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LEGO GROUP CASE STUDY

Nayomi Ekanayake

1. Analyze the macro environment


The PESTLE Analysis is a framework used to scan the organizations external macro environment. The letters stand for Political, Economic Socio-cultural, Technological, Legal and Environmental. political factors refer to the stability of the political environment and the attitudes of political parties or movements. This may manifest in government influence on tax policies, or government involvement in trading agreements. Political factors are inevitably entwined with Legal factors such as national employment laws, international trade regulations and restrictions, monopolies and mergers rules, and consumer protection. The difference between Political and Legal factors is that Political refers to attitudes and approaches, whereas Legal factors are those which have become law and regulations. Economic factors represent the wider economy so may include economic growth rates, levels of employment and unemployment, costs of raw materials such as energy, petrol and steel, interest rates and monetary policies, exchange rates and inflation rates. These may also vary from one country to another. Socio-cultural factors represent the culture of the society that an organization operates within. They may include demographics, age distribution, population growth rates, level of education, distribution of wealth and social classes, living conditions and lifestyle. Technological factors refer to the rate of new inventions and development, changes in information and mobile technology, changes in internet and e-commerce or even mobile commerce, and government spending on research. There is often a tendency to focus Technological developments on digital and internet-related areas, but it should also include materials development and new methods of manufacture, distribution and logistics. A PESTLE analysis should feed into a SWOT analysis as it helps to determine the threats and opportunities represented by macro-environment forces that the organization usually cannot control. On an international basis, it is best to perform the analysis on a country-by-country basis because factors can differ greatly between countries (or even regions).

2. What features of the external environment have influenced strategy development at the LEGO Group?
The external image of the company - that the affected the general public opinion and the usefulness of the LEGO Group as a prospective partner and employer suffered due to the fluctuations in sales and profits. Heavy financial losses led to a weaker capital structure and limited investment opportunities for the future. As a result of the procurement process has been re-analyzed and restructured were significant and cost reductions in all areas of the company. One of the first decisions strategies was based on the oil crisis in the 1980s. The Companies responded positively by introducing new innovations and penetrating previously unexplored markets. Spurred changes in the market environment in the 90s on strategy development at LEGO. The emergence of competitors and research as opposed to what Lego bases his strategy up to this point proved to be a focal point for the company. Objectives were discussed and adopted and the company moved on. LEGO had difficulties in accessing and reading the market. Once this has been highlighted by a new COO, structured the company and went on a cost cutting expedition Free resources to the objectives. LEGO suffered a sharp decline in long-term support the "Most Admired Companies in Denmark 'survey.

3. What resources and competences of the LEGO Group have enabled them to regain their successful position in the global toy market?
Resources are the assets that organizations have or can call upon whereas competencies are the ways those assets are used or deployed effectively. A shorthand way of thinking of this is that resources are what we have and competencies are what we do well. The commitment of LEGO management and staff is one of its major advantages. Having staff is dedicated to the mission and vision of the company's strategy essential for the success of their short-and long-term goals. LEGO bold approach to the global financial crisis in 2009 was a major part of their Success. This willingness and ability to act boldly looked like it in good stead during a time of economic downturns. Another excellent use of resources in the form of enthusiastic users for the development of LEGO products. LEGO have had is fortunate to have a strong brand and awareness in the market. The market favorable inclined 'Forgiveness' Companies that have taken the time to cultivate strong brand awareness. Even although LEGO had significantly greater problems, and they claimed developed their relationship with their customers to better understand their needs and inculcate a higher standard of customer service within the company. The strongly suffered from the distribution company retail. The focus remained heavy financial losses and sell LEGO. However briefly discussed, this was clearly a last resort decision for the CEO. The family company and their commitment in making it succeed, worked for them. Had she given the company would be the LEGO brand is not survive the climate there have did. The company enjoyed strong financial backing. Instead of selling the company decided it was that a loan would be included. Enter the heavy losses experienced the climate and changes in market share, LEGO yet secured a loan. Obviously someone else believed in them as much as they believed in themselves.

4. What were the alternative strategies facing the LEGO Group in 2004? Why do you think the LEGO Group followed the course that they did?
One of the foremost effective ways that of making various ways could be a SWOT analysis. This is essentially an analysis of the macro and small environments strengths, weaknesses, opportunities and threats. The case indicated that the corporate did indeed do the same analysis with the chief executive officer distinctive a mixture of internal and external factors chargeable for their issues. It was in short mentioned that they'd sell the business. This was just one of the alternatives recommended and discarded. The Lego complete had thrived for several years on its family in hand operations. Disintegrating this image within the limelight would have evidenced to be harmful to the lifetime of the corporate. Lego believed that they could save the corporate (theyd done it before) and that they set getting ready to do exactly that using daring concepts and innovative thinking. If they oversubscribed the corporate theyd also risk the Lego gift being related to one thing apart from their expressed mission. Another various was to maneuver eightieth of its producing operations out of the country into the Jap market wherever operations were typically cheaper. However there was the added issue of distribution channels. The choice to axe this solution was taken when Lego modified its philosophy concerning its offer chain. the choice to move operations would have resulted in additional layoffs of employees in Denmark and less flexibility in its distribution ways. This is able to have severely affected the main focus on distribution to key customers. Scraping employees would have resulted during a poor public perception of the corporate. By this point the corporate had set to not sell its business interests and would so have created the correlation between diminishing company image and sales. The value of moving operations (distribution channels), affiliating with Flextronics and scraping employees would so much outweigh the cost of keeping producing because it was. Another think about this call was that toys space seasonal artifact and Lego felt that they'd the capability to accommodate the high prices of producing with the high seasonal demand of the merchandise. As a primary step in cutting prices, the whole acquisition method was reviewed. This resulted in immense price savings for the corporate. One amongst the a lot of successful alternatives, cut would have freed up resources to pay back the loan as well as stabilize the capital position of the corporate.

5. Looking at the LEGO Group today how would you approach strategy development to ensure a successful development of the company in the future?
Strategy is viewed through four totally different lenses. By developing these lenses, the strategy of plaything is increased to incorporate changes within the current business environment. This successively can make sure the success of the companys development in future. Strategy as style - this lens emphasizes the utilization of tools and ideas that encourage objective analysis. Strategy is associate outcome of selections regarding positioning and positioning of the organization within the fast-changing setting. Factors affected on a business and operational may also be checked out. Distribution channels and ways, logistics and offer chain fundamentals, optimizing resources and highlight areas for improvement. The plaything cluster highlights innovation collectively of its key strategic advantages. Making new merchandise and inspiring innovation is clearly the approach Togolese Republic. in a very market that's dominated by digital and electronic toys plaything has to continuous return up with new and exciting merchandise to remain on high. Strategy as expertise - LEGO has in its favors the advantage of dedicated and constant workers World Health Organization have stood with the corporate through its most attempting times. Historical knowledge and information as well as expertise within the specific business cannot be discounted as a strategic tool. the staff experiences at intervals the corporate and outwardly can provide a broader perspective on wherever the corporate ought to be going. Strategy as selection - Utilize the individuals resources at intervals the corporate to make sure additional various innovations and creations. The creation of latest concepts can solely return once individuals area unit exposed to the strategy of the corporate. Open door policies make sure that workers World Health Organization area unit not part of the strategic management team may also contribute in how. This variety of individuals adding concepts is an enormous strategic advantage for the corporate. Strategy as Discourse -The strategy ought to be communicated and explained in language that's acceptable. Language and therefore the use of it is an enormous resource for the corporate. The strategy team ought to use media that's user friendly and cozy to speak the strategy. This can eliminate harmful barriers to communication between lower and higher level employees. Another necessary component of strategy is management designs and approaches to different things. Management mustn't prohibit them to at least one specific method of in operation. Things could involve different ways for solutions. Managers ought to be filmable This is crucial for modification management within the corporate strategy.