Lego Company Business Analysis - Case Study Example

? Lego Company: Business Analysis Lego Company: Business Analysis Introduction This report will suggest a better strategic plan for the Lego Group after considering a number of factors such as the firm’s mission and vision statements, internal and external strengths, organizational structure, and leadership. The report will also discuss some critical success factors and control and evaluation techniques. Background The Lego Group is a privately held multinational company based at Billund in Denmark, and it deals with toys industry. The company is prominent for the manufacture of Lego brand toys. The Lego Company was founded by Ole Kirk Christiansen in 1932. The firm has a wide range of product lines including video games, board games, education items, Lego mindstorms, pre-school products, bricks, and play themes. In addition, Lego group offers numerous community-based and other services for the benefit of children, particularly disadvantaged children. In the United States, the organization mainly focuses on Lego Imagination Centers, which are large stores that contain displays of Lego sculptures and a bricks play area; and as of 2002 data, the Lego Group operates 68 stores (including stores soon to be operated) in the North America (Lego stores, n. d.). Lego uses strategic risk management approach to drive its growth; and its strategic planning model has assisted the company to be successful throughout its corporate history. Mission Statement & Vision Statement The firm’s mission and vision values greatly benefit the organization in achieving its desired and end state. Lego’s mission statement is to “inspire and develop the builders of tomorrow”, and its vision statement is “inventing the future play” (A Case Study of the Lego Group, n. d.). The company’s mission statement reflects the view that Lego enhances children’s creative thinking and reasoning abilities and thereby develops them to demonstrate their potential for molding their own future. Similarly, the firm’s vision statement indicates that the company is obliged to explore future human possibilities. Altogether, the company’s mission and vision values specifically reflect its social responsibility perceptions rather than its monetary goals. Since these values contribute to Lego’s market reputation, the firm may easily achieve its desired and end state. Internal Analysis & External Analysis Evidently, Lego has a range of competitive internal strengths such as global presence, long market experience, a globally recognized brand, famous Lego bricks, and numerous popular video games to accomplish its goals and objectives set in their previous strategic plans. Market trends indicate that demand for colorful bricks is likely to remain stable over the next decades. In addition, emerging markets like Brazil, India, and China would contribute to the Lego’s efforts for meeting its strategic goals. Finally, the steadily growing toy industry would also improve Lego’s ability to respond to various internal and external challenges quickly and effectively. Long Term Objectives Brand value creation is one of the major long term objectives of the Lego Group. The company also gives particular emphasis to global expansion and market share growth in the long term. As Jenson (2012) points out, zero waste is the ultimate long term goal of the company. Strategy Analysis and Choice It is recommendable for Lego to choose cost leadership strategy to achieve and maintain competitive advantages over its market rivals. Currently, the company has spread across the globe and it has numerous potential capital sources to invest significantly in production assets. The organization possesses better product designing capabilities and high level expertise in manufacturing process engineering. In addition, Lego maintains efficient distribution channels. Furthermore, this generic strategy is beneficial for the organization to defend new entrants effectively. Similarly, the market development grand strategy is best for the organization. Under the market development strategy, a firm expands its market territory to reach new customers. Currently, the organization has a globally recognized brand and a wide variety of improved product lines. Hence, the market development approach would better fit within the strategic framework of the organization. Plan Goals and Implementation Under the cost leadership strategy, Lego sets lowest industry prices for its products and services and thereby gains competitive advantages over its rivals. According to marketing experts, the cost leadership strategy would assist an organization to remain profitable for a long period despite price wars and other similar difficulties. The company has altered its organizational structure recently in 2006 with intent to implement various operational strategies successfully; and as part of this change, Lego’s management has established three major divisions in the organization (Annual Report, 2005). In addition, the firm has made notable changes to the structure of its corporate management. Those changes have greatly assisted Lego Group’s leadership team to give more focus to the strategic direction of the firm whereas the three division management teams have been authorized to deal with the firm’s day to day operations. Hence, the organization is currently in a competitive position to successfully implement the cost leadership strategy and thereby promote its market development. Evidences suggest that a low cost strategy would perform better under a recessionary environment. Since the US economy has not been recovered from the impacts of the recent global recession yet, it is advisable for Lego to implement the cost leadership strategy as fast as possible. Critical Success Factors While implementing the planned cost leadership strategy, the organization should not compromise its product quality. Since high brand quality is the most important factor leading to Lego’s market dominance, the company would lose business to its rivals unless it maintains a particular quality level. Controls and Evaluation Once the proposed strategy has been implemented, the firm must closely monitor how the implemented strategy performs. For this, the management can compare sales revenues in pre- and post-strategy implementation phases. If the management notices that the company underperforms after the new strategic plan execution, the management must make necessary changes to the plan. In addition, the company may collect customer feedbacks about the strategic change through online surveys and SMS polls. Conclusion The Lego has a wide range of potential capabilities to spread its business across the globe. The report suggests cost leadership generic strategy and market development grand strategy for the betterment of company. References Annual Report 2005 LEGO Group. Retrieved from www.freedownloadspdf.net/guide/annual-report-2005-lego-group/ A Case Study of the Lego Group. (n. d.). Retrieved from http://pure.au.dk/portal-asb-student/files/36334745/BAMMC_Thesis_A_Case_Study_of_the_LEGO_Group.pdf Jenson, M. V. S. (2012). Lego: Environment. Retrieved from http://aboutus.lego.com/en-gb/sustainability/the-topics-we-work-with/environment/ Lego stores. (n. d.). retrieved from http://stores.lego.com/en-US/default.aspx Read More