Information Systems: Strategy Triangle Analysis and Co-opetition in LEGO - Case Study Example

Your name: Course name: Professors’ name: Date Information system strategy triangle Managing information system is becoming very important as businesses become more globalized. There are new IT solutions to business problems every day. However, business managers have to be very careful on what strategies they apply in their business models as sometimes technology can lead to problems especially when not applied correctly. They must ensure there is a balance in information system strategy triangle (ISS). ISS triangle points under consideration include business strategy, organizational strategy, and information systems. These points should be analyzed correctly to ensure smooth running of the business (Alter 2002, p.36). In the ISS triangle, all the processes are interdependent and interrelated. However, business strategy is at the top of the triangle, and organizational strategies and information systems have to be in line with the company’s business goals (Schultz & Hatch 2003, p.23). The business strategy encompasses the goals and the mission of the organization. LEGOs business strategy This will involve the objectives, goals, and strategies of the organization. These attributes are fundamental to the operation of the organization, and all the decision of the organization are made with respect to the business model. In the early 1950’s the business strategy of LEGO was to employ similar plastic bricks with the aim of encouraging long-term customers. At that time, the market was not as dynamic and competition was not as it is today. They enjoyed huge profits as they almost led a monopoly especially in the plastic bricks industry. However, with increased technology, they faced competition and drastic reduction on the revenues. The toy industry which they had controlled for such a long time, now faced huge competitions from other companies who were keen to incorporate technology in their innovations (Dibbern et al 2004, p.67). Through the years, LEGO was reluctant to change their business strategy. This was because changing some of the products would mean changing a lot in the manufacturing molds. Changing the structures and the shape of the molds means incurring more production cost. At a time when they had fewer revenues the company was reluctant to explore these options, and this give an opportunity to their competitors to explore the toy market (Rothaermel 2013, p.53). Their 7000 different shaped and colored bricks could not beat the tough competition from their competitors. However, in the 90s they focused majorly on children toys and saw their revenues increase. However, their profits were short lived as the children out grew them. They ran at a loss until the early 2000s when technology was advancing. At this moment, LEGO has to change their business model and adapt to new technologies while giving way to innovative designers to create and develop toys that would be appealing to the entire market. This saw them increase their production cost as there was a need to create more blocks to meet the new designs. They increased their production styles from 7000 to 24000. Though there was increased production cost, the company was able to increase its profits. Later, they developed a new business model to maintain and sustain the traditional market while at the same time bringing in focus on new technology to advance their products. These included computer games based on the trending movies and developed massive Multiplayer Online Game (MMOG) with NetDevil and Gazillion Entertainment. Organizational strategy LEGO employed a simple organizational strategy that was aimed at developing similar plastic bricks that could fit together. These gave the company multiple purchasing opportunities. The organization instituted the main plant to run twelve different production lines that operated 24/7 and were able to produce approximately 500 bricks per second. This made the company to be the leading plastic molding company in the world (Pearlson & Saunders 2004, p.42). LEGO was producing 7000 different shaped and differently colored bricks. This made the company stand out among the competitors at that time. Also with the set molds, the production cost was minimal, therefore, more profits. With increased technology, LEGO was faced with stiff competition, therefore, had to make an organizational decision and develop a strategy to maintain their sustainability in the toy industry (Jansen and Hummelgaard 2011, p.52). Therefore, LEGO partnered with Lucas Arts so as to enter the gaming scene. This also made part of their business strategy as competition from other companies was on a high rise. Under this platform, they developed Mindstorm line that was for the adults. Mindstorm included more robotic and technical elements to the kits to suit to the needs of the adults. They then developed Harry Potter and Star Wars games from the original movies. They gained their popularity in the social media through online interaction. This innovation led to LEGO capturing the adult market thus increasing its market share. However, movies are only popular for a short period, say a year. After this, the games would become obsolete and attract fewer customers. Thus leading to reduced revenues. Mindstorm at its inception was mind-blowing for the adult audience, but with time consumers found the product lacking, and some programmers hacked the program to attempt to improve the functionality of the game. Information strategy More details on the information strategy emerged when LEGO started working on videogames. On this light, LEGO captured more market as production of videogames captured more audience for adults and children. When they formed a partnership with Lucas Arts to produce Mindstorm line for adults, they increased their revenues. Advancement in technology led to more innovation for LEGO Company (Awazu 2009, p.53). Information strategy worked for several years through the video games and kits customized with popular movies. However, information strategy failed the company when they launched LEGO Universe in 2011. LEGO Universe has not been successful ever since its inception in the market (Brynjolfsson & Hitt 2001, p. 37). LEGO Universe was an MMOG developed by LEGO in collaboration with NetDevil and Gazillion Entertainment. The game required the user to register to the game with a subscription to create a virtual world with all LEGO styles. However, the game was a major failure and was discontinued in less than a year from its inception due to insufficient profits. This was because; the organization was late to introduce the free play. The subscription fee also led to the failure of the project since the market was flooded with massive free online games (Levina & Vaast 2005, p.342). Nonetheless, LEGO is yet to give up. There are speculations of the company launching their online game in 2014 or 2015, but with a different focus collaborating with Sony to integrate the videogame tech with LEGO designs. Coopetition analysis With the increased competition from other organization offering the same products, LEGO had to make a decision and invoke strategies that would help them maintain in the market (Sull 2005, p.26). With reduced revenues and increased losses, the company had to devise ways to counter that. For many organizations, business ecosystem involves a cooperative structure with other companies that facilitates the advancement of complementary business. Essentially, multi-stakeholder, multi-sector have structures that are guided by shared vision with the organization. Thus, this cooperation gives the organization an ecosystem where they can explore opportunities by healthy coopetition (Eisenhardt & Sull 2001, p.112). Therefore, coopetition is ideal for change and innovation. LEGO executives had to devise ways to make effective collaboration with other companies maintain their sustainability in a competitive market. They had to delegate more management of innovation to other stakeholders to create products that would be able to capture the market (Roos, Victor & Statler 2004, p.553). This ensured innovative opportunities for all the players and the stakeholders. The advancement of internet, facilitated growth of open communication and innovation based on collaboration with other organization in the business ecosystem (Gregor, 2006, p.627). LEGO in partnership with Lucas Arts launched Mindstorm (game involving programmable bricks). Enthusiastic community of children and adults embraced the product, and the company saw increase in revenues. Enthusiasts playing the game began to share design product of the game online, and created the LEGO Online Gallery (Antorini, Muniz and Askildsen 2012, p.27). This gave an opportunity for LEGO to analyse what the customer needed. Instead of discouraging the programmers of changing some of the LEGO’s design, they saw this as an opportunity to know what the consumer wanted. They embraced this platform and the company analysed more ways to couple the creative efforts of the consumers in their product design and development of their current products. They went further to rewarding consumers with the best product design suggestion that proved marketable. This open innovation led to the incremental improvement of their current products, therefore, creating more market space for the organization and other members to explore. LEGO coopetition strategy was adopted to respond to the increased competition the company faced from electrical products. One of the fundamental strategies for the company since restructuring in 2004 has been to incorporate innovation and IT. For them to realize that, they had to incorporate technology for the internal manufacturing processes. To do this, they had to seek innovation from various stakeholders in the business ecosystem (Walters 2012, p.33). This led to innovations including computer aided design and computer modelling. These incorporations allowed the company to speed up their manufacturing processes and improved on the quality of their products. Secondly, LEGO incorporated IT and innovation so as to diversify its product ranges. These innovations have contributed to the adaptation of LEGO traditional designs to incorporate electronic features through outright diversification of new products such as computer games that are based on LEGO theme. LEGO saw the need to tie their games with popular movies so that they can capture a wider market. These led to them producing Harry Potter and Star Wars games with collaboration with Lucas Arts. Initially, these innovations saw huge increase in profits but did not last long. This is because; people loved and played the game when the movies were still popular. When the popularity of the movies went down, so did the computer games tied to the movies. So when the movies eased of, the sales did the same. The shift from just toy products and continuous innovation through collaborative cooperation has seen the company sustainable since 2004. LEGO was not initially a videogame company. Thus, it required assistance from another company. Coopetition with other companies increased its innovation and created more opportunities in the market (Greene 2010, p.24). The video games since their inception in the market are still popular among the consumers. Though the intense competition especially from china products, continuous improvement of the products and collaboration with other companies has seen the company maintain its sustainability in the market. In 2011, LEGO in partnership with NetDevil and Gazillion Entertainment launched LEGO Universe. LEGO Universe is a Massive Multiplayer Online Game developed to capture the growing market of online gaming. Online gaming is very popular among the teenagers and some adults. It provides a great opportunity for the company to venture into online gaming and capture that market using their games styled with LEGO brands. The game required the user to register to the game with a subscription to create a virtual world with all LEGO styles. However, the game was a major failure and was discontinued in less than a year from its inception due to insufficient profits. This was because; the organization was late to introduce the free play. The subscription fee also led to the failure of the project since the market was flooded with massive free online games. Nonetheless, LEGO is yet to give up. There are speculations of the company launching their online game in 2014 or 2015, but with a different focus collaborating with Sony to integrate the videogame tech with LEGO designs. Seems that LEGO have realized that collaborative cooperation with other companies increases innovation and better quality products. LEGO requires a strategic cooperation that stays true to the fundamental values of the company; that is, make toys. With the anticipated collaboration with Sony, LEGO hopes to maintain its sustainability in the market and increase its revenues (Bogos 2013, p. 36). Coopetition is important and can help organization increase its revenues. However, there are certain problems associated with coopetition. When a company cooperates with another to produce particular products, there is greater exposure to risks (Pine Peppers & Rogers 2010, p.42). When LEGO went into partnership with NetDevil and Gazillion Entertainment to launch LEGO Universe, they were faced with massive problems since the product they launched was not profitable. The game was a major failure and was discontinued in less than a year from its inception. LEGO launched MMOG without carefully studying the market. They were late to introduce the free play. The subscription fee was too high in an already flooded market. With increased coopetition, the company may potentially loss distribution control. This happens when a company does not have a good business, organization and information strategy. LEGO was faced with complexities when they partnered with NetDevil and Gazillion Entertainment to launch MMOG. References Alter, S 2002, The work system method for understanding information systems and information systems research. Communications of the Association for Information Systems, 9(1), 6. Antorini, Y.M., Muniz, A.M. 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