Describe how the value that the firm creates becomes valuable as a result of factors in the general and industry environment?
This assignment takes into consideration detailed evaluation of the LEGO Group. LEGO Company majorly manufactures toys & their target audience is the children below 14 years of age. This assignment takes into consideration PESTEL Analysis, Porter’s Five Forces Model & Value Chain Analysis for the same. The main aim at LEGO is to design toys which will help the students to learn & play in a creative manner.
2. Value Of LEGO
At LEGO the values of the company as a whole is imagination, caring, learning & maintain the desired level of quality. LEGO embraces all these values and make the learning experience a memorable one for the educators. At LEGO, learning must be:
Relevant: At LEGO, the toys are designed in a manner to prepare the students for the real life experience applications such as knowledge of the subject as well as opportunities to develop various life skills such as communication, problem solving, etc.
Creative: At LEGO education, the toys are designed in a manner which helps the students to think creatively & systematically (Education.lego.com, 2015).
Engaging: The main motive of LEGO education is to engage each & every student in the learning process in an effective manner. This leads to long term curiosity & driving the students to learn in an efficient manner.
3.1 Political: Political stability of any country also refers to one of main aspects for the success of LEGO.
3.2 Economic: The toy industry is one of the developing sectors and is being stable in the past years. The economy has been improving and hence LEGO also improves its products so as to provide the best to its customers.
3.3 Social: LEGO Company is trying to launch the products which shall be accepted by the society as a whole.
3.4 Technological: Use of technology has been referred to as one of important measures in the toy industry. Use of various new innovations & technology will help the company to compete with their immediate competitors in a healthy manner (Kandampully, 2002).
3.5 Legal: In order to not to lose the customers, LEGO does not break the laws of the international market. It shall be taken into consideration that, they shall abode by the laws & rules of the market they are operating in (Dealtry, 1988).
3.6 Environmental: At LEGO, they are trying to manufacture toys or resources which provide minimal destruction to the environment. It has been seen that, company took certain measures which has helped to decline pollutants & create a good environment.
4. Porter’s Five Forces Model
4.1 Threat to New Entrants: While entering a new market place, the new entrant has to compete with the brand name i.e. LEGO. In order to compete with big brands, one has to have a larger distribution network so as to cover all its stores & end customer at large (Building value with Lego, 2012).
4.2 Threat of Substitute: Substitutes can come from the entire toy industry. Substitutes in the toy industry can be anything ranging from computer games to electronic devices, traditional toys or outdoor games as well.
4.3 Bargaining Power of Buyers: The pressure from the customers is very high along with the switching cost from traditional toys to other substitutes such as computer games, outdoor sports, etc.
4.4 Bargaining Power of Suppliers: The resources manufactured by LEGO are made up of fine plastic. There is diverse distribution and hence the company will not rely upon only one supplier.
4.5 Rivalry amongst Competitors: LEGO has a strong position in the toys industry. The company provides high quality products at a premium price.
5. Core Competencies; Lego has been referred to as the market leader in the toy industry. Lego has been referred to as a high brand equity organization which keeps its price at a premium level as compared to its immediate competitors. Based upon traditional macroeconomics, Lego has been termed to be an organization which has high levels of abnormal profits & Lego manages to sell its toys at a price which is higher than the marginal cost. It has been stated that, the overall toy industry is defined by high competition practicing an oligopolistic market structure taking into consideration the pricing strategy of the same (Bonn, 2001). Lego’s core competency lies in manufacturing different types of toys which are creative & provides a better learning experience to the learners.
6. Value Chain Analysis
6.1 Marketing & Selling: It has been seen that, LEGO follows a successful theme portfolio. LEGO has been in partnership with companies such as Harry Porter & Lucas Arts. LEGO has tried to include a product which attracts the female segment as well. In order to take care the female market, LEGO introduced a product by the name “LEGO friends” (Bloomberg, 2015). LEGO has increased its sales dramatically with the help of internet as well as its own stores.
6.2 Purchasing Goods:
6.3 Technology Development: LEGO has been referred to as an organization which connects with the educational world. It has close associations with University of Massachusetts Institute of Technology. It uses various developments in the departments which help to enhance their current product offerings & services.
6.4 Human Resource Management: At LEGO, all the employees play an active part in improving the wellbeing of the same. This is one of the ways with which, it can be stated that active involvement of the employees is taken place in the organization. At LEGO various motivators are taken into consideration to drive the overall performance of the employees (Barney & Hesterly, 2006).
Hence, it can be concluded that the various tools such as PESTEL Analysis, Porter’s Five Forces Model & Value Chain Analysis will help the business to solve the problems and improve the business in the near future. These tools will help any organization to expand strategically as well as achieve more knowledge.
Barney, J., & Hesterly, W. (2006). Strategic management and competitive advantage. Englewood Cliffs, N.J.: Pearson.
Bloomberg,. (2015). Brick by Brick: Inside Lego: Video. Retrieved 27 January 2015, from https://www.bloomberg.com/video/brick-by-brick-inside-lego-4-17-SlbmZEQnSfyC~y1eSm9FAg.html
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Dealtry, T. (1988). Strategic Company Enhancement. Management Decision, 26(3), 41-46. doi:10.1108/eb001498
Education.lego.com,. (2015). LEGO.com Education Home - About Us - LEGO Education Worldwide - Vision and Values. Retrieved 27 January 2015, from https://education.lego.com/nl-be/about-us/lego-education-worldwide/vision-and-values
Kandampully, J. (2002). Innovation as the core competency of a service organisation: the role of technology, knowledge and networks. European Journal Of Innovation Management, 5(1), 18-26. doi:10.1108/14601060210415144
Truss, C., Mankin, D., & Kelliher, C. (2012). Strategic human resource management. Oxford: Oxford University Press.