Competitive Advantages of Lego Plc as It Appears on the Strategy Clock - Essay Example

In a basic similarity with Porter's Strategies, the competitive advantage is considered in view of the advantage based on costs or the advantage based on the differentiation (Hooley, Saunders and Piercy, 2004). The Bowman’s Strategy Clock is used in defining the eight possible types of strategies, which are based on the coordinates of price and the value being added (Perceived). The shape of the strategy model is like a star and gives an overall appearance of a clock.

There are six different types of options that can be taken by any company-

 The Value \ The Price

Price at a low level

Price at a medium level

Price at a high level

A high amount of value addition.

Hybrid strategy.
The base is generally low cost, and the investment is based on the strategy of low pricing as well as differentiation.

Differentiation
The value is added at a better level by the user.

The differentiation is focused on nature.
The value perceived attains a higher level.

The value addition is at a medium level.

Cost leader

This strategy is the middle one, with the value and price being at the optimum level.

The price is raised to higher values. This may lead to the loss of market to other players.

The value addition is low.

It is specific to the segment.

The price is high and the value is low. The market may be lost, if not in a position of monopoly.

Based on the analysis from Bowman’s Strategy Clock, the position of the company is analyzed. This has been found out be as follows-
Position 4(Differentiation)

 The company has been playing the game of differentiation. It has set up a number of steps to make itself superior to its competitors. It can be seen from the huge spending being done by the company as a part of its plan for expansion. It has been spending over a hundred million sterling pounds on a yearly basis, on different projects. Lego has been diversifying with the building of theme parks in Denmark, it also the Lego bricks. In addition to this, theme parks have come up in other parts of the world like the UK (United Kingdom) and the USA. These have added to the brand value of the company as well as the visibility, attracting over 1.5 million people annually. The company has been trying to differentiate itself from the other players. The building of theme parks is an exercise of branding, which would set itself separate from other competitors (Johnson,s Scholes, and Whittington, 2008).  So, it is being done so that the company becomes a symbol of quality. The customers would associate the brand (Lego), with a better sense of quality.

This is the analysis of the company in terms of Bowman’s Strategy Clock.
DIRECTION OF STRATEGIC DEVELOPMENT

 The decisions regarding corporate growth are centered on the methodologies through which the organization can play a part in the promotion and sustenance of an existent competitive advantage. There is a need for the expansion and growth of the companies, which leads to the adoption of different strategies in an organization (Lynch, 2009). The cardinal options available to an organization include the option of penetration into an existing market, the development of the market, the development of the products, and complete diversification.

After studying Lego Plc, the following conclusions can be drawn regarding the directions of strategic development. They are as follows-

MARKET DEVELOPMENT

Lego has been following the strategy of market development. It has entered a number of new markets like Denmark, by building new theme parks.  They have put an existing service into a new geographical region, the different dimensions of the product have been showcased and the distribution has happened through a number of newer channels. The major goals being accomplished by the company include the attraction of a newer segment of customers and the usage of a different kind of strategy for the consumption of an existent product or service. The risks associated with the market are also moderate in nature.
DIVERSIFICATION

The company has also been using the strategy of diversification. Lego has been setting up theme parks in different countries like Denmark, the USA (United States of America), and the UK (United Kingdom). It can be seen as a forward form of diversification, where the company is offering a new range of services. It is also offering a renewed service to the consumers.

This is the analysis of the company in terms of the direction of strategic development.
CONCLUSION

The analysis of the company has been done in terms of Bowman’s Strategy Clock and the Ansoff Matrix. It has revealed that the company has been following the strategy of differentiation. In addition to that, it has been following the methods of market development and diversification, in terms of the direction for strategic development.