Strategic Management and Lego

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The Problem
How can LEGO expand its current product lines, and what strategy should LEGO formulate to maintain market dominance and financial success in future?

External Analysis
Using SWOT analysis (Appendix A), there are a few factors that are LEGO’s strengths. Its brand name, experience in the industry and ability to use innovative technology have allowed them to position themselves as one of the leading forces in the toy-building market, and this gives them a competitive advantage over their competitors (Hasbro, Mattel, MEGA Brands). Being named the ‘Toy of the Century (Pisani, 2006)’, LEGO has developed itself as a global brand that is well known ubiquitously. However, with the expiry of their plastic brick design patent, sustained competitive advantage is short-lived and this has lowered the barriers of entry for competitors.

Internal Analysis
Using the Resource-Based View Analysis, one tangible resource would be the large number of newer and more elaborated products produced by LEGO. Despite LEGO’s cost-saving restructuring, there is still a huge selection of LEGO brick colours and shapes made available to consumers. LEGO also has special machines that make only specific LEGO bricks that could help them reduce the amount of time and cost and increase their production capacity. Such raw materials and special equipment could help LEGO in providing and catering to the vast needs of consumers.

Looking at intangible resources, the long history and brand name of LEGO has set LEGO apart from its competitors. Being the oldest company in this specific industry and being such an established corporation has helped LEGO in terms of having more consumers and a wider and more loyal customer base. This reputation would be hard to imitate and duplicate as LEGO has been in the toy-building industry for many years and as such, will allow them to sustain their competitive advantage over the others.

Looking at organizational capabilities, LEGO has good...
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