The LEGO Group: Envisioning Risks in Asia (A) 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 (A)
On January 1, 2012, the LEGO Group announced a major new initiative to enhance its market penetration in Asia. Later in the year, a cross-functional group of senior managers gathered at company headquarters to discuss the status of the Asian initiative and the risks associated with it. The aim of the meeting was to outline four scenarios for the future that could help managers assess what key success factors and actions were required for coping with the challenges presented by each scenario and to prioritize them. Students will have an opportunity to enact the scenario exercise themselves, devising their own scenarios, and deciding whether the LEGO Group should build a factory in an Asian location in the next five to seven years. In order to facilitate a discussion about the challenges of designing a "winning organization," the case also presents difficult choices that executives had to make about the LEGO Group's strategy, choice of primary customers, core capabilities, and organizational structure. In order to facilitate a discussion about the challenges of designing a "winning organization", the case also presents difficult choices that executives had to make about the LEGO Group's strategy, choice of primary customers, core capabilities, and organizational structure.
Swot Analysis of "The LEGO Group: Envisioning Risks in Asia (A)" written by Anette Mikes, Dominique Hamel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lego Scenarios facing as an external strategic factors. Some of the topics covered in The LEGO Group: Envisioning Risks in Asia (A) case study are - Strategic Management Strategies, Design, Organizational structure, Risk management, Supply chain and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The LEGO Group: Envisioning Risks in Asia (A) casestudy better are - – there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, increasing transportation and logistics costs,
technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of The LEGO Group: Envisioning Risks in Asia (A)
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 (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lego Scenarios, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lego Scenarios 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 (A) can be done for the following purposes –
1. Strategic planning using facts provided in The LEGO Group: Envisioning Risks in Asia (A) case study
2. Improving business portfolio management of Lego Scenarios
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 Scenarios
Strengths The LEGO Group: Envisioning Risks in Asia (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lego Scenarios in The LEGO Group: Envisioning Risks in Asia (A) Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Lego Scenarios 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.
Innovation driven organization
– Lego Scenarios is one of the most innovative firm in sector. Manager in The LEGO Group: Envisioning Risks in Asia (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Lego Scenarios has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lego Scenarios to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Lego Scenarios has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Lego Scenarios is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Lego Scenarios 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 Anette Mikes, Dominique Hamel 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.
Superior customer experience
– The customer experience strategy of Lego Scenarios in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Lego Scenarios digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lego Scenarios 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.
Effective Research and Development (R&D)
– Lego Scenarios 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 (A) - 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 recruit top talent
– Lego Scenarios is one of the leading recruiters in the industry. Managers in the The LEGO Group: Envisioning Risks in Asia (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Finance & Accounting field
– Lego Scenarios 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 Scenarios in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the The LEGO Group: Envisioning Risks in Asia (A) 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 The LEGO Group: Envisioning Risks in Asia (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The LEGO Group: Envisioning Risks in Asia (A) are -
High cash cycle compare to competitors
Lego Scenarios has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the segment, Lego Scenarios needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study The LEGO Group: Envisioning Risks in Asia (A), it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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 operating costs
– Compare to the competitors, firm in the HBR case study The LEGO Group: Envisioning Risks in Asia (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Lego Scenarios 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Lego Scenarios, firm in the HBR case study The LEGO Group: Envisioning Risks in Asia (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Lego Scenarios is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Lego Scenarios needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lego Scenarios to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Lego Scenarios 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 (A) should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Lego Scenarios 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 Scenarios 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.
Capital Spending Reduction
– Even during the low interest decade, Lego Scenarios 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.
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 Scenarios supply chain. Even after few cautionary changes mentioned in the HBR case study - The LEGO Group: Envisioning Risks in Asia (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lego Scenarios vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study The LEGO Group: Envisioning Risks in Asia (A) 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 (A) can leverage the sales team experience to cultivate customer relationships as Lego Scenarios is planning to shift buying processes online.
Opportunities The LEGO Group: Envisioning Risks in Asia (A) | 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 (A) are -
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 Scenarios can use these opportunities to build new business models that can help the communities that Lego Scenarios operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Lego Scenarios 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lego Scenarios is facing challenges because of the dominance of functional experts in the organization. The LEGO Group: Envisioning Risks in Asia (A) 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lego Scenarios 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 Scenarios to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Lego Scenarios 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.
Manufacturing automation
– Lego Scenarios 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Lego Scenarios can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Lego Scenarios can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Lego Scenarios can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Lego Scenarios has opened avenues for new revenue streams for the organization in the industry. This can help Lego Scenarios to build a more holistic ecosystem as suggested in the The LEGO Group: Envisioning Risks in Asia (A) case study. Lego Scenarios can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Scenarios 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lego Scenarios can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Lego Scenarios can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The LEGO Group: Envisioning Risks in Asia (A) 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.
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 Scenarios in the consumer business. Now Lego Scenarios can target international markets with far fewer capital restrictions requirements than the existing system.
Threats The LEGO Group: Envisioning Risks in Asia (A) 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 (A) are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lego Scenarios 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lego Scenarios 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 (A), Lego Scenarios 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 .
Environmental challenges
– Lego Scenarios needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Lego Scenarios can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Scenarios.
Shortening product life cycle
– it is one of the major threat that Lego Scenarios is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Scenarios needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Regulatory challenges
– Lego Scenarios 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 Finance & Accounting industry regulations.
Consumer confidence and its impact on Lego Scenarios 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 Scenarios can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Lego Scenarios
– 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 Scenarios.
High dependence on third party suppliers
– Lego Scenarios 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.
Weighted SWOT Analysis of The LEGO Group: Envisioning Risks in Asia (A) 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 (A) 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 (A) 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 (A) 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 (A) 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 Scenarios needs to make to build a sustainable competitive advantage.
