Internal and External Environments of Lego and Harley Davidson - Essay Example

? Lego and Harley Davidson Internal and external environments are very important for businesses operating globallydue to local and external competitions. Healthy businesses must analyze their internal and external environments in their strategy formulation. Unless businesses restructure their operations and strive towards gaining competitive edge, it is not likely for the businesses to succeed. Strategic planning requires that an organization must initially scan the environment for the presence of numerous competitors as well as analyzing physical resources and skills of the workforce. Evaluation of the internal and external environments is then followed by crucial decisions regarding long and short term goals and finally organizes for the implementation of the plan of action. This writing describes the internal and external environments of Lego and Harley Davidson companies using an environmental scan. The argument of this writing is to carefully examine, evaluate and analyze both the internal and external environments of Lego and Harley Davidson that enable them gain competitive advantage in their respective industries. Lego is a company that has been successful in the toy and over 150 different types of products for the last 60 years and above. Lego Company has remained successful because of her great global and competitive strategies it has employed. LEGO Group has strived to beat her competitors in the industry due to her initiative of embracing new technology. Internal Environment According to Metcalf & Lafranco (2013), inbound logistics which emphasizes on raw material is fundamental in the company’s operations. It acquires her main bulk of chemical materials from Lanxess, a German company which provides standardized ingredients without any bottleneck that may interfere with Lego’s company. Lego further focuses on her product’s future demands by ensuring proper product mix. Although it is a cumbersome and technical forecast, the company has always done it successfully via utilization of software and analytical approach in achieving their goal. Moreover, Lego has optimally managed their manufacturing process in a way that high quality products are produced with minimal incidences of faultiness and wastage. The company’s patented plastic ingredient ensures durable product and desirable colors as well as adherence to the European CE-labeling thus ensuring conformation with the European Union legislation (Hjuler & Robertson, 2009). Additionally, Lego has outsourced her distribution to DHL Excel Supply Chain in Eastern Europe hence reducing excess capacity during summer when sales are low. It further helps them to concentrate in the production services and letting experts do her distributions. Lego has also diversified her operations such as entering into a strategic partnership with organizations such as Lucas Arts and Warner Bros that has enabled Star Wars and Harry Porter act as the savior of Lego (Metcalf & Lafranco, 2013). Hjuler & Robertson (2009), posit that several businesses combinations that Lego has entered itself in make it enjoy indirect marketing thus contributing to their dramatic increase in sales. The company has been expanding her production facility closer to their customers as well as numerous promotional strategies such as conventional media and philanthropic charity. The company also uses superior prices and avoids any engagement in price strategy and associates her high prices with better quality. It has also integrated some of her programs with educational institutions as a way of improving her products. External Environment Considering Lego’s bargaining power, her significant supplier is within the chemical market which is very competitive thus reducing the supplier’s bargaining power. The company has categorized her suppliers based on riskiness hence making their largest suppliers to be in low risk countries and smaller group of suppliers in high risk countries. Companies in the toy industries including Lego have ensured low suppliers’ bargaining power. The toy industry is dependent on B2B market and no single consumer can control the toy company. Retailers play an important role in selling and distributing Lego’s company (Hjuler & Robertson, 2009). Additionally, Lego has huge cost advantage since it does her production in low waged regions as well as the advantage of economies of scale. Lego also enjoys a vast variety of expertise which enables them to make competitive decisions as well as high brand equity that have been created for a long time. Metcalf & Lafranco (2013), argue that Lego has addressed the issue of threat brought about by computer games by moving to electronic gaming. Interestingly, because traditional toys are cheap, it may be hard for consumers to switch to electronic gaming because they are expensive. Lego enjoys loyal customers worldwide with exclusive licenses, solid distribution network, financial liberty as well as market experience. Harley Davidson Internal Environment According to Agnihotri (2013), Harley Davidson is amongst the leading motorcycle companies that have applied technology to her image thus making it stay competitive. The organization possesses a lot of internal resources that strengthen her long term strategies. It has a great corporate structure that counts as amongst the first divisional structure that used Just in time inventory strategy. It is involved in a diversified kind of business which not only includes motorcycles but also include other related products and financial services. Moreover, the company’s decision making process is decentralized and every department is accorded responsibility to deal with various issues. Harley Davidson is so much concentrated on deep emotional customer link via her services and products and this greatly attracts many customers who feel that the company cares for them. The company’s relationship of employees is so close and awesome as the top management is closely bonded to other employees thus easing decision making process. Harley Davidson’s culture is aimed at preserving and perpetuating the organization through unceasing in the product and service quality as well as achievement of financial success. The company always works at adding value to her products as well as creating image and attracting new customers. Its marketing brand boosts mystique appearance, feeling of riding free and pride of owning legend thus increasing brand recognition to the non-riders worldwide. it has successfully licensed her products and this has really enhanced her image. The organization sells her products through a wide network of dealers who have ensured a wide customer base especially in America (Agnihotri, 2013). Harley Davidson treats her customers by offering them 1 year membership to the Harley owners group and further conducts rallies that help in showcasing and demonstrating their new products. It uses value over price strategy and provides company information online. Moreover, Harley Davidson has strong financial position making it be in a favorable position to withstand falling prices and increased costs. It further uses strong R&D by investing in new technology that makes it manufacture powerful, lighter, stronger and finest motorcycles possible (Robertson & Qualizza, 2010). External Environment According to Robertson & Qualizza (2010), demand for motorcycles in the sporting industry has grown very high and Harley Davidson is so much trusted due to her high quality production. Being a U.S based company it enjoys a wider market segment because most people trust and love made in U.S products particularly when it comes to motorcycles. Harley Davidson enjoys efficient supply of sheet metal, coils and other raw materials from the favorable supply bases. The company dwells on its success in the heavyweight motorcycles which has seen it beating highly competitive substitutes such as Yamaha, Honda and Kawasaki. Both Harley Davidson and Lego use profit and increase in revenue as the measurement guidelines of the effectiveness of their strategies. The number of sales made and the ability to beat competitors in terms of revenue generated and the number of units sold remains integral way of ascertaining the effectiveness of the companies’ strategies. Also, Harley-Davidson and Lego focus on the wide market coverage especially the overseas market as a way of achieving their effectiveness. Measurement guidelines for both companies are indeed very effective and positive since they focus on the main objective of every business, making profit. Unless business’ revenue rises and profit increase is experienced, a business cannot be said to be making a progress and achieving her objectives. References Agnihotri, A. (2013). Turnaround of Harley Davidson – Cult Brand or Strategic Fit Approach? Journal of Strategic Marketing, 21(3), 292-301. Doi:10.1080/0965254X.2013.768689 Metcalf, T., & Lafranco, R. (2013). Lego Builds New Billionaires as Toymaker Topples Mattel.Bloomberg. Retrieved From Http://Www.Bloomberg.Com/News/2013- 03-13/Lego-Builds-New-Billionaires-As-Toymaker-Topples-Mattel.Html Hjuler, P. & Robertson, D. (2009). Innovation Governance in Action: The LEGO Group. Retrieved From Http://Www.Innovationgovernance.Net/Legostudy.Html Robertson, R. W., & Qualizza, J. (2010). Strategy, Customer Service, Communication and Globalization: The Keys To Renewal In Harley Davidson. Business Journal for Entrepreneurs, 2010(1), 35. Read More