Lego: A Family-Led Journey From Wooden Toys to Global Success - Essay Sample

Introduction

The Lego group company was established in 1932 in Billund, Denmark, where toys made of wood became the highest items on sale. The company got its name from a conjunction of two Danish words 'LEg GOdt' which means play well. It has been a family-led, innovative and successful global toy company that has experienced high growth rates over the decades (Jensen, 2013). The Lego bricks have been a major contributor to the expansion of the company as it evolved from the use of wooden toys at the beginning of the company to the use of plastic bricks which were more effective than the previous toys. The Lego company faced a huge employee intake with a rise from 65 employees in 1950 to 1000 employees 20 years later (Jensen, 2013). The group was successful even in the economic strives of the 1970s and 1980s as it presented more innovative products like the LEGO TECHNIC and several play themes such as LEGO Castle, LEGO Cowboys and LEGO Space.

Strategic Marketing

Strategic marketing of the Lego Company depends on the internal and external environment of the environment. The continuing technological development has facilitated the marketing of the Lego products and the development of different materials used by the company. The changes in technology create opportunities as well as threats to the marketing of the company (Jensen, 2013). The opportunity that technology creates for the company is that it makes it easy for the products to reach the target markets and be easily developed when need be. Another opportunity that may arise from the technological advancements in the company is that it has a strong capability of developing products that meet the requirements of the marketing strategies used like electronic toys for children. The challenge that the company may face from technological development includes dealing with other companies that have more technological advancements than it. Another challenge that the company may face from the development of the technology used is children changing their playing habits and leading to a loss of the market for traditional toys.

The attitudes of the public as well as the cultural values that surround the company, affect its marketing strategies. It is important to understand the marketing strategies of a company in the current corporate structure as they are a major component for the development of the company and the reaching of all target markets (Jensen, 2013). It is also a crucial aspect of ensuring the company continues developing its products with different features and figures. This aspect led to Lego Company developing products that had technical features and figures which made plastic bricks to gain more popularity and have a wider market.

This market makes it easy to reach more customers and improve the coverage of all Lego products in the competitive market where other companies provide products that are either better or equal to those produced by the Lego Company. Lego's development of its products, as well as the innovations it adopts in extending its playing opportunities to the target markets, creates better opportunities against competition from other companies (Jensen, 2013). Another strategy that Lego has adopted different from its competitors include the introduction of Lego theme parks, and robotic attempts of traditional Legos labelled the Lego Bionicles. These strategies have enabled the Lego Company to excel over other grouped companies that may pose as a threat to it.

Organizational Structure

The founder of the Lego Group of Companies was Ole Kirk Christiansen in the year 1932, where he founded it to be a family organization. When Ole died in the year 1958, Godtfred, his son, took over the company. He was a junior vice president of the company before the death of his father (Jensen, 2013). Third generation Kjeld who was the only business graduate among the applicants took over as the CEO of the groups of companies in 1978 while Godtfred remained as a board member ensuring that the company continued developing with its products reaching a wider market. Godtfred died in 1995, and Kjeld took over full control of Lego Company. Kjeld showed high leadership skills, where he contributed a lot to the international growth of the company with innovative products being among the leading causes for the success of the group of companies.

In 2004, Kjeld resigned from the CEO position and Jorgen Vig Knudstorp, who was the then Executive Vice President of the group of companies, took the position of CEO. Knudstorp has been the CEO of the Lego Group of Companies since then. He has restructured the organization's leadership with each part of the Lego Company having a team of internal consultants that incorporates financial and logistics managers as well as other employees who are used for the marketing purposes of the company's products (Jensen, 2013). The company is currently made up of corporate employees, business-level employees, and operational personnel all of whom are playing a major role in the development of the company and the effective dealing with the rising competition internationally.

Value Chain

The advantage of conducting a value chain analysis for the Lego Group is that it helps to identify different competitive sources and how to leverage them to gain an advantage over other companies. Lego is a company that cannot externally trade all its activities which makes it consider the activities that it chooses to be economic rent sources that help to deal with competition (Jensen, 2013). Porter's value chain has helped to analyze the activities of the company and create a list of activities that are not scrutinized at the same level as the competitive toy companies in the market.

Lego Group has been able to identify the advantages of different activities based on their product roles and the process they use to deliver services to different customers worldwide. The Lego Group is made up of primary activities such as operations, inbound logistics, outbound logistics, pre-sale and post-sale services as well as secondary activities such as human resource management, procurement, firm infrastructure, and development of technology (Jensen, 2013). Both the primary and secondary activities have helped to define the value of the company and place it ahead of its competitors through the administration of higher-level products and services than other companies producing the same products.

Focus

Lego group of companies has a focus on core business and the capital structure improvement where it is expected to finance all its activities and be able to deal with its debts. Different structural initiatives have been incorporated in the company with the rebirth of several activities of traditional business being widely noticed (Phillips, 2010). A strong financial position has also been realized in the company with an equity ratio that has been doubling since 2008 after dividend payments. The second focus has been on sales and distribution, where the company has been largely depending on retailers to deliver attractive products to customers.

The use of retailers has played a major role in the leveraging of the bargaining power of the company to the partners of distribution. Excellent relations are an important aspect of the alignment of expectations and the obtaining of market information (Phillips, 2010). A focus on costs and supply chain, as well as quality, is also evident in Lego Company. The seasons of toy markets change with time as peak sales vary with the needs of the clients. The varying peak seasons does planning for the company challenging as sales become difficult to predict.

Feedback from the customers, fast adjustments and flexibility in supply chains are also lost because the partners who are involved in the external sourcing of the Lego products are unable to cope (Phillips, 2010). Focus on innovation creates a need for Lego products to go through new designs several times over the years, which creates more sales, with about 60% of sales realized annually coming from the innovations.

Differentiation

The Lego Group Company has adopted different strategies that help to differentiate it from other toy companies worldwide. The company through the leadership of Knudstorp has adopted a focus on various opportunities that appear internationally and takes much effort to create a strategic management system that has played a major role in the differentiation of its activities and products from those of rival companies (Phillips, 2010). It has also been more selective in the assessing of partners to work with, which has helped it develop an operational and strategic fit in the market compared to other toy markets. The company's deal selection and exit process have gained a great reputation in the sector of entertainment, and both of these strategies have helped differentiate it from other international toy provider companies.

The company has also adopted the strategy to use online strategies of distribution of its products, and this has helped to create accountability in the products of entertainment and toys produced by the group. The company has also adopted a system where it changes with the constantly changing demands of the modern world (Phillips, 2010). Lego Group has high levels of technology that is not found in competitor companies which have helped to make all their products to fit the technological demands and the modernity of the toy world.

Strategic Grouping

The Lego Group has been involved in different attempts to turnaround and set its products in certain strategic categories that move from traditional games. It has adopted other categories such as play themes, video gaming, products that are educational-based for children as well as licensed products (Phillips, 2010). This type of strategic grouping of its products has enabled the company to remain on top in the competitive toy production markets.

The company adopted a strategic grouping plan due to the threat it faced from rising competition from companies such as Mattel and Hasbro. The adoption of this grouping plan enabled it to create new products that were more exciting to children and were different from the past traditional gaming equipment (Phillips, 2010). The new toys that the company has adopted over the years are also easily used by all children regardless of their age which increases sales and helps deal with the rising competition of other toy companies most of which currently produce the traditional toys.

References

Jensen, A. (2013). The LEGO Group: Adopting a Strategic Approach [PDF] (pp. 544-548).

Phillips, S. (2010). LEGO: Impossibly simple licensing [PDF] (pp. 52-54). Retrieved from https://www.licenseglobal.com/streaming-and-tv/molang-journeys-new-train-deal