Lego Case Study Free Essay Sample
I will be responsible for starting the presentation. In my part, I will begin by introducing the group’s members and saying what everyone is going to talk about.
Secondly, I will begin by introducing our partners in Lego to have a global information of the company, short but clear. I will talk about the history of the company, beginning, growth, expansion and current affairs.Later I’ll do a little description of their products, kind of them, why kids likes them, what they offer in their product, if they are safety or not… And finally I will also focus on the organization of the company like its organizational chart, managers and where they operate. Laura Ramirez Quiros 2- STRATEGIC PLANNING DECISIONS BY LEGO Lego Toys in the company that presented and implemented some unique strategic decision that made it stronger, especially in during the world economic crisis in late 2000’s.
During last 10 years Lego managed to introduce very innovative programs and decisions that shaped organization from inside but also managed to create a brand on how increase efficiency and effectiveness in higher levels of management. Lego went through 3 recognized strategic concepts that were the cornerstone of the operation in recent history, and these are: -Lego Serious Play -Focus turned to core consumers and not sales -Lego toy lines like Star Wars 1. Serious PlayThe Lego Serious Play was created to help visualize and built better understanding among the employees of Lego. The main idea about the aim of this Lego project is that “instead of having a conventional brainstorming meeting or workshop, using traditional methods and techniques that yield inconsistent results, the objective of Serious Play is to allow team members to build physical metaphors for their personal understanding of their company’s organizational entities using Lego toys. “In other words, team member play a real game with Lego bricks by building, consulting, trying to find out each other’s strength and weaknesses, inventing and creating a better working environment and finally developing a detailed “world” of their company, its people and their responsibilities. After being used initially by Lego, later was development as a brand and started to be sold as a consultancy product to other global firms like Nokia, Crysler etc. 2. Core Consumers vs Sales Under the helm of the latest Lego CEO, Mr. Knudstorp, company managed to reorganize its operations and goals.The CEO was the one that initiated Lego Serious Play program, later he also managed to change the philosophy of operations while putting more emphasis to the core customers rather than concentrating solely on sales.
Time magazine was reporting on the strategic endeavor by Mr. Knudstorp when he “stopped chasing sales and refocused the product line toward core consumers: the serious builders”. CEO was also cited saying that “Instead of growing, we actually insisted we didn’t want to grow”. Lego during this time concentrated its business in developed countries, mainly Europe and US, while putting a lot of emphasis on Christmas sales. . Lego toy lines The toy market was largely affected by the surge in the computer/console gaming industry like SonyPlaystation, PC games, Wii etc.
Lego shifted its policy of making independent pieces of toys to producing the Story line of toys such as Star Wars and Legos native line called Atlanticus. Lately it also launched a web based virtual game in response to high demand on e-products. These news lines enabled Lego maintain strong and register revenues in last quarter’s against a drop in toy markets. Dren Selimi 3-PESTLE analysis PoliticalLego made sure that they were aware of the political situation of the domestic market they have operated in and the industry has made sure that it has a reasonable position with regards to political issues. Lego continuously prepared for any problems concerning the political sector. Unless the political environment will change rules that relate to its operations, Lego prefers to stay away from such subject.
The political environment has allowed the liberation of the market, liberation of the market paved the way for improvement of products. Economic Lego can be said to be economically stable for the past years.Its economic stature is doing well that’s why they try to improve their products to give the best to their clients. It is not only the internal economic situation of the industry that should be taken note of but also the economy of the domestic market. Lego check first the economic status of the market they are operating in. The economy of the US domestic market has given opportunities to Lego .
. The status of the economy has paved the way for Lego to prosper in the region and help in proving that the domestic market is one the premier region that houses the industry.Social The social environment serves as the conscience for Lego. This environment ensures that the Lego will not do things they know can ruin the industry’s reputation with the society. The society ensures that Lego will consider first its environment before making any decisions.
Lego and other educational toy companies make sure that the products they offer will be accepted by the public. Lego tries to minimize the creation and delivery of some products they know will cause outbursts or complains from different groups in the society.Lego makes sure that they have a very good relationship with different sector in the society although some sectors hold a grudge towards them. Lego also engage in social activities that tend to develop a better relationship between them, the clients and the society they are operating in. Technological The technological forces dictate the trends in the toy industry; these forces are the one that determine what should be used to create a product.
Lego offered new innovations in its technological aspect and introduced new concepts with regards to its industry.It has moved away from the use of wood as its materials instead it focused on plastic and other newer technologies. Since technology rapidly changes Lego makes sure they are updated to what is happening and they can adjust to these changes. If other industries use new technologies to create products; Lego tries to use technology in competing with such technologies. Legal The legal forces in the domestic market try to make sure that there is fairness in terms of laws in that region. The legal forces of domestic market can create changes in the way business is done by Lego.
Legohas to be make sure that they follow the different laws of the market they engage transaction in. Lego don’t want to risk their client’s welfare and the industry’s image by breaking local and international laws. Lego makes sure that the transactions they engage in will have a legal basis and will be sanctioned by local or international legal organizations. Environmental In knowing the environment better, industries use demographic data. Demographic data helps the industries to decide regarding how their product will be made so that clients can appreciate it.
It will help in deciding on how a product should be changed to meet the demands of the region and a certain market. The demographic data is used to check for the need of the domestic market and what are the needs of certain groups of the environment. Lego make sure that the products they sell are proven to cause minimal problems to the environment. Lego puts up certain regulations on what type of product they will sell. Lego has also introduced better waste management strategies that aim to reduce pollutants and create a cleaner environment for the future.
SWOT AnalysisSWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieving that objective. Lego Education Strenght: 1. many different kind of sets are available on the market 2. “Fun”education /playeful learning/ 3. Exciting content 4.
Many activities 5. Sorted activity programs by ages ( product and consumer segmentation) 6.Helpful website( the consumer can find everything that they looking for such as : buy product, write comment, build up their own product atc…
) 7. Small class sizes 8. Personal attentions for each child 9. Certified, trained teachers 10. Education based on 3 pillar: – Extra learning dimension /teamworking/ – State of flow /balance between difficulties/ – 4C /connect, construct, contemplate, continue/ Weakness: 1.Expensive and takes long time to travel to education centers 2.
centers only at 6 places /not in Europe/ 3. need many stuffs to be bought for succesful learning( the learning step by step so the consumer has to follow each step this is another cost for consumer) Opportunities: 1. There are always kids for studying and selling the stuffs Threats: 1. Computer games, TV Poor countries /e. g. Africa, no money for this kind of education/( this is nature of the world the poor countryies is not the main target of the company allready) Fatih BIYIKLI 4- Porter’s five forcesPotential Entrants Lego has been around for a quite some time and the company is not greatly affected by the new entrants.
The influence of potential entrants to the company is weak. Any new entrant will have difficulty in gaining clients not unless they can provide innovative strategies that can thwart Lego from its position and get the company’s clients. The services offered by Lego is unique in terms of appearance if any new entrant want to compete with Lego’s products they need to have a huge investment to create products that have the same caliber as Lego’s products.They also need to make use of better strategies that will give them an instant brand identity. Competitive rivalry Competitive rivalry has a low influence on Lego. The company has lower concerns on its competitors since there are limited competitors in their industry.
The competitors cannot give much problem to the company since it already acquired a good percentage of the buying public. Substitutes Substitutes give high influence to Lego since substitutes can make a company lose the clients it has. The substitutes can be in the form of video games or the internet games.Lego makes sure that the substitutes won’t give them much problem. They do this by proving that the service they offer and the technologies they use to provide the service are better than substitutes. Bargaining power of buyers The bargaining power of buyers highly influences Lego and other educational toy companies.
It shows how the industry tries to create good relationships with clients. As much as possible the company maintains reasonable prices for their services. They also have promos that intend to make the clients have second thoughts on purchasing products from other companies.When the market try to dictate lower prices Lego tries to know whether it is reasonable. Lego and other educational toy companies sees to it that a big part of decisions on prices will be based on suggestions of the clients.
For Lego the bargaining power of its buyer is gradually increasing as they are more and more similar types of products and services available in the market. Bargaining power of sellers The bargaining power of sellers highly influences Lego. The company makes sure that their suppliers have high bargaining power through helping them show their importance in the industry.Lego and other educational toy companies make sure that the price being asked for a material has the same value as the same materials’ quality. This will ensure that budgets will not be wasted.
Lego makes sure that they are aware of its partnership with its services partners. Lego and other educational toy companies have to make sure that every part of the agreement with the partners will be followed. Any adverse changes or violations in the partnership agreement will incur a certain amount of risk to Lego and other educational toy companies. Competitors AnalysisTaking the time to look critically at and understand competitive advertising has been among the most effective ways to leverage means-end research into an effective communications strategy that builds on strength, stresses defensible points of distinction, and reframes the consumer decision-making process in a way that creates competitive advantage. Segmentation divides a heterogeneous marketplace into smaller and more manageable homogenous components. These smaller market segments can be targeted with more personally relevant positioning strategies that have greater appeal to individuals within the group (Reynolds & Olson 2001).
Today’s winning companies have been among the first to accentuate their distinctiveness by adopting customer-based marketing and positioning strategies. Such strategies help managers deal with their growing uncertainty regarding how to position a product and develop an action plan that will retain and cultivate established customers, and in some cases, attract market segments (Paley 2006). Competitors for Lego include Hasbro and Mattel. Hasbro is considered to be one of the largest toy makers in the world, second only to the toy giant Mattel.
Hasbro is also the creator and distributor of the world’s most popular board game, Monopoly.Hasbro has several brands of toys and games aimed at different demographics. Hasbro has often touted the safety of all its products, claiming they are lead free and that they exceed government safety standards. Mattel is known as the world’s largest toy importing company based on revenue. The products it imports include Barbie dolls, Hot Wheels and Matchbox cars, American Girl dolls and some board games. Alejandro PARADES 5- FINANCIAL ANALYSIS OF LEGO COMPANY As you know, actual figures which belong to companies are not easy to find on the internet.
But at the end of my research, figures shows us fallowing steps. Examined last 3 years, the average annual growth is about 8 percent. Approximately 20 percent of market share they have. In this context I would like to show the figures for recent years. Lego company presented their best financial for a long time in 2009. In 2009 the company’s net profit jumped by 63 percent annualy and reach 300 million and their sales increased 22,4 percent to 1.
57 billion dollars. The gross profit margin ratio measures the profitability (or gross profit margin) that is generated from each dollar of sales.Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Lego Group increased its Gross profit margin between 2008 and 2009.
This ratio shows us that the company has a net income of Danish Krone 0. 58 for each krone of sales. This is a rather high number compared to the rest of the sector. The situation seemed to improve in 2008 and there was an operating profit with a positive profit margin ratio. This means that the Lego Group makes Danish Krone 0. 6 for every krone of sales.
However, this figure is very low compared to the sector average. It shows that Lego has high variable costs that weight on the company’s profitability. Let’s look at a little after the 2002 crisis. They applied private level after this crisis. They produced different products from toys. This decision had bad impact on them.
Because they started to produce Lego T-shirts, Lego Hats something like that. But they forgot their business, their own business. So they had to produce toys. They are always perfect in this business. And when they changed their minds.
Again they catch upper-trend.Also in that period (after 2002 crisis) their market share rates dropped. In this context it is useful to look at the following chart. As shown in the chart, Lego company has not received the 2008 crisis wound. Also my friends told to you about their strategy, because of this , they could easily manage that crisis. But I can’t say the same things for 2002 crisis.
Conclusion, Lego Company has lots of variable cost. That means this is very big burden to this company and it affect the profit marjin so if they trying to decrease number of costs that they have, they can able to increase the profit marjin years by years.Mustafa OKUMUS ( 23739 ) CONCLUSION The latter part of the work is to carry out a conclusion about the various topics covered by my partners. I will summarize and highlight the major topics from our paper, for example, I will make an analysis of the pros and cons of this company, which is also emphasizing its strengths compared to other toy companies. Finally we will focus on what are the reasons for this great company is one of the leading companies in the toy market, based on the aforementioned marketing strategy for my partnerJESUS GARCIA VALERO Dear proffesor Our group which has lego company s work has sent by me.
but this is not the last version of our presentation. we are going to bring the datas to the power point program but before to do this, we would like to take your ideas about our task if it is allright or not and stages of our work. it is almost finished those informations will be use in presentation if there is no problem therefore we need your help to check it out. thanks for your atttention and see you on thursday for feedback.