LOGO case study Essay

IntroductionThe attempt is a st stridegic analysis for LEGO radical. LEGO multitude is a famous bring federation in the world, which established in Denmark. LEGO Brand is not tho the familiar logo, scarce also the expectation. LEGO acts as a guarantee of graphic symbol and originality. LEGOs lens nucleus hold dears argon imagination, creativity, fun, learning, caring and superior. The r breaker leave al ane show st rovegic analysis by identifying the indus settle, analyzing general and patience environment, leaning mental imagerys and capabilities, analyzing the participations core competency, SWOT, current strategies. Then, giving the key issues. Fin everyy, the essay result recommend the business-level dodging.Identifying The IndustryToy retail market place growth 4 per cent per year in a moderate thou in 2010, merely the prerequisite for the particular mode toy may surge or collapse rapidly. Thousands of toy constructrs serve the world(a) market, but th e few lead persistence. Mattel is the worlds leading toy manufacturer in revenue. LEGO is the worlds the third monstrousst toy manufacturer. There are more and more toy manufactures in Asia because its labor is cheap and some subcontractors are ready to produce unspoileds in behalf of their manufacture. Toy makers sell crossways by various retail conduct, including chemical chain stores, discount stores, independent toy specialists, plane section stores and online stores. There are three points, which need to pay attention to. Firstly, fad toys are more popular and the product tone cycle decrease. Additional, children fork over more after-school activities. Finally, more kids choose online activities more than toys. The rest product for toys is electronic games.Analysis of the general environmentsEconomic elementGenerally, the words economy is still unoptimistic in the recent. Although European debt crisis has been lightened conditionally, its negative effect to globa l economy still last for a certain m. Labor speak to is increasing. Because of multiple factors, the total toll of toy improves epochally, while its profit rate falling sharply.Socio-cultureMulticulturalism is source of innovation and creativity. LEGO design department has more than carbon designers from more than 10 countries, satellite support team up scattered all over the continents. LEGO design team hold ups deliberately the diversity of designers from a mix of educational and professional background. People with any qualifications and background has the potential to give out a member of this great design team. LEGO takes part in umteen public welfare activities for children, for example, encouraging children to joining in environment protection. LEGO has unspoilt relationship and trust. LEGO CEO Knudstrop makes a psychoanalyst to train the management team to support the good relationship. The peak of LEGO sale is during the school holidays, especially in Christmas ( Yi 2009).Global elementLEGO come products are made by malleable and chemical resource, that the price of these is influenced by the price of international crude oil. For global market, Knudstrop said that Asia market would be the companys largest strategic field of operation in the future and LEGO was discussing the possibility of establishing production bases. LEGO Group has not divided up a strong market position in BRIC. The market in BRIC will develop strongly in the future and LEGO Groups tries to invest in the markets. For outsourcing, LEGO chooses service provider Flextrinics, which has factories in Korea, Denmark, the USA and Switzerland.Technology elementIn 1999, LEGO had the online shop. This decision help LEGO get more consumers. Bases on the most thaumaturge building blocks, Lego developed some braining games based on personal data processor and the Internet, such as LEGO Loco, Bionicle, Lego Creator, etc. These innovations allow satisfied consumer group growth in the virtual age. LEGO interact with consumers through Internet. In 2009, LEGO Children Clubs has members round 3.2 billion and a dedicated website. Many adult fans of LEGO share experience, videos and pictures on the Internet. semi semipolitical/legal elementGlobal political environment is stable in general in the current. International relation between main political indexs in the world has gotten a balance after strong disceptation, which is comparative stable. To creating a favorable atmosphere for economic development and encouraging a positive development of the toy industry, most countries seek a stable, still and develop international environment.Analysis of the industry EnvironmentBargaining power of emptorsThere are a few large buyers, which are large retail chains such as Kmart, Target and Big W in Australia. They buy products from many several(predicate) brands. Buyers bargain for luxuriouslyer quality, lower price and great level of service.Bargaining power of s uppliersFor toy industry, on that point is no bargaining power of suppliers because in that location are many different suppliers in this industry.Risk of reinvigorated entrantsFor toy industry, new companies are undemanding to entry the industry because toy industry has fewer berries. The products are sympathetic, which is uncomplicated to copy. Toy industry does not need new firms to invest a lot and switching personifys are low because most consumers so not view as the dedication. If the products are more attractive, consumers will buy, especially major(ip) target people are children. It is easy to access to diffusion channels, but it is hard to cover the market because many retail ways roughly toys, including online stores, department stores and so on. curse of substitute productsSubstitute products perform the similar function as toys, which are electronic games. As technology has better rapidly, more children prefer to use iPod or iPad to play electronic games. Thr eat of substitute products is very high, which is very important.Intensity of emulationFor toy industry, there are many competitors. The rate of industry growth isslow, so companies try to use resources to expanding consumers effectively. Because product speciality is lower, the switching cost is low. More companies tuck the industry, which promoting competition.To sum up, for toy industry, threat of new entrants is low, supplier power is low, buyer power is moderately high, threat of substitute products is very high and competition is very fierce.It observes that the toy industry is still an attractive industry. There are nearly no barriers to entry the industry. As technology improves rapidly, new scientific research and manufacturing technology apply to the toy industry continually which collect to more and more new toys with high technology. If new companies dedicate wondrous ideas or design teams, it is easy to share the market. However intensity of rivalry is high, comp anies still washbasin get consumer base by catering to the demand of consumers. Because buyer power is high, new entrants do not worry more or less their sale ways.Analysis of Resources and CapabilitiesTangible resourcesTangible resources refer to assets that move be observed and quantified, including financial resources, organizational resources, physical resources and technological resources. LEGO has total assets for 10972 one million million DKK in 2010, 871 million DKK in cash flows and 5473 million DKK in equity. LEGO has a strong run scheme to deal with earlier supply chain problems. The company developed carcasss to evaluating all manufacturing cost as well. The optimization of labyrinthian operating model is successful, which helps LEGO save cost and time. Additionally, LEGOs trademark is the signifi merchant shipt resource.Intangible resourcesIntangible resources are a superior source of capabilities and core competencies. Creativity is the ability to come up with ideas that is valuable. Staffs are important resource because they have employee experience and the ability of innovation. LEGO Group has the great reputation from excellence quality. LEGO has the fantastic relationship with suppliers and distributors, which can subjugate unnecessary problem and makesoperating system more successful. LEGO has huge loyal consumer bases,CapabilitiesLEGO has a fantastic innovating system. Developers have to follow strict process and use market research insights, which can satisfy the market demand and avoid design mistakes. In selling area, LEGO has great connections with consumers. The company has a specific website for customer club, which interact with consumers by games, stories and activities. The club has the member about 320 million. In manufacturing areas, the company has competitive advantage, which is high automation technology. For supply chain management, the companys production cooking comes from sales incentives exact forecasts. In d istribution areas, the company builds distribution channels in order to reducing the furiousness on the expansion of the distribution costs.Innovating system is valuable, because this capability promotes the sales levels. The innovation must cover the fashion and make consumers satisfied. Each company knows this concept well, so it is not intimately to imitate. The company informs customer preferences by interaction with customers and builds relationship with children and their parents, who are end users. The company also keeps in touch with retail consumers to ensuring that these links steer well, because they can provide a steady stream of information. This process ineluctably long time and much money to build the relationship, so it is costly to imitate.Lego building distribution channels in order to reducing the emphasis on the expansion of the distribution costs. Firstly, the company reduces the number of logistics providers to satisfying the flexibility and encouraging s uppliers to competing. At the same time, the company assesses to economies of scale. Redesign the distribution system of the company has the ability to surpass rival. This is disused and valuable. To do this action, the company cost a lot, so it is costly to imitate. The high automation technology is rare and valuable, which reduces labor cost and producing time. This technology needs a long time to researching and developing, which is hard to imitate.SWOT AnalysisStrengthsClosely after the changes of the times by chance is the most significant feature of LEGO. In 2002, LEGO launches new products, a new Star Wars film, which is very popular. LEGO began to taking advantages of internet in designing and researching. Currently, LEGO has a large number of fans, including children and kids. The company pays more attention to reflection of consumers. The company expands the market in many countries.WeaknessesThe price is higher than other toys and the company does not have enoughhyposta tic stores to satisfy the consumers. Most LEGO products sell in department stores and retail stores. It is not convenience for consumers to purchase products. The high cost of manufacturing products.OpportunitiesLEGO products sale is concerned about seasons. The peak of sales in one year is during school holidays, especially Christmas (Yi 2009). The consumers are no concerned about ages. LEGO products are no age-limited toys and anyone can collect LEGO products. The Asia market has the great potential.ThreatsThe substitute is the threat, which are online games. Online games affect the LEGO sales, however, LEGO has the solutions. For example, improve products to make it technological.Analysis of current strategiesCurrently, LEGO redesign the distribution channel to reducing the inflating distribution cost. As for this, LEGO closed 5 distribution centers in Denmark, France and Germany, establishes an only new distribution center in Czech, which is operated by DHL (walwenfanyi, 2012). Lego keep interacting with consumers to get more information the about market needs, which takes the strength of the company. Now the company develops computer games based on the LEGO products by cooperating with game firms. The company cooperates with film organizations to making movies as well (walwenfanyi, 2012). These cooperation has bee a part of LEGO Group that has long history. These actions take the strength and are the solutions to type aspect threats. Articulation of key issues and/or problemHow to reduce the manufacturing cost?Although LEGO Group grows up continually and rapidly, its consumers can not follow the increasing rate? What should the company do? How to expand the Asia market?RecommendationsCost leadership strategyCost leadership strategy forces on reducing cost to maintain competitive advantages and relative to standardized products. To achieving cost leadership, the company must stringently control costs in the management, will reduce costs as much as possibl e. Considered the Asia market, Costleadership strategic is a good choice. There are more developing countries in Asia, so the life standard is lower than Europe. If LEGO can reduce the price, there are consumers will purchase goods. However, manufacture area is the weakness of the company and the company has redesigned the distribution channels. There are no more space to reducing the cost. speciality strategyDifferentiation strategy refers to a strategy to make their products and competitors products have obvious differences. The core of this strategy is to acquire some unique value to customers. For LEGO Group, this strategys benefits are that the firms innovation system that pays more attention to consumers demand can be appeared. LEGOs consumers have brand loyalty and there are millions of fans in the LEGO Club. There are some risks about differentiation strategy. When the company enters the Asia market, the firm will face the lower-cost imitation.Focus strategyFocus strategy ge ts the balance between cost leadership strategy and differentiation strategy. Firms can serve a specific segment of an industry more effectively than industry-wide competitors. This strategy fits the toy industry a lot, because the major target consumers of this industry are children. However, for LEGO, the focus strategy is hard to reach. The reason is that LEGOs target consumers are no age-limited people, which is its strength.In culmination, differentiation strategy is the best choice for LEGO Group. LEGO products were different from other products when it launched in the beginning. LEGO has the great brand loyalty, so that a differentiated product tends to reduce the chances for consumers to testing new products or other brands. Currently, the manufacturing cost is a problem. However, LEGO Group cannot use low cost instead of good quality. The firm can produce well-differentiated products to reduce consumer sensitivity to price increase. Using the better quality products to cov er the high producing cost. The firm should use its strengths that are brand loyalty and innovation to expand the markets. The differentiation strategy also can stand for against new entrants, because if new entrants want to share the market from LEGO, they must produce the same quality products at lower price, which is really difficult to reach.ConclusionThe above paragraphs recommend differentiation strategy by analyzing the industry, general environment, industry environment and the companys resources, capabilities, core competency, SWOT and current strategies. LEGO can use differentiation strategy as the solutions to current issues. Using the features of differentiation to taking strengths to covering weaknesses and getting up the opportunities and avoid threats.ReferenceJan, WR, Stefan, HT & Daniela, B, 2012. LEGO, Harvard line of business School 7 September 2014 Waiwenfanyi, LEGO competency analysis, 2013. Available from http//www.waiwenfanyi.com/fanyi-1492.html 9 September 2014 Yi, FL 2009, LEGO sales strategic plan, Dongding. Available from 9 September 2014