Lego's Global Expansion Report

This report analyzes Lego's global expansion strategy, particularly its focus on the Asian market. It uses a PESTLE analysis to identify key international business environment factors affecting Lego's management in Asia, including political, economic, social, technological, legal, and environmental factors. The report also examines Lego's current approach to global innovation, emphasizing continuous product and process improvement. Recommendations are provided to enhance Lego's global innovation efforts, such as understanding customer needs and developing innovative networks. Finally, the report identifies three key CSR challenges facing Lego—environmental impact, children's safety, and employee welfare—and offers recommendations for addressing these challenges using a Triple Bottom Line approach. The overall goal is to help Lego navigate the complexities of global expansion while maintaining ethical and sustainable practices.

Introduction to International
Business- Lego
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INTRODUCTION
With the continuous changing marketplace corporation now a days focuses on expanding
their business activities across the national boundaries (Wysokinska and Witkowska, 2004).
With the help of this, business organization ensure selling their products and services across the
boundaries without any obstacles. Through conducting the transaction across the national
boundaries will support the organization in setting higher profit margin as ell as gross sales that
will enhance their position in the new market. The present report focuses on Lego one of the
leading toy and games manufacturer company. The company has been operating successfully for
over 80 years and despite a dominant international market share in construction toys, its growth
has not been without ups and downs. Report will also focuses on gaining insight knowledge
regarding the Asian market so that Lego may expand their business in the region. Furthermore, it
has also determined the key CSR challenges are is faced by Lego in expanding their activities in
the global market as well as recommendation for the same has also being provided.
1. THE ASIAN MARKET
a) Three factors to explain why Asia is attractive and strategically important region for Lego's
future
With the increasing competition and growing pace of international business Lego one of
the leading toy and games construction company focuses on expanding their activities in the
Asian market as there are various factor that explains Asian market is attractive and strategically
important region for Lego future (Kaufman and et.al., 2011). The company is emphasizing on
conquering the Chinese market as because of three factors that are as follows-
 Market size- The key factor that explains Asia market is attractive and important region
for Lego as the market size is very large as compare to the another region or markets
(Strategies That Fit Emerging Markets, 2016). Although it has been stated that China is
among the second largest country within the Asia continent thus, expanding business in
Chinese market is feasible option for Lego.
 Growth rate- Another factor that justify attractiveness of Asian market is their growth
rate. The economy of Asian countries are effective as compare to the other countries in
the world.
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 Capital availability- Another factor is capital availability, Asian market is strategically
important for Lego future (Daniels, Radebourgh and Sullivan, 2011). As, the market
possess high capital availability that support in establishing and setting toy manufacturer
plant within the Chinese market. Furthermore, the market also have resource availability
that is physical and human resources as well as skilled workforce that is feasible for
Lego's future.
b) Current key international business environment factors that affect the management of Lego
business
With the increasing Asian market and grabbing the opportunity through conquering the
Chinese market there are key international business environment factors that directly affect the
management of Lego businesses (Steurer, Langer and Martinuzzi, 2005). With the help of
PESTLE tool, they can easily analyse political, economical, social, technological, legal and
environmental factors that are responsible for globalization of market and production of the Lego
in the Asian market. The factors can be assessed through enabling PESTLE analysis-
Factors
Political factors  The political factor of Asia market is very strong that support in
rising the overall economy. All the business activities is
controlled and managed by the government (YÜCEL and
DAĞDELEN, 2010).
 The tariff or duty that is enforced by the authorities are high that
will disallowed the Lego in trading the material from one region
to another.
Economical factors  The economy of Asia market is quite effective that support the
organization in spreading out their operation in the region.
 Literacy level among the individual is very high that act as
practicable situation for management of Lego to engage in
international business (Backstrand, 2006).
Social factors  The age structure of market constantly changes therefore the
market is suitable for Lego toy manufacturer as most of the
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population is below the age group of 15.
 Furthermore, the trend and preferences of customer related with
the toys and games keeps on changing.
Technological factors  The technological factor within Asian market plays significant
role as it will support the Lego management in brining
innovative and technological games for adults as well as young
customers (Steurer, Langer and Martinuzzi, 2005).
 Along with this, in Asian market there is good existence of
online or internet marketing that will support the Lego in
promoting and marketing their Toys as well as games in the
overall Asian region.
Legal factors  There are several legislation as well as laws that are framed in
the Asian Market that need to be abided by organization who is
establishing their businesses within the region (Brakman, 2006).
Environmental factors  Asian region is consider as disaster inclined area that is not
appropriate for overseas company to commit within the
economy as it will negatively impact the company's operational
activities.
c) Justified recommendations how Lego should address key factors
From the above identified and analysed business environment factors through conducting
PESTLE analysis it has been assessed that management of Lego must evaluated all the factors
and then take necessary steps towards addressing these factors (Berthon and et.al., 2012). There
are certain recommendations that help of Lego toy manufacturer company in addressing these
factors, the recommendations are as follows- Technical innovation in their products- Through analysing the technological factor
within the Asian market it has been recommended that Lego manufacturer company must
implement technological innovation within their toys and games so that all age group
individual can use their products. For targeting the young individual of Asian market
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Lego company can manufacture technological advanced games as well as well as
manufacturing play-station games for the individuals (Barlett, 2003). Thus, innovating
technological games products will target all demographic customers towards purchasing
their products.
 Strategic alliance with the existing company- In order to address the political factor of
Asia market it has been recommended that Lego must engage in strategic alliance with
the existing firm and company so that they can easily grab the existing market (Holbeche,
2009). It has been assessed that with the high tariff and duty Lego will not able to import
and export their material therefore, company must engage in forming strategic alliance
with the existing firm in the Asian market. As, it will also results in avoiding the
additional cost related with establishing the manufacturing plant.
2. GLOBAL INNOVATION
a) Lego current approach to innovation on a global basis and explain why this approach has been
adopted
In order to engage activities in the global market Lego's current approach to innovation is
mainly depends on their business strategy, competencies as well as understanding of their market
(Kaufman and et.al., 2011). The current approach to innovation that is used by Lego on the
global basis is related with continuous improvement among the product and processes. With the
help of product and process improvement management of Lego focuses on the manufacturing the
Toys according to the requirement and needs of the customer. Furthermore, with the traditional
toys using approach to innovation on the global basis it may results in modifying the Toy
products that is company must engage in introducing the technological aspect within their toys
and games so that results in attracting large customers of all age group (Hill, 2011). Thus, the
current approach to innovation adopted by Lego company that is continuous improvement within
their product and process is significant for the company. As, the adopted approach to innovation
on the global basis benefit the company in following ways such as-
 It support the Toy company in manufacturing and producing the new toy and games
according to the requirement of the customers that further assists in satisfying the
changing requirement and needs of the customers (Hofstede, 2001). With the
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modification in toy products it may results diversifying their toy range so that they may
satisfy the requirement of different customers.
 Moreover, adopting this approach to innovation is also feasible for Lego toy company as
it continuous improve the manufacturing process of toy so that it may avoid the wastage
and defect among the toy (Daniels, Radebourgh and Sullivan, 2011). Thus, this approach
to innovation will development the value chain of company while expanding in the
international market.
b) Recommendations to improve their global innovation efforts
In order to improve the global innovation efforts of Lego toy company there are certain
recommendations such as-
 Understanding and finding the needs of customers- The foremost recommendations to
improve the global innovation efforts within the toy manufacturer company is focusing
on understanding the requirement and needs of the customers that is what they require in
games and toy. For instance, now a days customers prefer to select the toys that have
attractive features that attract the customers to purchase their products (Cavusgil and
et.al., 2008). Along with this, now a days young and adults also prefer to play
technological games such as video games or play-stations. Thus, for improving the global
innovation efforts Lego toy manufacturer must engage in manufacturing the video or 3D
games for targeting the adults and young generation customers towards their products.
 Innovation networks- Another recommendation for amending the global innovation
efforts of Lego company is that management must engage in the innovating their
networking that is supply chain, logistics, authorized stores or networking through social
media sites (Cateora and Graham, 2004). Thus, with the help of enabling social
networking it may results in enhancing their reach on the international platform so that
large customers get attracted towards it. With the innovation in their network it may also
results in distributing their
3. CSR AND ETHICS
a) Three key CSR challenges facing Lego as global expansion continues
In order to continue the global expansion Lego faces certain CSR challenges that is
related with maintaining environment through gaining competitive edge in maintaining
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leadership position within the environment (Mason and Staude, 2009). The company engage in
emitting various gases and other substances within the environment that effect their surrounding.
Furthermore, company also faces challenge regarding the improving their energy sources and
efficiency through using the resource in the optimum manner.
Another CSR challenge that Lego faces is related with innovating the toy for satisfying
the children so that they may gain learning experience (Kelly, 2009). Children are consider as the
key stakeholder of Lego toy company that purchases their different products and games in order
to have playful experience. On the other hand, Lego also faces challenges related with
manufacturing safely toy products and games through this they may promote their
responsibilities and duties towards the children.
The key ethical challenge that Lego Toy manufacturing company is facing is related with
the conduct within the workplace towards their employees and staff. The company is facing
ethical challenge towards maintaining the respect of their staff and maintaining right of labour
those are engaged in the services of manufacturing the toys and games for the children
(Kippenberger, 2000). Therefore, it is essential for the company to manage and implement the
laws and legislation related with maintaining the welfare among the labour as well as also
maintain ethical transparency towards the employees.
b) Recommendations on how Lego can respond to current and predicted CSR challenges
For responding to the current and predicted CSR challenges it has been recommended
that Lego company must use the Triple Bottom Line approach within their operation so that they
can easily maintain their existence in the market. It is a framework that is often adopted by the
corporation that assists in measuring their performance in order to make over the business worth
(Neuland, 2009). It is recommended that company TBL approaches will ensure the socialization
and well being of the employees or the other stakeholders. Business organization also offers
health-care, healthy and safe workplace to work, possibility for advancement through proper
training and development. It also focus on the preserving the planet that is society by eliminating
or removing ecological footprint, going green, reducing CO2 to become more profitable in the
long run. The business organization with the TBL will also ensure adopting the sustainable
environmental exercise for the organization so that the practices may not damage or harm the
environment.
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Another recommendation to respond the current CSR challenge is that for overcoming
the ethical challenge among the Lego toy manufacturing company (Das, 2011). They must
ensure protecting the well-being and safety of labour and staff through implementing the
legislation related with the safety and welfare so that management can perform their service to
overcome or respond towards the CSR challenges that are faced by the toy manufacture.
CONCLUSION
The aforementioned report summarizes that to survive in the global market international
business is consider as significant approach that assist the business organization in spreading out
their market across the boundaries with the main aim of increasing the profit ratio. In order to
engage activities in the global market Lego's current approach to innovation is mainly depends
on their business strategy, competencies as well as understanding of their market. Furthermore,
the report has also gain an insight knowledge regarding the relevant factors that are responsible
for emerging production in the Asian market so the Lego company can easily grab the
opportunity through capturing Chinese market. With the help of PESTLE analysis, Lego has
measured the factors that directly and indirectly affect their operation and business in the new
emerging marketplace. In addition to this, it has also measure the current innovation approach
that is adopted by the manufacturer company in order to sustain their production in the global
environment. Furthermore, it has also determined the key CSR challenges are is faced by Lego in
expanding their activities in the global market as well as recommendation for the same has also
being provided.
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