THE LEGO GROUP Harvard Case Solution & Analysis

The LEGO group Case Study Solution

Analysing Business Performance

To analyse the LEGO group’s business performance to exhibit superior performance, the best tool which will be used is PEST.This tool will help in understanding the company’s performance by looking at the impact of political, social, economic, legal and technological factors in the business.

PESTL Analysis:

Political Analysis:

The political analysis of LEGO group is that the company enjoys its position in conducting its business in Denmark. As Denmark is considered the best and the most attractive place to invest according to the EIU (Economic Intelligence Unit). The political conditions in Denmark are considered stable and they primarily use this location for the research, development and production of its goods.Lego group is also able to easily export its toys from its current position to North America and Western European markets which is their main sales originating source. The labour costs in Denmark was higher; they used a strategy in the production of legos in which 20% of the manufacturing would be done in Billund while other would be manufactured in the cheap cost regions in Eastern Europe.

Economic Analysis:

The economic factor can become a big threat toLEGO company’s sales and business. The company’s external environment forces can be greatly affected by the changes of the country’s economy parameters. Even though the entire world suffered from the financial crises in 2008 – 2009, LEGO group still managed to pull through that financial crisis and performed very well in generating sales. The company earned the most sales during those times which is about 11,660 million DKK. The reason that they were successful in the economic crisis is because of the newly advanced machinery and certain programs for laying off employees to be cost effective. This caused them to manufacture the toys at less cost and laying off some employees reduced their operational cost. The company even took measures by divesting the LEGO parks to Merlin Entertainments group as it was realised that this strategy was significantly different than the rest.

Social Analysis:

Due to the release of new and top movies such as Harry Potter and Star Wars, the LEGO group used it to their advantage by creating toys relating to those movies. They came up with new LEGO models of Star Wars and Harry Potter. This caused increase in sales because most of the children and teens were attracted by these new models. They later made more innovations in their LEGO toys by coming up with famous models with the name of “LEGO DUPLO” to which consumers were not attracted. The reasons were because of the consumers switching to more advanced electronic games, and this caused the LEGO market to decline. The lifespan of children playing with LEGO products has started to decrease unless the company came up with new innovations and exciting LEGO models. The sales of LEGO company were mostly reliant on the seasons holiday such as Christmas.

Technological Analysis:

As the environment is rapidly changing due to the advanced technology, the LEGO group needs to come up with innovative and exciting LEGO products to attract the consumer. To attract the customers, the LEGO group took different measures such as the development of an online LEGO multiplayer game in which the players can build, create and play LEGO online with other players. The company even took actions by developing LEGO movies such as Star Wars and Batman to attract the consumer. But due to highly advanced technology, most of the children are preferring to play electronic digital games instead of physical games.

For the manufacture of digital LEGO games, the company made partners with the gaming industry for developing attractive games and also made a partnership with the renowned company Warner Bros. in which they announced to make LEGO movies.

THE LEGO GROUP Harvard Case Solution & Analysis

Legal Analysis:

Most of the Chinese toy companies have started to copying the products of LEGO group in which they are illegally manufacturing the same type of products and selling them at cheaper prices. The negative impact of companies producing the same LEGO is that it will lower the sales of the LEGO group and it might even damage the goodwill of the company. The LEGO group has taken various steps in the protection of its copyrights and making it difficult for the other companies to copy the product.

Evaluation of various Stakeholders

In LEGO group’s external environment, there are mainly three stakeholders that are related with the company are the customers, retailors and the competitors. Internal stakeholders consist of the investors which are the shareholders and the employees of the organisations.The brand image of LEGO group have been known throughout the world as it has occupied a great position in the minds of the customers. Although there are some internal and external stakeholder issues which have been analyzed by looking at the PESTL analysis................

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