LEGO Case Study
Executive Summary
This strategic analysis report has been completed on the Lego group between the years 2004 and 2014, ten years of comprehensive change for the company. Lego started out in humble beginnings in 1932 where only ten employees existed. Children quickly adopted Lego building blocks as a new and innovative way of learning. This lead to a large customer base and product recognition was growing. Lego had a variety of strategic opportunities available to them throughout their growth and maturity periods. Customers would recognise their products as safe and durable, great toys for children to develop learning skills overtime.
In 2004 Lego started to feel the pressures of ever growing market presence of competitors and the changes in markets. In 2014, the CEO, Jørgen Vig Knudstorp, employed changes that would benefit the Lego Group immensely. Lego have been able to develop a wide range of resources over there operating life. This has allowed them to have an inside-out approach. They have taken these unique resources and leveraged them very well. They have been able to pursue other market opportunities such as video gaming and movies. This has assisted Lego in sustaining their competitive advantage over the market through diversification of their products. The new CEO may have reduced their entire product catalogue, but he has expanded into other markets to ensure growth.
Strategic tools used to assist in this report is the Business Systems Model and Porters Five Forces which can be seen in the Appendices. Within the BSM we have Resource Base (Stock of Assets), tangible and intangible, and relational resources and competences. There is also the Activity System (Value Chain) with primary and secondary activities. Finally, there is the Product Offering used as the value proposition tool. These tools have been used to develop recommendations for the future of Lego and to sustain their competitive advantage.
The recommendations made to Lego in this report
This strategic analysis report has been completed on the Lego group between the years 2004 and 2014, ten years of comprehensive change for the company. Lego started out in humble beginnings in 1932 where only ten employees existed. Children quickly adopted Lego building blocks as a new and innovative way of learning. This lead to a large customer base and product recognition was growing. Lego had a variety of strategic opportunities available to them throughout their growth and maturity periods. Customers would recognise their products as safe and durable, great toys for children to develop learning skills overtime.
In 2004 Lego started to feel the pressures of ever growing market presence of competitors and the changes in markets. In 2014, the CEO, Jørgen Vig Knudstorp, employed changes that would benefit the Lego Group immensely. Lego have been able to develop a wide range of resources over there operating life. This has allowed them to have an inside-out approach. They have taken these unique resources and leveraged them very well. They have been able to pursue other market opportunities such as video gaming and movies. This has assisted Lego in sustaining their competitive advantage over the market through diversification of their products. The new CEO may have reduced their entire product catalogue, but he has expanded into other markets to ensure growth.
Strategic tools used to assist in this report is the Business Systems Model and Porters Five Forces which can be seen in the Appendices. Within the BSM we have Resource Base (Stock of Assets), tangible and intangible, and relational resources and competences. There is also the Activity System (Value Chain) with primary and secondary activities. Finally, there is the Product Offering used as the value proposition tool. These tools have been used to develop recommendations for the future of Lego and to sustain their competitive advantage.
The recommendations made to Lego in this report
References: LEGO Annual Report (2004) LEGO Annual Report (2013) Tangible Resources Lego has acquired machinery to produce the required 36 million bricks used that need to be stocked (Fedders & Villadsen 2013)