The LEGO Group: Envisioning Risks in Asia (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The LEGO Group: Envisioning Risks in Asia (B)
This brief follow-up complements the case on The LEGO Group: Stepping Up in Asia (9-113-054), and discusses the aftermath of the scenario planning session, in which LEGO managers contemplated the risks of their new Asian strategy. The scenario planning exercise played a role in managers' realization that the Group could not simply "copy-paste" its existing operating model across the diversity of Asian markets. LEGO invested significantly in Asia throughout 2012-2013 in order to adapt its playbook to the anticipated challenges. The case also describes how, in 2013, scenario planning became part of the business-planning process at the LEGO Group. It allows students to understand the difference between a tailored scenario planning exercise, and the tenuous future-gazing processes that generally fail to get traction among business managers.
Swot Analysis of "The LEGO Group: Envisioning Risks in Asia (B)" written by Anette Mikes, Amram Migdal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lego Scenario facing as an external strategic factors. Some of the topics covered in The LEGO Group: Envisioning Risks in Asia (B) case study are - Strategic Management Strategies, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The LEGO Group: Envisioning Risks in Asia (B) casestudy better are - – central banks are concerned over increasing inflation, increasing commodity prices, there is increasing trade war between United States & China, wage bills are increasing, technology disruption, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs,
there is backlash against globalization, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of The LEGO Group: Envisioning Risks in Asia (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The LEGO Group: Envisioning Risks in Asia (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lego Scenario, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lego Scenario 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 The LEGO Group: Envisioning Risks in Asia (B) can be done for the following purposes –
1. Strategic planning using facts provided in The LEGO Group: Envisioning Risks in Asia (B) case study
2. Improving business portfolio management of Lego Scenario
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lego Scenario
Strengths The LEGO Group: Envisioning Risks in Asia (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lego Scenario in The LEGO Group: Envisioning Risks in Asia (B) Harvard Business Review case study are -
Effective Research and Development (R&D)
– Lego Scenario 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 The LEGO Group: Envisioning Risks in Asia (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Lego Scenario are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Lego Scenario is one of the leading recruiters in the industry. Managers in the The LEGO Group: Envisioning Risks in Asia (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Lego Scenario has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The LEGO Group: Envisioning Risks in Asia (B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– The LEGO Group: Envisioning Risks in Asia (B) firm has clearly differentiated products in the market place. This has enabled Lego Scenario to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Lego Scenario to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Lego Scenario is present in almost all the verticals within the industry. This has provided firm in The LEGO Group: Envisioning Risks in Asia (B) 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 Scenario 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 The LEGO Group: Envisioning Risks in Asia (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Lego Scenario is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Lego Scenario digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lego Scenario has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Lego Scenario 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 Scenario is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The LEGO Group: Envisioning Risks in Asia (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Lego Scenario has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lego Scenario has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Lego Scenario has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lego Scenario to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses The LEGO Group: Envisioning Risks in Asia (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The LEGO Group: Envisioning Risks in Asia (B) are -
Skills based hiring
– The stress on hiring functional specialists at Lego Scenario 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The LEGO Group: Envisioning Risks in Asia (B), is just above the industry average. Lego Scenario needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study The LEGO Group: Envisioning Risks in Asia (B) 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 The LEGO Group: Envisioning Risks in Asia (B) can leverage the sales team experience to cultivate customer relationships as Lego Scenario is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The LEGO Group: Envisioning Risks in Asia (B) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Lego Scenario has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The LEGO Group: Envisioning Risks in Asia (B), it seems that the employees of Lego Scenario don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to strategic competitive environment developments
– As The LEGO Group: Envisioning Risks in Asia (B) HBR case study mentions - Lego Scenario 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.
Need for greater diversity
– Lego Scenario 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The LEGO Group: Envisioning Risks in Asia (B), in the dynamic environment Lego Scenario has struggled to respond to the nimble upstart competition. Lego Scenario has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Lego Scenario has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - The LEGO Group: Envisioning Risks in Asia (B) should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Lego Scenario is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Lego Scenario needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lego Scenario to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Lego Scenario 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.
Opportunities The LEGO Group: Envisioning Risks in Asia (B) | 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 The LEGO Group: Envisioning Risks in Asia (B) are -
Better consumer reach
– The expansion of the 5G network will help Lego Scenario to increase its market reach. Lego Scenario 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.
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 Scenario in the consumer business. Now Lego Scenario can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Lego Scenario can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The LEGO Group: Envisioning Risks in Asia (B) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lego Scenario in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lego Scenario is facing challenges because of the dominance of functional experts in the organization. The LEGO Group: Envisioning Risks in Asia (B) 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lego Scenario 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lego Scenario can use these opportunities to build new business models that can help the communities that Lego Scenario operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Using analytics as competitive advantage
– Lego Scenario 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 The LEGO Group: Envisioning Risks in Asia (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lego Scenario to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Lego Scenario can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lego Scenario can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, The LEGO Group: Envisioning Risks in Asia (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Lego Scenario can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Lego Scenario can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Lego Scenario 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 Finance & Accounting segment.
Threats The LEGO Group: Envisioning Risks in Asia (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The LEGO Group: Envisioning Risks in Asia (B) are -
High dependence on third party suppliers
– Lego Scenario 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.
Consumer confidence and its impact on Lego Scenario 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Lego Scenario can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Scenario.
Technology acceleration in Forth Industrial Revolution
– Lego Scenario has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Lego Scenario needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lego Scenario with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The LEGO Group: Envisioning Risks in Asia (B), Lego Scenario may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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 Scenario in the Finance & Accounting sector and impact the bottomline of the organization.
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 Scenario needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lego Scenario in the Finance & Accounting industry. The Finance & Accounting 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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Lego Scenario will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of The LEGO Group: Envisioning Risks in Asia (B) 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 The LEGO Group: Envisioning Risks in Asia (B) 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 The LEGO Group: Envisioning Risks in Asia (B) 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 The LEGO Group: Envisioning Risks in Asia (B) 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 The LEGO Group: Envisioning Risks in Asia (B) 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 Scenario needs to make to build a sustainable competitive advantage.
