Case Study Description of LEGOA? Friends: Leveraging Competitive Advantage
In December 2011 the Lego Group (TLG) announced the launch of Lego Friends, the company's sixth attempt to market a product to girls. Lego Friends, which was supported by a $40 million global marketing campaign, was designed to introduce the fun of building with Lego bricks to girls, who represented less than 10 percent of Lego's audience. The company's poorly executed brand extensions and move from free-form building sets to story-driven kits had nearly cost it its independence in 2004, so the launch of Lego Friends was strategically important. However, within hours of the product's appearance it was heavily criticized for reinforcing gender stereotypes and damaging the valuable Lego brand. JA?rgen Vig Knudstorp, CEO since 2004, had saved TLG and ushered in an era of sales growth with a series of successful strategic initiatives. Would Lego Friends be another addition to TLG's graveyard of failed products for girls, or would it prove popular and finally enable the company to double its sales and profits by reaching this segment?
Swot Analysis of "LEGOA? Friends: Leveraging Competitive Advantage" written by Michael Mazzeo, Greg Merkley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lego Friends facing as an external strategic factors. Some of the topics covered in LEGOA? Friends: Leveraging Competitive Advantage case study are - Strategic Management Strategies, Competitive strategy, Marketing, Operations management, Product development, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the LEGOA? Friends: Leveraging Competitive Advantage casestudy better are - – wage bills are increasing, geopolitical disruptions, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation,
increasing transportation and logistics costs, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of LEGOA? Friends: Leveraging Competitive Advantage
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in LEGOA? Friends: Leveraging Competitive Advantage case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lego Friends, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lego Friends operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of LEGOA? Friends: Leveraging Competitive Advantage can be done for the following purposes –
1. Strategic planning using facts provided in LEGOA? Friends: Leveraging Competitive Advantage case study
2. Improving business portfolio management of Lego Friends
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lego Friends
Strengths LEGOA? Friends: Leveraging Competitive Advantage | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lego Friends in LEGOA? Friends: Leveraging Competitive Advantage Harvard Business Review case study are -
Innovation driven organization
– Lego Friends is one of the most innovative firm in sector. Manager in LEGOA? Friends: Leveraging Competitive Advantage Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Lego Friends is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael Mazzeo, Greg Merkley can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Effective Research and Development (R&D)
– Lego Friends has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study LEGOA? Friends: Leveraging Competitive Advantage - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Lego Friends is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Lego Friends in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Lego Friends in the sector have low bargaining power. LEGOA? Friends: Leveraging Competitive Advantage has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lego Friends to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Lego Friends is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Lego Friends is present in almost all the verticals within the industry. This has provided firm in LEGOA? Friends: Leveraging Competitive Advantage case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Lego Friends has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in LEGOA? Friends: Leveraging Competitive Advantage HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Lego Friends has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lego Friends to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Lego Friends
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lego Friends does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Lego Friends is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Lego Friends is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in LEGOA? Friends: Leveraging Competitive Advantage Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the LEGOA? Friends: Leveraging Competitive Advantage Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses LEGOA? Friends: Leveraging Competitive Advantage | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of LEGOA? Friends: Leveraging Competitive Advantage are -
Need for greater diversity
– Lego Friends has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As LEGOA? Friends: Leveraging Competitive Advantage HBR case study mentions - Lego Friends takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Skills based hiring
– The stress on hiring functional specialists at Lego Friends has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Lego Friends is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Lego Friends needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lego Friends to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Lego Friends has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
No frontier risks strategy
– After analyzing the HBR case study LEGOA? Friends: Leveraging Competitive Advantage, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Lego Friends supply chain. Even after few cautionary changes mentioned in the HBR case study - LEGOA? Friends: Leveraging Competitive Advantage, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lego Friends vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study LEGOA? Friends: Leveraging Competitive Advantage that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case LEGOA? Friends: Leveraging Competitive Advantage can leverage the sales team experience to cultivate customer relationships as Lego Friends is planning to shift buying processes online.
Interest costs
– Compare to the competition, Lego Friends has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Lego Friends has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Lego Friends even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Lego Friends, firm in the HBR case study LEGOA? Friends: Leveraging Competitive Advantage needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities LEGOA? Friends: Leveraging Competitive Advantage | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study LEGOA? Friends: Leveraging Competitive Advantage are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lego Friends is facing challenges because of the dominance of functional experts in the organization. LEGOA? Friends: Leveraging Competitive Advantage case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lego Friends in the consumer business. Now Lego Friends can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Lego Friends can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lego Friends can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Lego Friends to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Lego Friends to increase its market reach. Lego Friends will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Lego Friends can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lego Friends to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Lego Friends to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Lego Friends to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Using analytics as competitive advantage
– Lego Friends has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study LEGOA? Friends: Leveraging Competitive Advantage - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lego Friends to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Lego Friends can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lego Friends in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Lego Friends has opened avenues for new revenue streams for the organization in the industry. This can help Lego Friends to build a more holistic ecosystem as suggested in the LEGOA? Friends: Leveraging Competitive Advantage case study. Lego Friends can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats LEGOA? Friends: Leveraging Competitive Advantage External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study LEGOA? Friends: Leveraging Competitive Advantage are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Lego Friends.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Lego Friends in the Strategy & Execution sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Lego Friends high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study LEGOA? Friends: Leveraging Competitive Advantage, Lego Friends may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Lego Friends needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lego Friends in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Lego Friends
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Lego Friends.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lego Friends can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study LEGOA? Friends: Leveraging Competitive Advantage .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Lego Friends business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Lego Friends demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lego Friends with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Lego Friends needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Weighted SWOT Analysis of LEGOA? Friends: Leveraging Competitive Advantage Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study LEGOA? Friends: Leveraging Competitive Advantage needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study LEGOA? Friends: Leveraging Competitive Advantage is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study LEGOA? Friends: Leveraging Competitive Advantage is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of LEGOA? Friends: Leveraging Competitive Advantage is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Lego Friends needs to make to build a sustainable competitive advantage.