Strategic Analysis of Lego
| Strategic Analysis of the LEGO Group of LEGO Group | | |
Business Policy and corporate strategy
9th January 2012
Strategic Analysis of the LEGO Group
Discussion and evaluation of strategies adopted by Lego during 1995-2009
Strategies adopted by Lego 1995-2009
Strategies are processes businesses carry out, the directions they take and the decisions they make to reach their goals (Thompson & Martin, 2005). Strategic models such as the Ansoff matrix can be used to aid companies in choosing a suitable growth strategy. The Ansoff matrix proposes that a company’s growth strategy depends on whether it markets new or existing products in new or existing markets (Ansoff, 1957). The diagram of the Ansoff matrix below details what growth strategies are most suitable depending on whether the company is selecting new or existing products/markets.
Other types of strategies, corporate-level strategies, are outline by Hill & Jones (2007). They explain that corporate-level strategies should help a business to produce goods at a lower cost or in a way that allows for differentiation and premium price. The corporate level strategies they outline are: * Horizontal Integration – this involves buying or merging with industry competitors * Vertical Integration – this involves entering new industries to support the company’s core product * Strategic Outsourcing – this involves handing over the running of company processes that are not central to the businesses core competences
Using the Ansoff matrix and Hill & Jones’s corporate level strategies as guides it is clear to see that LEGO progressed through different strategies from 1995-2009. These different strategies can be split up into the periods of time shown below:
1995 – 1998
From 1995-1998 LEGO went through some huge strategic changes and set very ambitious future objectives in 1995. They shifted their company structure from a traditional hierarchical structure to a flatter one
Business Policy and corporate strategy
9th January 2012
Strategic Analysis of the LEGO Group
Discussion and evaluation of strategies adopted by Lego during 1995-2009
Strategies adopted by Lego 1995-2009
Strategies are processes businesses carry out, the directions they take and the decisions they make to reach their goals (Thompson & Martin, 2005). Strategic models such as the Ansoff matrix can be used to aid companies in choosing a suitable growth strategy. The Ansoff matrix proposes that a company’s growth strategy depends on whether it markets new or existing products in new or existing markets (Ansoff, 1957). The diagram of the Ansoff matrix below details what growth strategies are most suitable depending on whether the company is selecting new or existing products/markets.
Other types of strategies, corporate-level strategies, are outline by Hill & Jones (2007). They explain that corporate-level strategies should help a business to produce goods at a lower cost or in a way that allows for differentiation and premium price. The corporate level strategies they outline are: * Horizontal Integration – this involves buying or merging with industry competitors * Vertical Integration – this involves entering new industries to support the company’s core product * Strategic Outsourcing – this involves handing over the running of company processes that are not central to the businesses core competences
Using the Ansoff matrix and Hill & Jones’s corporate level strategies as guides it is clear to see that LEGO progressed through different strategies from 1995-2009. These different strategies can be split up into the periods of time shown below:
1995 – 1998
From 1995-1998 LEGO went through some huge strategic changes and set very ambitious future objectives in 1995. They shifted their company structure from a traditional hierarchical structure to a flatter one
References: AMEXDIS. (2005). Proceedings of 1st international conference on automated production of cross media content for multi-channel distribution. Industrial and Application Papers. 22 (2), p.21 Ansoff, I Asia Times. (2006). Playtime is over for China 's toy industry. Available: http://www.atimes.com/atimes/China_Business/HF21Cb05.html. Last accessed 4th January 2012. CPSC. (2008). CONSUMER PRODUCT SAFETY IMPROVEMENT ACT OF 2008. Available: http://www.cpsc.gov/cpsia.pdf. Last accessed 6th January 2012 Daily Mail East Valley Tribune. (2008). Block party: Lego turn 50. Available: http://www.eastvalleytribune.com/get_out/article_0003e4a5-f20a-5bf7-9eb1-9bc449168073.html. Last accessed 4th January 2012. Kotler, P., (1988) Marketing Management: Analysis Planning and Control, Prentice-Hall KPMG Mintel. (2010). Toy Retailing - UK - December 2010. Available: http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=480969. Last accessed 5th Jan 2012. Porter, M Prahalad, C.K & Hamel, G . (1990). The Core Competence of the Corporation. Available: http://hbr.org/1990/05/the-core-competence-of-the-corporation/ar/1. Last accessed 6th January 2011. Telegraph. (2011). Finacial Crisis. Available: http://www.telegraph.co.uk/finance/financialcrisis/. Last accessed 6th January 2012. The LEGO Group Tompson, J & Martin, F (2005). Strategic Management, Awareness & Change. 5th ed. London: Cengage. AMEXDIS. (2005). Proceedings of 1st international conference on automated production of cross media content for multi-channel distribution. Industrial and Application Papers. 22 (2), p.21 Ansoff, I Asia Times. (2006). Playtime is over for China 's toy industry. Available: http://www.atimes.com/atimes/China_Business/HF21Cb05.html. Last accessed 4th January 2012. CPSC. (2008). CONSUMER PRODUCT SAFETY IMPROVEMENT ACT OF 2008. Available: http://www.cpsc.gov/cpsia.pdf. Last accessed 6th January 2012 Daily Mail East Valley Tribune. (2008). Block party: Lego turn 50. Available: http://www.eastvalleytribune.com/get_out/article_0003e4a5-f20a-5bf7-9eb1-9bc449168073.html. Last accessed 4th January 2012. Kotler, P., (1988) Marketing Management: Analysis Planning and Control, Prentice-Hall KPMG LEGO Universe. (2011). Game Closing Questions. Available: http://universe.lego.com/en-us/help/faq.aspx?id=359551. Last accessed 5th Janauary 2012. Mattel. (2012). Barbie Home. Available: http://www.barbie.com/. Last accessed 5th January 2012 McKinsey Growth Pyramid Mintel. (2010). Toy Retailing - UK - December 2010. Available: http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=480969. Last accessed 5th Jan 2012. Porter, M Prahalad, C.K & Hamel, G . (1990). The Core Competence of the Corporation. Available: http://hbr.org/1990/05/the-core-competence-of-the-corporation/ar/1. Last accessed 6th January 2011. The LEGO Group. (2011). About Us. Available: http://aboutus.lego.com/en-US/group/default.aspx. Last accessed 7th Janauary 2012. Tompson, J & Martin, F (2005). Strategic Management, Awareness & Change. 5th ed. London: Cengage.