Vanessa S.

Cubas
04-1426-2010

LEGO Case
1. Explain how the development of strategy at the LEGO GROUP reflect the
key caracteristics of strategic management outlined in section 1.2 and in
the model in Figure 1.3

When it comes to the long term direction of a company: LEGO identified where and
what were provoking all their problems in the company throughout the times. That is
why the corporates decided to implement new strategies that would generate them
good results as long as theyd keep focus in not that many paths.
The scope of an organizations activity: One of the things that LEGO did was to
expand to as many countries as possible. Once there, they thought it would be good to
reach different segments in the market to increase their profits via Software,
Educational kids products, Dolls, Books, Magazines, Television, Themes Parks and
even their own shop retails. The focus was to saturate the market, which gave them
positive results in certain areas.
Advantage for the organization over competitors: LEGOs background has made it
possessor of reliability among all manufactures. In addition of their position in the
market, that has placed them in the second place among other toy makers companies
in the world only seconds to Mattel. Also, although many companies came up with the
same idea afterwards. They were able to keep their position up in the market.
Strategic fit with the business environment: on this particular area LEGO managed
to aim its products to niches that would receive their products eagerly. Their products
covered: childrens preferences, to adults desires in different forms. They did not only
focused its products in the local market but they facilitated LEGOs products to all over
the world. Action that gained them fans everywhere, which would translate later in big
profits for the company.

Vanessa S. Cubas
04-1426-2010

The organizations resources and competences: As LEGO was going through the
many strategies that they implemented, they had to overcome several upcoming issues.
Among these issues, it was present the inability to satisfy the demand when the sharp in
sales exceeded their expectations. On another opportunity, they had to make many
changes in almost every area of the company in order to keep subsisting in the market.
The values and expectations of powerful actors in and around the organization:
there was a moment in the LEGOs story were no one was happy. They were standing
in a burning platform. Besides, it existed a matrix structure where their members had no
idea about any movement of the company whatsoever. Not forgetting the neglected
attitude casted towards its customers. However, when Jorgen Knudstorp with the
assistance of Jesper ousen and Chris Zook discovered that they needed a change in
the business strategy; they implemented them.
Upon the change that LEGO went through, they had to understand where they were
first. They had to acknowledge everything that prevented them and held them back in
the growing market, once getting to know their failures it was easier to find solutions.
However, they went a couple of years focusing on the wrong paths until the day that
lights were shed on them and they were finally able to execute these new strategies as
best of their capabilities.
2. What feature of the external invorement have influence strategyc
development at the LEGO Group?

The principle influence of Legos strategic development is, the undeniable group of
toy manufacturers from all over the world. These companies mean a big threat to the
growth of the company.
Having competitor is a risk to the finance statements of any organization, nor only are
they there to compete in the same market. But also, to cause struggles within
companies in their constant search for overcoming any difficulty that it may appear.
On the other hand, it was blatantly clear how the LEGOs owners have feared the
Bricks patent expiration date for years. When the company completes the legal amount

Vanessa S. Cubas
04-1426-2010

of time that the laws patent grants them. It is very likely that many similar competitor
would surface from everywhere. Not it will only mean more competitors by also a battle
between retailers and prices.
3. What resources and competences of the LEGO Group have enabled them
to regain their successful position in the global toy market?

First of all, their products are some of the most transcendental sources of enjoyment
in such tiny products. That are not only focused on entertainment but also in
nurturing the child within every person willing to experience with them.
In addition, each and every strategy that has been applied throughout the times
in order to enhance their productivity has left some impact in the company.
For instance, although it was not executed in the best of ways, all the
diversification that they came up with resulted in attracting or helping to get the
customers attention. However, what I believe that put them in the spot out there was
when they launched the story starters line dedicated to many popular and fictional
universes.
Also, the management and consulting that they have being part of has helped
them in a big extend. Not only providing them with advices but teaching them the
best way to putting it into action. All thanks to the willingness of the corporates to
enable and acknowledging these changes.
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?

After several years of ups and downs, LEGO with the help of Knudstorp
and Zook came to the realization that focusing in many diversifications was not
the way to go. First, because it was not profitable to keep everything working the
way they were; they were more of a burden to the company that of any benefit.

Vanessa S. Cubas
04-1426-2010

For that reason, the strategy that was propose was to going back to
basics. Where the main focus of the company was going to survive by: cutting
costs, selling businesses, restoring competitiveness, generating cash and
ignoring the dash for growth in the immediate future. Also, to focus the business
in retail first, then the end user; improving margins and stocks, delivering the right
kits at the right time. Creating a balance portfolio on the shelves. But the most
important would be to focus on kids and in Adults Fans of Lego.
This way they would get back in track, the place that they should had
never left. By following these proposals they improved in every area that they
were lacking good results, by changing some of the ways they got to give the
company a new perspective that would generate them a lot of revenues and
profits after taxes.
5. Looking at the LEGO Group today how would you approach strategy
development to ensure a successful development of the company In the
future?

I would study the company situation thoroughly by going to every area and
analyzing the situation of every place in order to find what is working and what is not.
Also, I would like to keep what it is working and expand it to give it a better potential that
would ensue a good aftermath.
On the other hand, after going through the actual situation of the company if it
necessary I would emphasize the investment in the entertainment industry mainly in
movies and videogames, which are gaining a lot of terrain lately. I would find ways to
star alliances with some studios that develop popular blockbusters and see where it
takes from there.
When it comes to videogames, adaptations on originals and popular franchises
would be the best way to go. Will it not only have a built in fan base but it will also
ensure possible sequels or at least it would put the company in the market.

Vanessa S. Cubas
04-1426-2010

I would also approach and make the Story Starters product a priority by doing
marketing research in popular media. Such as movies, cartoons, popular series and
even music, YouTube and the internet as a whole.
In addition, I would advise to build a new line of bricks that are specially built to
enhance robots construction, in response of the many invention and research that are
being perform by students or robots amateurs.