Lego 's Strategic Objectives For The Years

To achieve its business strategies the LEGO has taken the help of the IT vendors IBM and SAP for the establishment of their IS making it possible to extend more quickly and add capacity and functionality as it was needed. Supporting massive expansion brings its own challenges, one of which is to ensure that the underlying systems can scale reliably and effectively. The main issues with the supply chain management, end customer feedbacks, product profit accountability, spread its market and the various unit functioning etc. had been addressed completely by the advent and the establishment of the efficient IS for the business.

These suppliers have slightly more bargaining power because of the differentiation between their work. However the need for these suppliers can be eliminated if furniture manufacturers produce every piece of their products themselves. A furniture manufacturer will only outsource production of parts if it proves to be cost effective for their company. Since the price of materials is consistent market and the outsourcing of production is unnecessary, suppliers have low bargaining power in the furniture manufacturing industry.

Bargaining Power of Suppliers: The bargaining power of suppliers in the industry is low. There are numerous suppliers in this industry, and the large department stores have the ability to negotiate for the lowest prices. In addition, the switching costs are low, as the products are not highly differentiated. There are a large volume of purchases in the industry, allowing the department stores to exert even more power over the suppliers.

Bargaining power of buyers is medium-high because of the low switching costs and wider spectrum of similar products selling at competitive prices due to the influence of developing countries

Bargaining power of supplier: High levels of competition among suppliers act to reduce prices to producers. This is a positive for Ford Motor Company. Standardization of parts allowed Ford to reduce dependency on fixed supplier/vendor which goes into producer’s favor.

1. From early 1990s to 2004, the Lego Group, a long successful toymaker with a world-renowned brand, fell into the edge of bankruptcy. Compared with the highest revenue in 1999, the revenue in 2014 decreased by 35.6% while the net profit was negative, seven times less than that in 1999, the lowest in the past ten years. Its net profit margin and ROE were also the lowest. The gross margin and inventory turnover were all lower than its competitors. The strategic moves in the two main periods “growth period that wasn’t” (1993-1998) and the “fix that wasn’t” (1999-2004) lead to its poor performance.

An Analysis of the Operations Strategy and Management Decisions in Lego Group between 2004 and 2009

Entrants erode the market and rarely grow it enough to the incumbent’s advantage. New entrants have an impact on the industry business but at a moderate level. This is mainly because new firms will find it difficult to compete against the incumbents’ strong brand, like Starbucks and McDonalds, and because the market is saturated. However, the costs of entry are relatively low. Most of the raw materials are cheap and the distribution chain is not complicated. This makes it easy for new companies to enter the market. Also, established companies might leverage their brands as they enter the industry to compete against the incumbents.

The purpose of this report is to research and examine Toys "R" Us, the world's largiest toy chain store, so as to provide the company with strategic recommendations for future success. To throughly understand the company, the analysis is divided into multiple focus points: industry analysis, firm strategy analysis and firm financial analysis. The analysis concludes with rating that we give the company's stock as well as our strategic recommendations for the company to increase it's overall preformance.

There are many barriers to new organizations in the toy industry, making the threat of new entrants low. Lego and other big toy companies like Mattel benefit from economies of scale. An economy of scale is achieved by lower costs through large volume production (Textbook glossary). Economies of scale can occur in many departments within the organization including production, marketing, research and development, and finance. Some manufacturing of Lego products was shifted to Central Europe and Mexico in order to benefit from lower wages and to shorten product supply chains (p. 13 of case). The management of Lego additionally holds expertise on production, distribution and customer needs; which are absent in a new organization. To enter the toy sector a potential entrant needs to calculate the start of production at a level that will give a competitive position and production costs lower than the market.

Lego President and CEO Jørgen Vig Knudstorp was surprised when Greenpeace activists, in an attempt to stop Arctic drilling, mounted a campaign criticizing his popular toy company for its cobranding relationship with Shell Oil. At first, Knudstorp and his executive team at Lego headquarters in Billund Denmark didn’t quite understand Greenpeace’s criticism. Was the criticism justified? Why didn’t Greenpeace tackle Shell directly? Would Greenpeace’s campaign be taken seriously or would it simply fade away? As Greenpeace beefed up its efforts through social media, Lego’s top management was left wondering how to respond to Greenpeace or whether they should respond at all. And more importantly, executives didn’t know whether Lego should continue its business relationship with Shell.

As we have seen strategies will provide to organizations a unique position in the market, making hard to our competitors to copy the competences achieved by those strategies differentiating us from them. Strategies also help organization to achieve the objectives in the long-term, focusing in not losing the core business, but what happen when the long term strategies are not supported by an action plan? What happen when the objectives are set without considering the resources and skills which the company will need to achieve them?

Lego's key strengths may be seen as coming from both its brand recognition and its ability to use innovative

Limited number of suppliers –In the case of 3D printing, early bargaining power of suppliers will be strong as there may be many buyers of the technology and a limited number of suppliers.

External environment is quite important for the any company, because it creates the conditions that the organization need to run the business in. In order to develop company strategy successfully, the external environment need to be analyzed properly. One of the best techniques to do that is Five Porter’s Forces analysis.