Case Study: of THE LEGO GROUP (between 2200 to 2500 word)
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Task 1: An analysis of the competitive environment within which Lego operates using the Porters five forces framework to highlight the strategic issues facing the company.
These are some of the points that you might want to consider while analyzing the competitive environment within which Lego operates:
- Competitive Rivalry: Who are the direct and indirect competitors for the different businesses of Lego? What could be the level of competition? Can the competitors give consumers the same benefits that Lego offers at a better price?
- Bargaining power of buyers: Do the buyers have many options to choose from? Are the tastes of the users changing? How does affect their bargaining power?
- How could the behavior of these forces change in the future?
- Which force may become more positive and which less so?
- How might these changes affect the future attractiveness of the industry?
- Threat of New Entrants: Would it easy for a new entrant to duplicate Lego? What could be the entry barriers- capital cost of entry? Product Differentiation? Presence of strong competitors both from the branded as well as unbranded? Brand image of Lego?
- What is the attractiveness of the industry based on the above analysis?
Task 2: A resource analysis of the company to assess whether Lego’s strategic capabilities will continue to give them a sustainable competitive advantage in the coming years.
These are some of the points that you might want to consider while analyzing the Lego’s strategic capabilities using VRIN.
- What are the key physical, technological, HR and intangible resources& competences of Lego?
- Would you consider the founder as a key resource? Would the customer centric culture of the company, focus on distributors and its emphasis on quality be considered as distinctive resources & competences of the company?
- Which of the resources & competences are valuable, rare, inimitable and non-substitutable?
- Could these give the company a sustainable competitive advantage?
- Will these resources & competences allow the company to win when the environment changes? (Link this to your analysis of the possible future competitive environment done in the previous section)
Task 3: A discussion on the growth and evolution of Lego highlighting the growth strategies (methods and directions) used along the way to sustain its leadership position.
These are some of the points that you might want to consider while evaluating the growth strategies used by Lego (based on the Ansoff’s matrix).
- What growth directions has Lego used? Why?
- What were the external and internal environmental factors that made these directions and methods the best choice?
- What were the opportunities and threats because which Lego used the above mentioned growth methods and directions? (Use the external analysis done above to support the arguments here)
- Did Lego have the resources and competences required for the above growth strategies? (Use the VRIN analysis done above to justify Lego’s ability to follow these strategies)
- This discussion can be built by addressing the following:
- How did these strategic choices give the company a competitive advantage?
- How did these strategies allow the company to address the challenges of the environment?
- Were these strategies feasible according to Lego’s strategic capabilities?
Task 4: Suggestions to the company on where they could expand their product lines and business operations to continue their dominance in the global toy market.
These are some of the points that you might want to consider while recommending future growth directions that Lego could use based on the Ansoff’s matrix:
- What should the company do in the future?
- Should they pursue all the four growth directions or focus on any particular one in light of the changing opportunities and threats?
- What according to your analysis of the external environment, could be the most significant opportunities and threats in the future?
- Use the analysis done in the strategic opportunities and threats section. This should help you justify why you are recommending certain strategic options to Lego.
- Would their existing resources & competences still remain valuable? Will these still give them a competitive advantage in the changed external environment?
- Use the VRIN analysis done to support your recommendations.
- Make sure that you justify how these options would allow Lego to face the emerging challenges in the environment effectively and ensure sustainability.
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