CASE: LEGO GROUP BUILDING STARTEGY Harvard Case Solution & Analysis



Lego Group was founded by Mr. Kirk Kristiansen in 1934. It is a Denmark based toy manufacturing company. The family owned business was handed from the father to his grandchild Mr. Kjeld Kirk Kristiansen. The company offers wide range of quality products that enhance the learning of children. The company is involved in creating the product, which builds the creativity of the children through learning and playing.It has become one of the largest toy manufacturers throughout the globe.
By spreading their business operations internationally, they became global brand. According to British association of retailer, Lego is entitled as “Toy of the Century”. The company expanded itsproduct line by offering not only new technological based toy but also providing computer games, websites and movies. Initially, the company decided to sell wooden toys altogetherhoweverthe incident that took place in their workshop had destroyed all the assets so ithad changed itsstrategy and focus completely on Lego brick system of play.
In the beginning of 2000, it started growing due to to licensing the products and intellectual properties. The toy industry has changed dramatically in 2003 and competition has been increased. The children were attracted by the multimedia fantasies. The traditional toy trend has been reduced since a decade. The toy industry reduced the cost from outsourcing the manufacturing from Asian countries. Lego has lost its capability to innovate the new product and is nowhere to be found near its core business due to market diversification trend.

Key Issues

The company was facing expansion crisis because the company’s capability encourages itto capture the new market in order to get more privilege and competitive advantage. The company had difficulty to identify the new market. In addition to this, Lego wants to promote the toy industry in future and increase its strength in order to get more financial success and achieve market dominance.

Internal Analysis

VRIN Analysis

The company has many advantages and strengths in the industry that can become a significant source of competitive advantage. The company possesses numerous tangible and intangible resources that can prove to be a significant source of gaining competitive advantage in the market and stand out from the competition. Nowadays, technology and innovation are what everyone is adapting in the industry; however, Lego Group has a reputed brand name and image that gives the company an edge over its competitors.
The strong reputation of the brand in the mind of the consumers is the major source of gaining competitive advantage. Lego Group is making quality toysfrom its inception and is amongst the pioneers in the industry and holds a significant market share. The brand name of the company can be a great source of value as in the European market; it is a standout, and a well-recognized brand.
The brand is associated with quality and is considered as a premium brand in the toy category and only a few players in the industry can share the same attribute. The brand name of the company will give the company an edge over its competitors due to its rareness as not every brand can create the same brand name like Lego and in order to reach the same level, other players will have to spend more and wait longer. The industry shows results in a long term. Therefore, the brand name and image are very rare attributes that will give the company an outstanding source of competitive advantage.
Furthermore, imitating brand image is impossible as the brand name and the image of another player can never be imitated rather other brands strive to establish their brand names. Apart from that, the brand name and image of Robert Lego group a renon-substitutable as the company has a long history, and there is no substitute for its long existence in the industry. The company can gain competitive advantage by using its brand name and image as the company initially intended to focus on selling and growing its premium brands in the industry, unlike its competitors that are focusing on investing heavily on mergers and acquisitions..........

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