LOGO Case Study
Also – like in all markets – the internationalization has affected the strategy of the company. They entered new markets, opened markets in South America, the US and Asia and negotiated with retailers over there.
Apart from opportunities, threats which were the oil crisis, financial crisis, competitors and the development of customers need, LOGO needed to react and change or chose different strategies. While the oil and financial crisis occurred, LOGO invested money in new equipment, entered new markets and launched new products.
For that reason they ere able to overcome these difficulties at that time. Moreover they changed their traditional strategy which Included their wooden toys to an Innovative strategy with plastic bricks and electronic features to adapt themselves to the ‘new age. Also the competitors were a reason for them to develop their strategy.
To stay competitive LOGO for example hired the young innovative CEO J?urge Big Inductors and sold the LOGO theme park to Merlin Entertainments Group to be able to focus on their core product.
Within their strategic management the company was always willing to take risk which is until now one of their strength. Moreover the popularity of their company and the popularity of movies like Star Wars helped them to create new products and to develop their strategy in a more modern way through conquering partly the movie industry. On the other hand they had weaknesses concerning the often changing management strategy. First they went from the centralized management to decentralized management where a number of senior and long serving managers left. This also led to difficulties In financial control.
Moreover when they changed their traditional wooden toys to the now famous plastic bricks and there features they did not know at that point if this new way will be accepted by the customers. The last point under strategic position is the purpose and the culture. During the development of strategy the main purpose was to entertain children but most of all to stay profitable and to keep production and main operations in Denmark. The second key characteristic is the strategic choices. In the begging their key business was toys for children whereby after a time they created LOGO theme parks.
After recognizing that it is the better strategy to focus on their main business they sold it to an entertainment group. To stay competitive it was also necessary to go international, entered new markets, form alliances (e. G. Warner Brows) and launch new products to keep their growth rate up. The strategy to steadily develop Innovations and not to stay with the traditional products Is still part of their company.
The third key characteristic of strategic management Is to put strategy Into action. The LOGO Group always reacted quickly concerning environmental changes.
One example is Tanat at ten time ten customer enema products winch invented small electronic engines and other technical features. En n ewe age teeny 2. There are several external environmental aspects which influenced the strategic development of the LOGO Group.
The first external feature is the oil crisis which has affected the world economy negatively. Instead of choosing a cost cutting strategy they counteracted with the introduction of new innovative products like LOGO Technical, play themes like LOGO Castle and LOGO Cowboys.
Furthermore they conquered new markets in South America, the US and Asia. With this they were able to grow international wide and overcome the oil crisis. The competition is another eater of the external environment which has influenced their strategy.
Bigger companies entered the sector with advanced electronic games. Thus they needed to reconsider their traditional strategy which included their traditional brick. Even if they introduced a ‘Fitness’ programmer to cut costs and restructure, the company Just shortly made profit.
External features like the rapid change of the environment, difficulties in financial control and logistics and longer lead times needed for running in new activities such as the new LEGEND parks were responsible for their fluctuating profit. Moreover the customers are an essential external feature. The customer needs changed from traditional to innovative which is reflected in the success of bigger companies with electronic games.
It turned out that younger customers expect more of their toys then before and that the using time of traditional bricks decreased.
For that reason LOGO came up with play themes which connected LOGO and movies to extend the life span of LOGO bricks – LOGO Star Wars was introduced. To satisfy the customers within the ‘new media’ age they created a new digital strategy where they developed an online multilayer (LOGO Universe). Also the internal action of renaming LOGO DUPLE into LOGO EXPLORER affected the external factor customer who did not approve this change and that is why sales decreased. In addition retailers started with too high inventory and needed to wait for it to sell before they were able to buy new LOGO supplies.
So the company needed to reconsider their logistic strategy.
Besides this, the number of competitors in the US increased which weakened the exchange rate of the IIS$ against the Danish Crone which led too decrease in sales. In this case the external factor retailers also played a role. Due to their own problems they put more pressure on LOGO to create new products but since high stock levels blocked the launch of innovations retailers demanded discounts in return to buy more of their new products. A main problem was here the external factor of (seasonal) buying behavior since the customers especially demanded LOGO products around Christmas.
To avoid this, the company now is eager to get closer to retailers in order to understand their sales to end customers.
Also to compete in the price war between the competitors and LOGO they had to minimize their cost to offer a more favorable price. So the company cut the number of suppliers. The last feature of external environment which influenced the strategy of LOGO – like the oil crisis – was the financial crisis in 2009. Here the management decided to take the risk to increase the production to prepare for 2009 onwards and to order new equipment.
This decision proved to be right and since teen teeny snow steady progress. 10 summarize, It can De salsa Tanat many Theatres AT the external environment influence strategic management and that it is necessary for a company’s success to scan the environment, define critical success factors and react correspondingly.
. The generic term which includes resources and competences is ‘Strategic capability where you identify the unique resources and core competences which give you an advantage over competitors and what makes your company ‘special’ comparing to others.
Beginning with the resources of LOGO you can name several resources such as their brand name which is well known under consumer of toys for children. The raw materials knowledge and the focus on high quality standards helped the company to regain their successful position because instead of outsourcing their production facilities which are also a resource they decided to eave their production in Denmark. Another resource which helped LOGO was their later management organization and leadership of family members.
The most important resource of the LOGO Group which enabled them to regain their successful position in the global toy market is their product creativity. Concerning the last point of resources there is to mention Logo’s most valuable competence, their innovations. During their whole development they always solved difficult times through launching innovations which gave them a comparative advantage over the competitors. Moreover the LOGO Group uses their brand name to create alliances with movie makers, publishing companies, game makers and other companies in different markets.
Moreover they successfully keep on capturing different markets to internationalist but still setting value to stay a family business and keep their core business.
4. In 2004, Keeled decided to be more involved in strategy and to take more responsibility. At this point the COO left the company. Additionally they changed the famous name and expected to expand their small children’s segment. Instead of the expected expanding segment, customers did not welcome this change and sales decreased.
Another problem was that retailers had to high inventories so that they needed to sell those products before buying the new products of LOGO.
There would have been different alternatives for the company. The thinking of getting family support back and representing the family business status of the company was a smart choice. But instead of now staying with their traditional product name and make use of their recognition value they wanted to rename it to attract a bigger spectrum of customers which went into the opposite erection.
Another strategy concerning the retailers would have been to first wait for the reaction of the customer in terms of the new name. Or in advance the LOGO group could have conducted a market research to figure out if a new name is profitable.
But they probably expected a higher demand and therefore wanted to stock the retailer’s inventory accordingly. 1 En LOGO Group snouts malting tenet strategy concerning to Innovativeness Ana adoption since the internal and external environment keeps on changing. Now it is advisable to secure a solid management and not to make many changes within the management structure.
This will help to give the employees more security and confidence, as well as the customers. Moreover LOGO already realized that there is a ‘new age of customers who prefer more visual and electronic products then the so called old fashioned toys.
For that reason they should keep making alliances with movie and game producer. In addition to that new technical devices like smart phones and tablets offer a new opportunity to keep up with the customer needs and with the time. Here the company could create a game App to gain even more popularity and to show that the LOGO group is an innovative company with traditional roots.
Another suggestion is to try to conquer new markets maybe within Europe but keep their roots in Denmark. But also the idea to enter into the parlor game market with a LOGO board game is a way to stay innovative.
With this idea as well as with LOGO movies also older target groups can be reached. All in all if LOGO Group stays innovative, keep on entering new markets to ensure their growth rate, focus on customer needs and focus on their main business which is to entertain children they will be successful in the future.