
 Koreans as well as the Westerners should respect & understand each other
values & beliefs & work cohesively to achieve the overall objectives
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24. Conclusion
• The Korean Business Culture are at significant crossroads with a great need to find
the Right Balance between Traditional Values and Modern Management practice.
• Role of an expatriate is to maintain the organizational structure and philosophy of
the MNC however they need to follow the rules and regulations of work within the
host country.
• Global business leaders need to have Global Mindset or Cultural Intelligence.
• Managers who can cohesively work and adapt to cross cultural environments is
valuable asset to a company that is expanding globally.
• Need to have a Holistic view of Cross Cultural Management Performance
Understanding , Managing & Exploiting the Cultural Differences could
spell the difference between Success and Failure of a Global Businesses24

25. Group Discussion Feedback
Please jot down bullet points for the
Discussion Questions & Hand it over
THANK YOU !! 25

26. 26
Findings - Group Discussion

27. References
• Richard M.Steers, Luciara Nardon, Carlos J.Sanchez-Runde (2013). Management
Across Cultures, Developing Global Competencies, Cambridge University Press
• Earley, P. C. (2002). A Theory of Cultural Intelligence in Organisations. Research in
Organizational Behavior. B. M. Staw and R. Kramer. Greenwich, CT, JAI Press. 24:
271-299.
• Bird, A. and J. S. Osland (2004). Global Competencies: An Introduction. The Blackwell
Handbook of Global Management: A Guide to Managing Complexity. H. W. Lane, M. L.
Mazneveski, M. E. Mendenhall and J. McNett. Malden, MA, Blackwell: 57-80.
• Evan Sinar, Ph.D. (2013). Cognitive Skills in Senior Leaders : Focused Influence Critical
Consequences. White Paper, DDI - Development Dimension International
• Lane,H.W.,DeStefano,J.J.,&Mazneveski,M.L. (2000). International Management
Behavior 4th Edition Oxford : Blackwell
• Bennett, M.J.,(1986). Towards Ethnorelativism: A Development Model of Intercultural
Sensitivity. In R.M. Paige (Ed.), Cross – cultural Orientation: New Conceptualisations
and Applications (pp 27-69) New York: University Press of America.
• Camille Percheron, (2013), Special Survey on Diversity in Korea, DHR International,
Seoul
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