Lego | Growth Strategy for the 21st Century |
1.0 Executive Summary 1
2.0 Overview of Lego 2
3.0 Environmental Analysis 4
3.1 Internal Analysis 4
3.2 External Analysis 4
4.0 Strategic Analysis 5
4.1 Business-Level Strategy 5
4.2 Corporate-Level Strategy 6
4.3 Corporate Restructuring 6
4.4 Cooperative Strategies 7
5.0 Strategic Issues 7
6.0Options Generation 8
6.1 Alternatives 8
6.2 Decision Criteria 10
6.3 Discussion of Alternatives 10
6.3.1 Integrate more current technology into Lego products 10
6.3.2 Enter emerging markets with a new product line 10
6.3.3 Partner with Nintendo 11
7.0 Recommendations and Implementation 12
7.1 Corporate Strategy 12
7.2 Implementation 13
7.2.1 Product Offering 13
7.2.3 Distribution 14
7.3 Future developments 14
8.0 Conclusions 15
Exhibit A - SWOT Analysis I
Exhibit B – Lego’s Competitive Adantage II
Exhibit C – Decision Criteria II
Exhibit D – Analysis of Options III
1.0 Executive Summary
Lego started out 78 years ago as an innovative firm establishing its unique image with a strong reputation and position inthe toy market. In these past six or seven decades, almost every child in developed countries has a part of their childhood built with Lego. These great accomplishments of Lego Group, however, are fading as the competitive environment expands exponentially due to technological growth, cultural changes, and an increasing number of competitors’ implementing innovative strategies to get to themarketplace. A detailed environmental and strategic analyses suggests that it is vital for Lego to develop and sustain its competitive advantage based on its strong brand name in order to continue its growth.
Alternative courses for Lego include developing more technologically-advanced products, entering emerging market, and engaging in strategic technological partnership with a firm such as Nintendo.The first option would incur a heavy expense in research and development, the rewards of which do not adequately compensate the firm for the risks borne. In addition, a partnership with Nintendo is best thought of a long-term strategy to delve further into developed markets, but do little for the firm in the immediate future.
Entering emerging Asian markets, particularly India, China andIndonesia, would be the most effective strategy for the firm in the near future. This report proposes developing a new, competitively-priced product line for these markets, which will be designed to cater to the tastes of these consumers. These products would take advantage of efficiencies in manufacturing and design to reduce production costs, and a new production facility in India would allow Lego tohave easy access to the region, further streamlining distribution. However, a strategic partnership with a firm such as Nintendo would still be a viable strategy in the long-run, once Lego has established a strong foothold within emerging Asia.
2.0 Overview of Lego
Lego® toys are universally recognized for their inventiveness, timelessness and durability. The highly successful company, founded OleKirk Christiansen in 1932, remains a family-owned business today. Ole took the first two letters of the Danish words LEG GODT, meaning “play well”, and put them together, unaware that one meaning of the word in Latin is “I put together”. Today, many years later, Lego is both the name and the idea behind the company. It is Lego’s philosophy that “good play” enriches the life of a child intoadulthood, which is why has developed and marketed a wide range of products, all founded on the same basic philosophy of learning and developing – through play.
True to its motto “Only the best is good enough”, the Lego Group has emphasized the importance of high quality throughout its more than 75-year history, ensuring that consumers return to Lego products again and again. At the same time, the...