preview

Lego Case Strategic Management

Better Essays

1. What has led the LEGO group to the edge of bankruptcy? External threats (macro PEST, micro Porter’s 5 forces) ­ giant conglomerates dominating industry (risk of being taken over) p.2 ­ competing rising costs while competitors outsource p.2 ­ pressure from big retail customers with power? e.g. Walmart, Target p.2 ­ negative industry trends in toy industry p.1 1) fad toys are rising and product life cycles declining. threat of shortening/declining life cycle despite rise of fad toys, steady growth of industry at 4% 2) children had more after­school activities and less unscheduled time to play 3) demand shifts towards technology (inc., videogames and online activities 4) parents prefer to buy toys which they …show more content…

Despite their strategy being that of following Disney, it is not Disney and their competences and strengths would be different (LEGO started as a toy manufacturer with cutting edge capabilities in material science, not as a film, character based company that built a costly themepark to bring these films/Walt's imagination to life, as a brand Lego is more tangible andin order to understand its brand people need to touch the bricks) ­ Yet, expansion tended to be done in­house p.4 which means HUGE COSTS to manage that huge portfolio 1998 ­ Huge investments did not result in positive sales results hence losses 1999 ­ 2004 ­ structure reforms, production cost­cutting, consolidation (retail vertical integration) with Plougmann, employee morale still there? p.5 Continued product development and market development Yet a lot of problems still needed fixing: not understanding consumer demands (changing of

Get Access