Business Environment And Strategic Management: A Case Of Lego

Describe how the value that the firm creates becomes valuable as a result of factors in the general and industry environment?

Answer:

1. Introduction

2. Value of Lego

The toy making company has integrated theme parks, Lego video games and also designed scenes of popular movies like Man of Steel, Lone ranger, Ninja Turtles etc which attracts the attention of all ages of customers. The introduction of the new Friends Line in 2011 for the girls made it possible for the company to surpass Mattel (Barutçu & Tunca, 2012).

3. PESTEL analysis

3.1 Political

3.2 Economical

3.3 Social

3.4 Technological

3.5 Environmental

Lego’s current position may be hampered due to the lack of proper waste management system. Around 1099 pieces of plastic bricks are produced each day adding to the waste plastic and also carbon emission by the technologies. Hence improper management of the same will endanger the sustainability of the company. Moreover as per the Forbes majority of the paint used on the toys contain lead which is harmful for children use.

3.6 Legal

Lego in order to formulate a growth strategy has started implementing the laws set by the Toy Safety Directives 2009. The company has switched over to plastic bricks with rounded corners so that the use of the toys is safe foe children below the age of 14 years. The company also faced copyright issues in respect of the movie produced by Lego with the Warner bros. The negative movie showing the negative affect of the deal between Shell and Lego damaged the goodwill of the company (Lasserre, 2012).

4. Porter’s Five force analysis

4.1 Threat of new entrants

4.2 Threat of substitutes

4.3 Bargaining power of buyers

4.4 Bargaining power of suppliers

The major raw material for Lego products is plastic which is being made by oil hence the bargaining power of suppliers are very high. Hence with the fluctuations of oil prices the company’s cost of production fluctuates.

4.5 Rivalry of competitors

The two other rival companies namely Best Lock from Hong kong and Mega Brands from Canada offers low priced products like Lego. However high brand loyalty and positive brand image reduces the chances of the rivals.

5. Core competencies

• Developing product leadership and brand image in targeting a niche product market within the overall toy industry
• Adoption of the segmentation strategy to reach out to the target market
• Constant renewal of the same product and focus on high quality standards, design and efficient supply chain (Bloomberg, 2015)

6. Value chain analysis

6.1 Inbound logistics:

• Main supplier
• Use of standard commodities (Olivas-Lujan & Bondarouk, 2013)
• 3D Printing
• Robotic transportation

6.2 Marketing and selling

Lego for the purpose of increasing sales increase the brand value, enters into strategic partnerships and engages in services like downloadable manuals, web community etc.

6.3 Purchasing goods

• Quality control of plastics
• Procurement of oil from companies like Shell at high market price
• Arranging for fairs to recognize the creation of Fan’s

6.4 Technology development

• Digitalization of brick products by collaborating with reality company Metaio
• Usage of 3D animation technology(Barutçu & Tunca, 2012)

6.5 Human resource management

• High rate employee benefits like scope of innovation, employee brainstorming sessions
• Management workshops and congenial working hours
• Focused on employee motivation and satisfaction
• Employing creative people for the posts

7. Conclusion

8. Reference list

Books

Olivas-Lujan, M., & Bondarouk, T. (2013). Social media in strategic management. Bingley, UK: Emerald.

Rothaermel, F. (2013). Strategic management. New York: McGraw-Hill Irwin.

Journals

SuÅ‚kowski, ÅÂ?. (2013). Strategic Management as the Ideology of Power. Journal Of Intercultural Management, 5(3).

Sumpio, B. (2013). Application of Porter's Five Forces Model and generic strategies for vascular surgery: should be stuck in the middle?. Vascular, 21(3), 149-156.

Websites