Lego Friends Case Harvard Case Solution & Analysis

Lego Friends Case Case Study Solution

Competitor Analysis:

The Lego Company is one of the most trending company in the toy industry. It is among the top 10 toy manufacturing companies around the world. The company manufactures high quality products for its well trusted customers. The Lego has gained popularity in its theme product kits launched for the kids, based on the cartoon characters such as Harry Potter, Indiana Jones etc. Lego’s products are not only admired by the children but also by their Parents. The bricks models make the child use his/her brain to develop the structure of the toy. In the social media, the company has created many opportunities for the individuals to design the toy structures out of which the most popular designgets approved to be proceeded to the final manufacturing. It manufactures products according to the interest of customers.

Competitive Advantage:

Among all the companies in the toy manufacturing industry, Lego is the only company which does not compromise over the quality of the products, due to which customers have built their trust over its products. As the company has to pay high wages to the employees, causing it difficult for LEGO to maintain its product quality. Hence, the company outsourced its manufacturing of most of its products to Flextronics.

Pros:

  • The lower wage rates of the companies for the manufacturing and the packaging of the products.
  • The outsourcing helped LEGO to drop the share rates of in-home manufacturing from 20% to 95%.

Cons:

  • Despite of the low wage rate, the company is stressed due to the work load of the manufacturing products.
  • The raw materials used by the Flextronics and the technology it uses is less efficient.
  • The quality of the products is not as good as the products manufactured by the Lego itself in Billund.

VRIO Analysis:

This analysis is helpful in determining the relationship between the company and its proficiencies. The company persists a reputable position in the market, because of its high quality and unique product lines, which attract the customers in bulk. The financial state of the company is not strong enough to face any further failure of the products. However, the technology utilized for the innovation, and the creativity in the development of products are quite remarkable. Thus the innovative methods employed by the company are valuable and costly to imitate; leading the company to have sustainable competitive advantage. The organizational structure is well-developed and works right in accordance with plan; leading the company to possess a competitive parity. (see Exhibit 4).

Positioning Strategy:

The LEGO Company holds a good position in the market, but the company is now working under stressful conditions.  In order to maintain the position that the company currently has; the financial plans should be well-understood, and it should only launch the products that are creative and innovative not only for manufacturers but also for retailers and customers. Simultaneously, the company should open play areas in the malls, equipped with their high profile products, to retain the interest of customers towards their brand. This involves minimum investment and can significantly result in the generation of good profit. The company should not license all the products, and cancel the license of the Lego Friend product line as it doesn’t seem to generate potential outcomes.

Future Recommendation:

The licensing strategy is worth it, but due to the initial failure in outcomes of the Lego Friends product line in the market; the company should license all those products that  have high potentials to get huge success in the market. This will also reduce the licensing expenses of the company; assisting the company to spend more on the product quality. The inauguration of the play areas in the malls will help the company to spread its brand awareness among the people visiting the malls, which would not only boost the sales of the products but also provide great profits to the company, ultimately helping the company to flourish more in the toy industry.

Conclusion:

To conclude, the Lego Company has been trending well in the toy industry. The company has launched many of the attractive themed toy kits that significantly increased the revenues of the company. An example of which is Bionicle, which has been the most famous story based product line. To license every product that the company launches, the company would be required to spend a huge amount.. The company has experienced that girls are less interested in their toys, as a result of which, a product line based on different mindset has been manufactured. Unfortunately, the first two products failed to get popularized, resulting in the financial loss. So, it’s better to license the products but after going through a close inspection of the facts about whether the products are going to be successful in the market or not.

 

Exhibits:

Exhibit 1:

StrengthWeakness
·         Stronger network of product distribution.

·         Variation in the portfolio of the products.

·         High  quality of the products

·         Most popular brand trending in the toy industry

·         High product cost

·         Financial Plans are not well-established.

·         Stressed workers due to work load.

·         Not enough budget to spend in maintaining the product quality.

OpportunitiesThreat
·         Advertisement to the popular webs.

·         Innovation in the products

·         Low-cost products

·         Collaboration with movie companies to manufacture trending products

·         Tough competition

·         Financial loss

·         Decrease in customer’s interest.

Exhibit 2:

PPoliticalEEconomicSSocialTTechnologyLLegalEEnvironment
International trade agreements

 

Labour Policies

 

Tax Policies

 

Production costs as low as possible

 

 

Children spending more time on social media

 

Variety of products

 

Innovative and creative products

 

Use of IT

 

Product quality

 

Laws and rights of consumers

 

Pollution targets

 

Use of environmental plastic

 

 

 

Exhibit 3:

Exhibit 4:

ResourcesValuableRareCostly to ImitateOrganizationCompetitive Advantage
Technology YesYesNoYesSustained competitive Advantage
ReputationYesYesYesYesSustainable Competitive Advantage
Organizational CapabilitiesYesYesNoYesStrong competitive Advantage
Financial Resources YesTo Some extentNoYesCompetitive Parity
Innovation and CreativityYesYesTo some extentYesCompetitive Advantage

 

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