Preview

Strategic Analysis Of The 2004 LEGO Group Crisis

Good Essays
Open Document
Open Document
524 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Strategic Analysis Of The 2004 LEGO Group Crisis
Strategic Analysis of the 2004 LEGO Group Crisis Abstract LEGO Group is a worldwide, well-known toy manufacturing company. In 2004, the company was faced with a major financial crisis and a major decision to make. Do they try to save the business or not? Through strategic analysis of the company’s external and internal environments, many contributing factors became evident. External Analysis The external environment facing LEGO “consists of many external conditions and forces that have the potential to influence their organization” (Ketchen and Short). The external environment is analyzed through macroenvironmental, industry, and opportunities and threats. Macroenvironmental Analysis The PEST analysis organizes and identifies how macroenvironmental factors affect LEGO. Political. Trends within the political segment shaped LEGO throughout the years. First, outsourcing toy manufacturing to China created employment overseas, meaning an increase in overseas household spending. Star Wars also became a popular trend, making references to fighting and crime in the world. This significantly impacted toymakers, specifically LEGO, by providing an opportunity to incorporate new trends into their products. LEGO was also influenced by regulations that supported safer toys; they needed extra safety precautions when creating products. Economic. The 2004 LEGO crisis is related to the overall economics of the 2000s, when the global economy slowed down, decreasing household spending. As unemployment rose, consumers were discouraged from purchasing LEGO products, because they were unessential. This unstable economy resulted in a decrease in sales for LEGO. Another trend in the economic segment was the decreased cost of outsourcing. Companies began outsourcing manufacturing to Asia, because labor was cheaper. In addition, when the Berlin Wall fell, LEGO saw a steady growth in sales, but it was not enough. Lastly, most LEGO purchases happened seasonally, meaning LEGO needed to adjust
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Best Essays

    JOhn Lewis environment forces
    • 2514 Words
    • 11 Pages

    JOhn Lewis environment forces

    Macro-environment is also known as external environment which affects business decision in various ways and which can impinge not only on the transformation of the firm, but also on the process of resources acquisition and on the creation and consumption of output (Worthington and Britton, 2009). These forces can shape and moderate the behaviour of all stakeholders in the market including competitors, suppliers, customers and employees. The macro forces are often organised into political/legal, economic, ecological/physical, social/cultural and technology (Kotler et al., 2010, p.154). In order to clarify its influence effectively, the economists arrange them into few models such as PESTEL, DEEPLIST. This paper will apply the PEST model to consider:…

    • 2514 Words
    • 11 Pages
    Best Essays
    Read More
  • Satisfactory Essays

    Target Corporation Strategy Analysis
    • 93 Words
    • 1 Page

    Target Corporation Strategy Analysis

    Target Corporation has two reportable segments: First one is the Retail, and the second one is the Credit Card. The Retail Segment includes all of the merchandising operations. Under this are all of the discount stores in the United States of America and the online business. On the other hand, the Credit Card Segment includes the Target Visa and Target Card (also known as REDcards). These credit cards offer credit to qualified guests. Because of this, it helps to strengthen the bonds with the guests, increases sales, and gives better results of…

    • 93 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Better Essays

    Environmental Factors
    • 1140 Words
    • 4 Pages

    Environmental Factors

    A company operates within a larger framework of the external environment that shapes the opportunities and threat to an organization. The external environment for global and domestic marketing decisions is comprised of forces that are part of a company's marketing process but is external to the organization. Those forces include the organization's market, its producer's suppliers, and intermediaries. It would be necessary for companies to understand that the environmental conditions because the conditions interact with marketing strategy decisions. The external environmental has a huge impact on the determination of marketing decisions. Any successful company will scan the external environment that affects them so they would be able to respond profitably to the unmet needs and trends in targeted markets.…

    • 1140 Words
    • 4 Pages
    Better Essays
    Read More
  • Better Essays

    Environmental Scan
    • 1449 Words
    • 6 Pages

    Environmental Scan

    According to Metcalf & Lafranco (2013), inbound logistics, which emphasizes on raw material, is fundamental in the company’s operations. It acquires her main bulk of chemical materials from Lanxess, a German company that provides standardized ingredients without any bottleneck…

    • 1449 Words
    • 6 Pages
    Better Essays
    Read More
  • Powerful Essays

    Mattell Case Study
    • 1198 Words
    • 5 Pages

    Mattell Case Study

    This article discusses the organizational growth, obstacles and changes of toy maker, Mattel. Over their 50 years of experience, Mattel has grown from a garage run shop to an international super star. The case mainly addresses CEO, Bob Eckert’s organizational changes that catapulted Mattel to industry leadership. In a 2008 interview, Mr. Eckert says “if you can consistently try to do the right thing, life is so much easier. If you live by your basic values, a) you'll get through it, and b) you'll feel satisfied that you did the best you could” (Yang, 2008). By examining Mattel’s admirable reactions to adversity, the article demonstrates how the CEO really lives by these words. Through effective change and excellent communication both internally and externally, Mattel has become an industry leader and a positive example of doing the right thing. It finishes by analyzing Mattel’s efforts to correct its errors by enforcing stricter oversight on its manufacturers, in future efforts to avert future mistakes.…

    • 1198 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Best Essays

    The Lego Group Case Study
    • 3243 Words
    • 10 Pages

    The Lego Group Case Study

    Lego bricks still hold special meaning to many young adults who have played with the bricks in their teenage years. I, for one, count among those young adults as I was an avid collector of Lego products myself: whenever there were new Lego products released, I used to nag my parents to buy them for me and promised to be a ‘good boy’. Thus it came quite natural to me that I wanted to investigate the Lego group – the symbol of my childhood nostalgia - as a full case study report for my Strategy for Creative Technology Business class. Established in 1932, the Lego group was the world’s leading toy manufacturer that was embodiment of dream and imagination to children. Parents too, inspired by Lego’s brand image as ‘fostering mental development and creativity for kids’, patronized their products in spite of Lego’s relatively high prices. By the turn of the millennium, however, the changes in the toy industry coupled with expiry on their license, Lego faced huge challenged, reflected in their net loss of 308 million Euros in the early 2000s. Nevertheless, Lego’s exemplarily strategic management practices under its CEO, Knudstorp brought the company back to brilliance and as of 2014, Lego thrives once again as the world’s most competitive toy company. As such as is the case, this essay shall examine Lego groups ‘from riches to rags to riches’ story with a special focus on the strategic management process.…

    • 3243 Words
    • 10 Pages
    Best Essays
    Read More
  • Good Essays

    Lego
    • 659 Words
    • 3 Pages

    Lego

    The short-term expenditure to get the sustainable product underway would be greeted with long-term benefits including greater innovation, quality improvement, energy savings, and revenue growth. Developing new manufacturing practices and product design synergizes the eco-efficiency efforts that can result in lower production costs and greater operational efficiencies, as well as reduced shipping and transportation costs. A sustainable product should have the five key elements: Social, Governance, Financial, Health and Safety, and Environment. In which the proposal for Lego Group does have those five key elements, the proposal gears towards all five in developing a plan that removes toxins from their plastics, a sustainable product that lowers the consumption of energy, a product that is safe for the…

    • 659 Words
    • 3 Pages
    Good Essays
    Read More
  • Best Essays

    Global Brands and Labour in Developing Countries
    • 3442 Words
    • 14 Pages

    Global Brands and Labour in Developing Countries

    One cause of such precarious conditions is the new business model that has emerged under globalisation. Global brand companies have positioned…

    • 3442 Words
    • 14 Pages
    Best Essays
    Read More
  • Better Essays

    LOGO case study
    • 2465 Words
    • 9 Pages

    LOGO case study

    The essay is a strategic analysis for LEGO Group. LEGO Group is a famous toy company in the world, which established in Denmark. LEGO Brand is not only the familiar logo, but also the expectation. LEGO acts as a guarantee of quality and originality. LEGO’s core values are imagination, creativity, fun, learning, caring and quality. The essay will show strategic analysis by identifying the industry, analyzing general and industry environment, listing resources and capabilities, analyzing the company’s core competency, SWOT, current strategies. Then, giving the key issues. Finally, the essay will recommend the business-level strategy.…

    • 2465 Words
    • 9 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Lego Group
    • 915 Words
    • 4 Pages

    Lego Group

     The Company, analysis  History  Today  Tomorrow  Collaborative Innovation  Theory, evolution  Tools  Lego User Innovation Strategy  Lego Board Games  Lego “Design By Me”  Costs and Benefits  Q&A…

    • 915 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    How External Environment Factors Affect Organizations: Macroenvironment
    • 272 Words
    • 1 Page

    How External Environment Factors Affect Organizations: Macroenvironment

    The marketing tool “Macro-environment (PEST) normally is utilized by senior marketers in order to get better understanding and evaluate how the external environment factors affect the organizations. This essay provided an analysis and evaluations of Alibaba Company via political force, economical force, socialcultural force and the technical force. Results of the findings shows that the Chinese government’s new strategies and regulations about its local business companies that have provided more business opportunities for Alibaba’s online marketplace (Taobao.com); The growth of China’s economy and the increasing trend of the ‘middle class’ in China also have become the main target for Alibaba group, and the dramatic growth of the E-commerce and M-commerce industries environment that have pushed Alibaba to gain a wide range of consumers. The essay also finds Alibaba’s current strategies is not suitable for the western country, but only specifically suits the Chinese cultural market. However, since Alibaba had listed in IPO in New York, it should has different objectives and strategies to gain western consumers’ attention.…

    • 272 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Powerful Essays

    Build a bear
    • 5870 Words
    • 28 Pages

    Build a bear

    Our proposal will increase Build-A-Bear’s revenue by x% and increase the Earnings per Share to $1.17 from a negative $3.02. SmartBear is a stuffed toy with a ME403C kid’s tablet attached to the animal’s belly. The SmartBear is synced to the bearville.com and the bearville app. Any changes you make to the bear can be applied to the customer’s bear online. In this proposal, we will address macro-environmental analysis in order to check for major changes that might happen in near future. We will also analyze the industry that Build-A-Bear competes in using the Porter’s 5 Forces model. This model will help you understand the key success factors that we figured using this model. We all know that the resources need to match the environment of the industry. So, we also have done an internal resource analysis of the company. The internal analysis is used to help the company improve in areas in which its competitors are thriving and strengthening its strengths over its competitors even more.…

    • 5870 Words
    • 28 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Lego case study analysis
    • 1354 Words
    • 4 Pages

    Lego case study analysis

    By the end of 2003 Lego was already facing crisis owing to dipping profits and declining market pool for toys. Lego had planned to expand into markets beyond building toys and needed huge investment to be made in it. But it found difficult to compete when fad players and other toy manufacturers were giving them stiff competition in a market that already was supposed to be giving lesser returns every year. This was mostly due to factors out of the control of Lego and other toy companies because, firstly, a research suggested that the demand of children who were primary customers of these companies were changing rapidly to fashionable and electronic products. They had lesser attention span and looked for instant gratification, and were lesser inclined to play with toys involving physical activity. Also Lego found it difficult to be competitive when its manufacturing base was in European markets while toy companies were moving to Far East and Middle East where labor was comparatively cheaper.…

    • 1354 Words
    • 4 Pages
    Powerful Essays
    Read More
  • Good Essays

    Case Study: Fisher-Price Toys, Inc.
    • 1041 Words
    • 5 Pages

    Case Study: Fisher-Price Toys, Inc.

    Case analysis 1) Current Market strategy (“4P” / “4C”) (1) (2) (3) (4) 2) Product → Commodity: innovative products / safe, durable and educational Price → Cost: moderate price / good value for money Place → Channel: Aggressive to increase the market reach and improve sales Promotion → Communication: focused strategies for advertisement and promotion of differentiated range and group of products SWOT analysis (1) Strengths (Internal) 1Internal operation ­ ­ ­ ­ ­ 2­ ­ well-run established professional management expertise from diverse industries excellent sales history (continuous sales increase during the last 10 years) effective product testing and marketing programs facilitate internal toy design sound financial condition A leading toy manufacturer with a wide range of quality toys at moderate prices. has relatively good market for specialty toys, which has grown substantially over recent years 3Brand & Reputation ­ ­ ­ (2) the best know brand for toys, has the largest market share (64.7%), and is brought most often (82.7%) Enjoys a reputation for…

    • 1041 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Legoland Malaysia
    • 636 Words
    • 3 Pages

    Legoland Malaysia

    Location analysis is an important decision and should not be taken lightly. The physical location of business functions is an important part in the supply chain strategy of any company. Many companies such as Hard Rock, Universal Studios, Disneyland and Lego are expanding their business to Asian Countries such as Malaysia, Hong Kong and Singapore. There are a few reasons why these businesses are investing outside of their home countries include: improved market access, reduced operating costs, sources of raw materials, consolidated operations, development of new product lines, improved productivity, develop new technologies, improved labor force access and reducing the risk. This report will discuss about the location decision of Legoland Parks in Johor Bahru, Malaysia.…

    • 636 Words
    • 3 Pages
    Good Essays
    Read More

Related Topics