Business Model and Lego Toys

The aim of this paper is to discuss the notions of business model and disruption. The term business model refers to the blueprint of the business plan whereas disruption refers to the innovation in the business model through smart-connected devices. This paper discusses about the disruptive business model of Lego toys and further analyses through Osterwalder and Pigeneur’s business model. The paper also discusses about the two specific perspectives on business.

Running head: BUSINESS MODEL AND LEGO TOYS
BUSINESS MODEL AND LEGO TOYS
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BUSINESS MODEL AND LEGO TOYS
Introduction:
The aim of this paper is to discuss the notions of business model and disruption. The
term business model refers to the blueprint of the business plan whereas disruption refers to
the innovation in the business model through smart-connected devices. This paper discusses
about the disruptive business model of Lego toys and further analyses through Osterwalder
and Pigeneur’s business model. The paper also discusses about the two specific perspectives
on business.
Business model:
Business model underscore on the conceptual tool that is used in defining and
explaining the underlying principle of the business. It has been described as model that
elaborates on the rationale of business in terms of its organization, creation, capturing the
values of the customers as well as disseminating its values among the customers, and delivery
of the of the products (Chesbrough, 2010). It further provides an insight into how different
companies aim to generate money and in what ways a idea turns into a full-fledged business.
Studies have shown that different companies may have similar settings but have divergence
on the business models (Forbes Welcome, 2018). Therefore, the business model is the
provides a blueprint of the organization and renders directions about the operation of strategy
of the company. A business model consists of three elements that are namely value
proposition, profit formula and key resources and processes (Zhu & Furr, 2016).

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BUSINESS MODEL AND LEGO TOYS
Disruption:
The term disruption in business model underscore on the notion of interruption of the
traditional principles of business by fostering alteration in the business model (Zott, Amit,
& Massa, 2011). Disruption in business is concerned with seeking risks and
experimentation with the given business model (De Jong & van Dijk, 2015). Some of the
important examples of disruption in business can be understood through the following
examples. Amazon has revolutionized the scene of disruption in business through the
introduction of Amazon Prime and streaming of blockbusters (Clinton & Whisnant, 2018).
It has further enabled the distributed of DVDs therefore, bringing a change in culture of
business. Another example of disruption in business is that of Domino’s pizza that have
changed the game of delivery through the incorporation of smart-connected devices. These
devices have enabled in tracking the order, monitoring the preparation of pizza and finally
keeping a tab on the delivery person. It also has a safety censoring system that is believed
to be effective in preventing accidents (Caro, F., & Martínez-de-Albéniz, V. (2015). The
company has big plans to incorporate artificial intelligence in the delivery of its products.
Another important example of disruption in business is that of Commonwelath bank,
Australia. The company is planning to take the experience of customer care to the next
level through the introduction of machine-to-machine transaction. This is believed to be
effective in reducing the burden on the customers during physical transactions. Therefore,
it can be seen that the strategies adopted by the companies are in dissonance with the
conventional business model and is a challenge to the cherished ideals of the organization
of business (Kavadias, Ladas & Loch, 2016).

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BUSINESS MODEL AND LEGO TOYS
Lego Toys, Denmark and digital leadership:
According to El Sawy, Kræmmergaard, Amsinck & Vinther, (2016), companies are
veering towards digital leaderships. This refers to the idea that companies are becoming
digital. The present focus of the companies is to concentrate on technology and reach out to
the customers through digital customer engagement. This digitalization of business needs to
be understood beyond its traditional meaning of tapping the advantages of the digital
platforms. It is widely understood as veering towards the digital business and the
incorporation of digital technologies to restructure the business models and creation of value
opportunities. This digitization can be witnessed in the form of wide-scale incorporation of
smart-connected devices that has made business innovation more integrated. The
digitalization strategy can be illustrated through the example of Lego toys (Rodriguez, 2018).
The company was founded by Kirk Kristiansen, a carpenter ho was known for making
wooden toys in Denmark (Pine II & Gilmore, 2016). The organizational structure of Lego has
been described as a wheel. The structure focuses on the communication and sharing of
knowledge. The organizational culture of Lego is premised on trust, openness, principles of
imagination and creativity. The company has engaged in three lenses in the enhancement of
digitalization-product lens that was woven around the ecosystem and innovation of the
product, marketing lens important for digital marketing and the enterprise lens that was
woven around enterprise platforms and the fusion of the external world with that of the
internal world.

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BUSINESS MODEL AND LEGO TOYS
Opportunities and threats smart-connected products: Lego Toys:
The company has built LEGO community platforms and have engaged in the
crowdsourcing innovation. Smart toys are increasingly becoming popular. The idea of pure
play that is bestowed with aside effect of learning has become the trend in the toy industry
(Porter & Heppelmann, 2014). Smart toys introduced by the brand Lego through its new line
Lego Dimensions has come up with play figurines like Amiibo, skylanders and other ranges.
It is predicted that the smart toys that also includes the app content and hardware is et to
become a $2.8 billion industry (Corbyn, 2018). The appeal and advantage of these toys lie in
their ability to connect to the virtual and the physical world. This has enabled Lego to take
advantage of the popularity of the gaming environment. Some of the creations of Lego that
have been popular in the market are Nintendo and Skylanders. Another innovation from the
company is the sensors that are attached to the toy that continuously collect data whilst
children have fun with their toys. These app challenge the children by asking them to do
mind-bogging assignments. The threat of these smart-connected devices of Lego emerges
from the parents and child educators (Reinventing Your Business Model, 2018). They are of
the opinion that the intervention of machine between the children will further dehumanize the
experience of play for children. However, overall technology is being perceived to have a
positive bearing on the early childhood development and learning of children.

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BUSINESS MODEL AND LEGO TOYS
Business model framework of Osterwalder and Pigneur to analyze Lego
toys:
The disruptive business model of Lego toys can be understood through the business
model framework of Osterwalder and Pigeur. Their model has enlisted nine elements and
those are customer segments, channels, customer relationship, value proposition, key
resources and key processes, revenue streams, cost structure and key activities (Osterwalder
& Pigneur, 2010). Drawing from the above illustration of Lego Toys it can be said that the
company is committed towards establishing its customer interface pillars, customer
relationships and creating value proposition. This can be witnessed in the initiative of
digitization of the company. The incorporation of smart toys is meant for providing an
experience of enhancing the learning experience of the children and therefore, building on the
value proposition. The brand knows that the target market is children especially pre-school
children who will find these smart toys quite in sync with their temperament. It has reached
out to the customers through a digital platform. The company has been dedicated in
increasing the engagement with the community through digital platforms, therefore
emphasizing that more the customers are connected digitally they have a greater chance of
providing information. The company has also been committed in bolstering the business
process of the current LEGO enterprise.

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BUSINESS MODEL AND LEGO TOYS
Key Partners
 New
ecosystem
partner
Key Activities
 Sales and
marketing
Production
of the
famous
Lego brick
 Production
of smart
toys
Value
Proposition
 Value
propositions
is to create a
better
learning
experience
through the
incorporatio
n of smart
toys
Customer
Relationships
 Innovation
of products
 Awareness
about the
brand
 Involving
the parents
Customer
Segments
 Children
especially
pre-school
children
Key Resources
 Brand
image
 Building on
the
networks
 Reaching
out to the
customers
Channels
 The
company is
not just
famous in
Denmark
but all over
the world
 Official
website
 Tie-up with
e-commerce
giants
Cost Structure
 Technology
 Taxes to government and intercity and
interstate taxes
 Customs
 Employee wages
 Production costs
 Buying of raw materials for the
production of toys
Revenue Streams
 Advertisement
 Crowdsourcing

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BUSINESS MODEL AND LEGO TOYS
Business model perspectives:
Two business model perspectives need to be discussed in respect to the Lego Toys.
The first one profit formula. This is concerned with the values and principles of the company
in relation to the generation of profit (Burns, 2016). This comprises of the blueprint of the
business model and subsumes the revenue model, velocity of resource and the cost structure.
The second perspective of the business model is customer value proposition. According to
this, value proposition and value segments are part of the value delivery and value creation.
This is concerned with the value creation of the company. The building relationship with the
customer is concerned with the value co-creation setting. In case of Lego, it can be seen that
it has appointed a digital manager who is entrusted with the responsibility of technological
advances and digital innovation.
Conclusion:
Therefore, it can be stated that innovation or in other words the disruptive model of
business looks like the future of business model and will adopted by more companies to gain
competitive advantage. Lego Toys have made a mark by introducing smart toys.

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BUSINESS MODEL AND LEGO TOYS

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BUSINESS MODEL AND LEGO TOYS
References
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BUSINESS MODEL AND LEGO TOYS
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