Legoland Theme Park Corporate Social Responsibility and Strategies - Report Example

MANAGEMENT: Legoland theme park corporate social responsibility and strategies BY YOU YOUR ACADEMIC ORGANISATION HERE YOUR HERE HERE Legoland theme park corporate social responsibility and strategies The stakeholder interests The Lego company maintains a wide variety of different stakeholders, including generic consumers which buy the products, the company’s retail trade clients (the marketing intermediary), employees and managers, various business partners, raw materials suppliers and similar vendors, as well as general society (Annual Report, 2004). All of these stakeholders maintain very different stakes in terms of how they are inter-connected with company activities, however each stakeholder is significantly important in terms of whether the company experiences high profitability or sustainable business practices or growth. The introduction of a new Legoland theme park in Paris, France would require taking into consideration a wide variety of factors, including the impact on all stakeholders for such a new business venture. Will the company be able to maintain enough profit to cover all of the costs of operating and building the new facility, thus making this new theme park budget-conscious and sustainable for long-term business activity? This question can be answered by reviewing the revenues of other international Legoland theme parks from 2002-2003 and comparing these revenues to the current operating environment for Lego company. For instance, Legoland Deutschland, in 2003, experienced a significant drop in sales volume after only its second year of operations due to less consumer patronage and an unusually-hot summer (Annual Report, 2003). Though the Legoland Deutschland park appeared to be a rather instant success for consumers in this country during the park’s first year, this excitement appeared to have worn off rather quickly, likely making executive leadership at the company take a second look at whether Legoland theme parks are sustainable business concepts for long-term profitability. However, despite these statistics, the Paris, France operation requires an examination of stakeholder interests involving each group. The consumers/patrons will likely dictate whether or not the Legoland park is a continued success. Consumer attitudes fluctuate rather unexpectedly based on social and economic trends (Kurtz, 2006), thus making patronage levels extremely difficult to predict, especially in the difficult economic climate being experienced across the globe today. Suppliers, also, who would be responsible for distributing various foods and beverages associated with the new Legoland Paris theme park also have an active interest in whether the new park is successful. The supplier business’ longevity and profit margins would be greatly affected if contractual supply agreements suddenly experienced significant drops in per-ticket sales volume. Business partners, such as those involved with various marketing or strategic alliances to promote different branded products throughout the Paris theme park, would also have a significant stake in whether or not the company was able to manage/operate a successful organisation. General society, as a whole, as a broader portion of stakeholder interests, would also be concerned with issues of waste management, noise reduction, or any other number of issues which are a routine part of theme park operations. Legoland Paris’ stakeholders are also actively affected by the company’s views on corporate social responsibility, especially involving issues of energy consumption and recycling efforts. The company actively considers how to reduce energy consumption by changing internal operations, especially regarding how plastic granulate is melted, cooled and cast into various Lego bricks (Lego Sustainability Report, 2006). The company has considered a renewable energy scheme in order to reduce the company’s contribution to energy consumption in Denmark, which has shown a marked improvement since 2005. “The Lego Group has always taken responsibility for the society and the communities in which (they) operate” (Lego Sustainability Report, 2006, p.5). In today’s current global economic crisis, disposable income is likely not readily available to all consumers which is a significant factor driving whether or not the Lego parks experience success in their business ventures. The company appears to attempt to make their business efforts more transparent to all of their many stakeholders, including communicating potential lay-offs as quickly as possible so as to allow staff members to seek new employment prior to being released from their positions (Lego Sustainability Report, 2006). Additionally, in terms of satisfying corporate social responsibility and the needs of general society, the company is working with different chemical suppliers to create less-hazardous substances and ensuring that internal staff members are exposed as little as possible to dangerous substances (Lego Sustainability Report, 2006). To satisfy further stakeholder groups and their firm commitment to CSR, the company works with various entities to ensure that the company’s contribution to global warming is reduced amidst a highly industrial organisation. These sustainable environmental practices are also witnessed in all Legoland theme parks which appear to work consistently to reduce any negative impact to the environment, which is designed to satisfy all stakeholder groups. As many of these materials are used in the construction of the Legoland theme parks, sustainable environmental policy as part of corporate social responsibility satisfies all stakeholder groups. Current strategic policy at Lego To reinforce the importance of today’s economic climate on whether or not the company continues to pursue a Paris Legoland park, it is important to identify how the company leadership is approaching new business ventures as well as whether or not to continue operations at existing Legoland parks. For instance, a 2005 Action Plan has called for the sale of the majority of all Legoland parks so as to “improve liquidity and establish a more solid financial base for the company. Thus, the parks are not regarded as part of continuing activities at Lego” (Annual Report, 2004, p.4). This is a significant change in strategy from 2002-2003, which strongly indicates that Legoland theme parks may very well, in the eyes of the consumer stakeholder, not be a viable long-term business strategy. Perhaps the majority of Legoland parks were a fad which their initial successes could be explained away by changing and unpredictable consumer behaviour patterns. Interestingly, current strategy at Lego seems to take into consideration the various threats to the business, as part of a comprehensive SWOT analysis to determine the firm’s current strengths and weaknesses versus the firm’s opportunities and threats. For example, under Porter’s Five Forces Model, which identifies the threats of new entrants (as well as other business issues), other businesses which sell toys to consumers are now sourcing their operations to discount countries such as China (Annual Report, 2004). This gives many toy companies the opportunity to create inexpensive toys whilst saving a significant volume of cash by avoiding high payroll costs, allowing them to expand their toy lines internationally. This creates a threat of new entrants in the market which serves to erode the profitability of Lego which does not appear to utilise cheap, foreign labour markets to create its products. There is no research indication that Lego is currently pursuing sourcing countries such as China to reduce manufacturing costs, which could be a significant weakness in current manufacturing and supply chain strategy. Additionally, in 2003, Legoland California (USA) was granted a strategic $2 million upgrade to the theme park in order to boost customer patronage levels (Zoltak, 2003). However, with today’s intention to phase out the Legoland theme park concept, it is clear that the company is currently in-line with necessary strategic decision-making to keep the company afloat during a difficult economic period across the globe. This suggests that the leadership at the firm recognises when changing consumer behaviour patterns call for drastic cost-reduction activities in order to keep Lego brand products one step ahead of competition and on the road to long-term profitability. These changes greatly impact the direction of the company and also whether or not the firm can remain competitive in the face of new market entrants, changing consumer behaviours, and the ability to create sustainable theme parks which can ensure profitability long-term. From many perspectives, the modern Lego company strategy involves scanning the external environment for threats (competitive or otherwise) and aligning the business with activities which are cost-conscious and will additionally bring significant value to the Lego Group and Lego brand name products. Bibliography Kurtz, David. (2006). Contemporary Marketing, 12th ed. Thomson South-Western, United Kingdom. Lego. (2003). ‘Annual Report Lego Company’. http://www.lego.com/info/pdf/uk_report2003_web.pdf. (Accessed 6 Mar 2008) Lego. (2004). ‘Annual Report Lego Company’. http://www.lego.com/info/pdf/annualreport2004UK.pdf. (Accessed 7 Mar 2008) Lego. (2006). ‘Sustainability Report Lego Company’. http://cache.lego.com/downloads/info/SusReport_2006_UK.pdf. (Accessed 6 Mar 2008). Naylor, John. (2003). Management, 2nd ed. Financial Times/Pearson Education. Zoltak, James. (2003). ‘Legoland adds three new attractions as part of a $2 mil upgrade, expansion’, Amusement Business, 115(28). www.proquest.com. (Accessed 6 Mar 2008). OUTLINE I. Identify Stakeholders Consumers – Retail trade clients – Employees – Business partners – Suppliers General Society II. Identify Stakeholder Stakes in Paris Legoland Theme Park Profit affects all stakeholders Changing consumer behaviour patterns Contracts affect suppliers Environmental issues affect all stakeholders III. Identify Corporate Social Responsibility Reduce Energy Consumption Recycling and Renewable Energy Communicate lay-offs quickly IV. Current Strategic Policy at Lego Action plan to close Legoland theme parks Analysis of competitor activities and new market entrants Competitor sourcing to China – Weakness Cut off funding for Legoland improvements Read More