LEGO Environmental Analysis Report

This report provides an in-depth environmental analysis of LEGO, a privately owned company specializing in play materials. It examines the business challenges faced by LEGO, including political, economic, social, technological, legal, and environmental factors using the PESTLE framework. The report also analyzes the competitive landscape using Porter's Five Forces, assessing the threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and competitive rivalry. Furthermore, it discusses LEGO's economic system, globalization strategies, foreign direct investment plans, and international trade theory. The report concludes by summarizing the strategic changes and challenges faced by LEGO in the national and international markets.

STRATEGIC GOALS – LEGO
LEG*O –Environmental Analysis of the Issues
Word Count - 1966
Reference Style – APA references
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STRATEGIC GOALS – LEGO
Contents
Introduction................................................................................................................................2
Environmental analysis..............................................................................................................2
Porters five force........................................................................................................................3
Conclusion..................................................................................................................................6
References..................................................................................................................................7
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STRATEGIC GOALS – LEGO
Introduction
LEGO, a privately owned company specialises in the manufacture of different types
of play materials. At present, the management has operations in European parts, Australia,
Asia, and the US. The headquarters of the company is in Denmark and has employed more
than 12,582 employees. Despite of facing extensive challenges, the company could improve
the performances by 13% in the year 2014. The issues faced by LEGO includes following the
right business strategies for launching new products for the children, by following the terms
and conditions. This report examines the business challenges faced by LEGO in conducting
the business activities and improving the operations.
Environmental analysis
1. PESTLE
Political-The company faced challenges in earning profit in the year 2000, but with
effective business strategies and innovative technology LEGO improved the performances.
Political situations and strict rules and regulations followed in different countries is examined
and introduced by the management. For instance, the rules and policies in the US market for
manufacturing and selling the toys had to be followed by LEGO groups. Product distribution
method is done as per the political decisions made by the leaders of the nations, where the
products are intended to be sold. The company is liable to pay taxes as there corporate laws
followed in different countries. Developing countries usually impose heavy tax amounts as
compared to the developed nations (Girard, 2013).
Economic - As it was predicted by the IMF or the international monetary fund, the
world economy has grown up tremendously. The rate of development in the developing
nations like China, India, and others has been more than the developed countries. This
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increase has improved the wealth of the people, and encouraged the buyers to spend a
considerable amount on the toy purchases. LEGO has been benefitted by this improvement in
the gross development and purchasing power of the people. However, the company is yet to
improve financially in EURO areas where the market is not fully recovered from the
recession that was recorded in the year 2008-2009.
Social - The demands and requirements of the children in the developing and
developed nations are changing. This has increased the demands for well-designed and
innovative toys that are different from the traditional ones. An increase in the women
employees across the world has increased the standard of livings for the people.
Technological - New products due to the technology adoption have improved the
product value manufactured by LEGO. The company works on innovative strategies to cater
the requirements of the children of different age groups. This enabled the management to
attract children who get attracted to the games viewed and played on internet. LEGO uses 3
D technology for producing different types of games (Heathcote and Roux, 2012).
Legal - The company policy for protecting the patent rights is quite strict. Legal
aspects such as getting the licenses and franchising for the business conduct are closely
examined and followed by the management. The rules and its relevant changes are examined
by the management on a timely manner, as it helps in smooth conduct of the business
operations in different places.
Environmental - LEGO followed the strategies for corporate social responsibilities
meant to protect the rights of the community and the environment. The policies adopted by
LEGO are unbeatable as it works on the renewable energy and protection of the environment.
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STRATEGIC GOALS – LEGO
Company policies towards the work safety is closely analysed by the management and
appropriate measures are introduced for protecting the environment (Tuli et al., 2007).
Porters five force
Threat of entry - The demand for new and impressive toys in the toy market is
constantly increasing. Threat of entry of the new products in the market is quite high, as the
entry process for different companies in various markets are quite high. New toys constantly
enter the market through different channels like Amazon, Wal-Mart, and others. LEGO is a
reputed company that operates in the national and international market.
Bargaining power of the suppliers - The primary suppliers for LEGO are the
contractors or the sub-contractors who supply the products or raw materials to the clients.
Supply chain management system followed by LEGO is quite effective, and this makes the
company less dependent on different suppliers for the purchases and sales of the raw
materials. LEGO also has a reliable production-in-house product supply requirements of the
company (Greenblatt, 2015).
Bargaining power of buyers - The products manufactured by LEGO is distinct from
the other products available in the market. Uniqueness of the products makes it reliable and
attractive from the others. The retailers are selected for endorsing or selling the products and
this makes the buyers to choose an integrated system for manufacturing and selling exclusive
toys to the clients. Product differentiated enabled LEGO to easily venture into different
markets and enjoy the potential market.
Threat of substitutes - Children prefers to spend time and money on the purchase of
the digital products. This affected the sales of different toy manufacturing companies.
However, LEGO was not impacted by the increase in the demand for the digital products by
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the young clients. LEGO could easily maintain the niche of the market, by introducing new
and impressive products for the clients (Solomon, 2014).
Competitive rivalry - Bandai, Takara Tomy, Mattel and Hasbro are some of the rival
companies of LEGO. However the major competitors for LEGO are Hasbro and Mattel.
LEGO leads the competition by offering the better services and adopting the better strategies
for increasing the operations to different markets. The company has been successful in
increasing the operating margin, which was unbeatable by the rival companies (Court et al.,
2006).
Economic system
The costs for the products and the manufacturing are controlled by introducing
improved system for accomplishing the business goals. LEGO conducts the operational
activities in different parts of the world. It is quite imperative for the company to adopt an
effective method for controlling the expenses. The charges involved with the supplier’s
retention are controlled by improving the relationships with the clients. Strategic changes and
goals are improved by introducing new policies and methods for acquiring the business
strategies. The company also outsources the product manufacturing process, as it helped in
improving the sales for the toy products in different markets. LEGO products as compared to
others are quite seasonal and the order horizon is shorter. This makes the product feasibility
and sales highly effective and feasible. For reducing the costs of the products, the toy
manufacturing company has adopted a feasible and effective supply chain management
system (Schultz and Hatch, 2003).
The costs for the products were reduced by LEGO by adopting an effective digital
strategy for manufacturing and selling toys to the clients in different markets. Through the
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digital strategy, the company developed and sold online games that provide different range of
product choices to the clients. This process enabled the managers to analyse the product
requirements of the customers to design effective methods for catering the needs of the
potential buyers (McGee et al., 2005).
For acquiring the economic growth, the company spend considerable time and
efforts to attract the clients. Structural changes were introduced by the management to
increase the profit and reduce the challenges and costs involved with the production
activities. Innovative strategies were designed and implemented for catering the needs of the
clients that increased the sales.
New strategies were designed to introduce new policies and methods for acquiring
larger market size. The process and the methods are analysed to understand the changes to be
introduced for improving the sales and the product value for the customers. For increasing the
sales, the company adopted innovative strategies that helped in analysing the needs of the
customers and encouraged the management to sell the right products to the clients. The
process required the management to introduce new methods for improving the managerial
aspects that needed improved strategies required for accomplishing the business goals.
Business perspectives were changed and new methods were adopted to implement the
changes that were essential for increasing the overall business activities. For handling the
challenges, the company conducted an in-depth situational analysis that was essential for
acquiring new market and selling efficient products to the clients (Lauwaert, 2009).
Globalisation
Globalisation enabled the management of LEGO to expand the operations to
different European and Asian countries. Business expansion changes were introduced by the
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management to improve the operational activities in different parts of the country. Through
the globalisation process the countries developed effective strategies that helped in
approaching the customers from different countries. Policies were formed and followed by
the authorities. The company could easily expand its operational activities to different parts
of the globe and this enabled the management to deal with various issues. Through a designed
strategy, the rules and regulations followed by the management were introduced and followed
by the management.
FDI
Foreign direct investments plan by LEGO was carefully planned and introduced by
the management. These aspects enabled the management to choose a particular country and
plan for the investment plan. The strategies and policies were introduced for accomplishing
the targeted goals of improving the business expansion strategies that was required for
approaching the clients from different markets. Through a defined strategy the management
could easily overcome the challenges and improve the strategic goals required for
accomplishing the targeted goals. For expanding the business operations, the company
partnered with different companies to sell the best products for the children. These strategies
were examined and improved policies were introduced to overcome the challenges that
impacted the business expansion plans adopted and introduced by the management. Foreign
direct investment schemes were effectively introduced for accomplishing the targeted goals
for increasing business sales.
Foreign direct investment plans are drastically planned by LEGO, and this has
helped the company to venture in different countries for expanding the operations. These
aspects are quite relevant and important for the business goal achievement.
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International trade theory
The international trade theory concentrates on comparative advantage that benefits
the company and use the strategies used for selling the products and goods to the clients. This
provides the companies with the required advantage that assists in accomplishing the business
goals of providing the clients with the required services. The country analyse the usefulness
of the absolute advantage that are associated with the task performances of providing the
clients with the better services that will increase the number of clients for the company. In
this process, the company designed and implemented new policies that enabled the
management to design new process for accomplishing the business goals. This method
enabled the management to product the exclusive products that were required for
accomplishing the targeted goals of offering the better services and products to the clients.
Product sales and accomplishment of the targeted goals could be accomplished by the
company. LEGO ensured to follow the strategies that were mentioned in different countries.
These aspects were analysed, and corrective measures were introduced for selling the right
type of products to the clients, as this enabled the managers to develop new products that
were sold to the children from various markets.
Conclusion
Business expansion plan and the strategic goals were decided by the management to
improve the operational levels. The strategic changes were introduced for acquiring the new
market and to make the sales in different markets. These strategies were introduced for
improving the performances of the company in the national and international market.
PESTLE analysis was conducted to find the relevance of the changes and the business
challenges that impacted the business activities. The economic and political aspects were
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examined to understand the challenges involved with the task execution and implementing
new processes for increasing sales.
References
Court, D.C., French, T.D. and Knudsen, T.R. (2006). ‘The Proliferation Challenge,
New York’ McKinsey & Company.
Girard, K. (2013). ‘Can LEGO Snap Together a Future in Asia?’ Available:
http://hbswk.hbs.edu/item/7144.html
Greenblatt. S. (2015). ‘The LEGO Success Story: Getting Everything to Awesome.’
Retrieved from https://rctom.hbs.org/submission/the-LEGO-success-story-gettingeverything-
to-awesome/
Heathcote, E. and Roux, C. (2012). ‘Things ain’t what they used to be’ 2 Available:
http://www.ft.com/intl/cms/s/2/b2a9fa26-19f3-11e2-a179-00144feabdc0.html
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STRATEGIC GOALS – LEGO
Lauwaert, M. (2009). ‘The Place of Play: Toys and Digital Cultures,’ Amsterdam
University Press.
McGee, J., Thomas, H. and Wilson, D. (2005). ‘Strategy: Analysis & Practice,
Mcgraw-Hill Education.’
Schultz, M. and Hatch, M.J. (2003). 'The Cycles of Corporate Branding: The Case of
LEGO Company', CALIFORNIA MANAGEMENT REVIEW, vol. 46, no. 1, Fall.
Solomon, B. (2014). ‘Jealous Barbie: Mattel Comes After Lego With Mega Bloks
Purchase.’ Forbes. Retrieved from
http://www.forbes.com/sites/briansolomon/2014/02/28/jealousbarbie-mattel-comes-after-
lego-with-mega-bloks-purchase/#44c3a2e75114
Tuli, K., Kohli, A.K. and Bharadwaj, S.G. (2007). ‘Rethinking Customer Solutions:
From Product Bundles to Relational Processes', Journal of Marketing, July, pp. 1-17.
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