https://www.wsj.com/articles/back-to-basics-lgs-new-flagship-phone-ditches-geeky-features-1488106983?mod=djem_jiewr_IT_domainid&mg=id-wsj
Jiahao Yang 3/8
Quantitative methods:
1. Discounted cash flow: expected cash inflow is discounted by a certain rate. So the cash flow for LG now is more important than the money in the future.
2. Real options may be sold at a good price. Because LG’s making normal phones with powerful essential functions instead of fancy techs, future sales can be predicted to be more steady.
Qualitative Methods:
1. Screening questions: for the role of customers, smartphone market is still huge. Not every customer is a geek that chase for fancy features, so going back to the origin and producing better essential smart phones may satisfied a large group of customers that only want a better phone. For the role of capability, top competitors companies like Apple and Samsung sure spend much more in R&D and have better capabilities, but LG can avoid their blades by producing the basic phones instead of phones with latest technologies, which is good for them in using their capabilities in a useful area. Project development time and cost may also decline at the same time for abandoning those fancy features.
2. The Aggregate Project Planning Framework: LG now views its phone as derivative projects with incremental improvements and variety in design features. Although there’s seems to be not much apparent changes, but small improvements that increase user experience are taking place. This kind of projects pay off the quickest, the cash flow earned then can be invested in advanced R&D for long-term strategy of the company.
When combining both methods, we can see that though LG’s ranking is just no.8 for now with a almost 8% decrease in shipments. But that’s not a big problem. There’s actually not much difference between the shipments from no.3 to no.8 on the rank. So with the new strategy now that focus on basic and essential things, LG still can boost the sales of smart phones and catch up with others.
