Scribd
Upload
298 views

Kristýna Bostanová, Ilaria Maroccia,: Apolline Allier, Leonardo Salvati Agathe Aknine

Introduction Why did LEGO face bankruptcy in the early 2000s? What is LEGO’s core competence? (core competence-market matrix to show how LEGO leveraged its core competence into existing and new markets under Jørgen Vig Knudstorp, who was appointed CEO in late 2004). Analysis of competitive advantage creation and sustainability.

Uploaded by

ilamrc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
298 views

Kristýna Bostanová, Ilaria Maroccia,: Apolline Allier, Leonardo Salvati Agathe Aknine

Introduction Why did LEGO face bankruptcy in the early 2000s? What is LEGO’s core competence? (core competence-market matrix to show how LEGO leveraged its core competence into existing and new markets under Jørgen Vig Knudstorp, who was appointed CEO in late 2004). Analysis of competitive advantage creation and sustainability.

Uploaded by

ilamrc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 19

LEGO

Apolline Allier, Kristýna Bostanová, Leonardo Salvati, Ilaria Maroccia, Agathe Aknine
SUMMARY
• Introduction
• Why did LEGO face bankruptcy in the early 2000s? In your reasoning, focus on both
internal and external factors.
• What is LEGO’s core competence? Explain.
• Apply the core competence-market matrix to show how LEGO leveraged its core
competence into existing and new markets under Jørgen Vig Knudstorp, who was
appointed CEO in late 2004.
• In terms of revenue growth, LEGO experienced a competitive advantage over both
Hasbro and Mattel since 2007 because it grew much faster. What explains LEGO’s
competitive advantage?
• What must LEGO do to sustain its competitive advantage in the future? One avenue to
tackle this question is to think about diversification, both along products but also
geography. Another avenue is partnerships such as strategic alliances or even
acquisitions. What lesson from LEGO’s past should guide its future diversification?
• Conclusion
KEY
FACTS

WHERE WHAT WHEN

HOW
• WHAT • WHEN
 toys’ sector  private company founded
85 years ago by Ole
kirk Kristiansen

 interlocking plastic bricks  chairman of the group is


Jorgen Vig Knudstorp
• HOW • WHERE

 In 1934, the founder  42 offices


launched a competition to
find a name for the
company

 Combining the first two  customers are retails


letters of the stores around the world and
words LEg and GOdt into the of course the 131 Lego
name “LEGO”. brand retail stores
KEY FACTS

MISSION AND VISION COMPETITIVE ENVIRONMENT

• Mission  « Inventing the • Compete against:


future of play »
 Mattel Hasbro and Playmobil
• VISION  « Inspire and develop  technology companies as
the builders of tomorrow » Microsoft.

 Tablets and smartphones


BANKRUPTCY
LEGO’s group faced bakruptcy due to both external and internal factors.

• EXTERNAL ENVIRONMENT - economic conditions, sociocultural forces, technological


factors, environmental forces, legal and regulatory factors and political factors.

• INDUSTRY AND COMPETITIVE ENVIRONMENT - threat of substitutes or new


entrants, the bargaining power of both buyers and suppliers and rivalry between firms in a
same industry.

THE MOST IMPORTANT FACTOR:


Technology improvement → children’s wants shifted from simple toys to more
technological ones such as computer games and gaming consoles.
• INTERNAL ENVIRONMENT – all the elements of an organization (like the employee’s
behavior or the leadership style, the specific market and focus of the firm, including the
attractiveness of the product itself).

HOW LEGO REACTED Biggest manufacturers worldwide based on revenue


(in billion euros)
7

→ The company expanded in 6

too many different markets 5

(clothes, accessories, …) 4

→ They forgot to focus on its 2


core competence and endded up
1
facing its first deficit in 1998.
0
LEGO Mattel Hasbro

2003 2012 2016


BACK TO CORE COMPETENCIES

Resources

Core
Activities
Competencies

Capabilities
• CAPABILITIES
- Intangible → organizational and managerial skills

• RESOURCES

- Tangible → production facilities

- Intangible → brand name, bricks characteristics


CORE COMPETENCE MATRIX
The new CEO decided to go back to the core focusing on:

• EXPLOITATION • EXPLORATION
(of the core competencies) (innovation and developing)
• CORE COMPETENCIES
→ simplicity, versability, durability

• NEW COMPETENCIES
→ bringing adults into the developing process
→ take advantage of the internet
→ focus on the intellectual property
→ creation of the LEGO Movie
→ improve the ecological impact (R&D investments, eco-friendly bricks)
→ take advantage of the internet
FUTURE MARKETS

• INNOVATION • SOCIAL
ASPECT ASPECT
→ encourage users’ creativity → parents rather buy bricks
by interpolating the pieces than videogames to develop
together their children’s creativity
COMPETITIVE ADVANTAGE
LEGO’s revenue growth was due to:

• INTANGIBLE RESOURCES - using its image and former prestige


to focus on its core products, such as Duplo.

• MEMBERSHIPS - products featuring licensed characters, such


as Lego Star Wars, Winnie the Pooh Duplo, Indiana Jones
collaborations and so on.
• DIVERSIFICATION - expanding the brand also to other markets:
→ Lego Games (board games)

→ Lego Power Miners

→ Videogames

→ The Lego Movie (with Warner Bros) and The Lego Batman Movie (with
Warner Bros and DC Entertainment)

→ Legoland theme parks (with Merlin Entertainments)


SUSTAINABILITY
DIVERSIFICATION PARTNERSHIPS
• Product - since they already are • Strategic alliances and
focused on differentiation, they acquisitions - could extend the LEGO
could also focus on the core, the influence to many other markets and
product itself. allow the company for more income.

• Geography - the company should • Producing their own goods -


explore emerging markets in Asia avoids the risk of working with
(lower costs of goods); having the others, which is for profits to be
headquarter in a small town has a outsourced.
positive effect on the customer's
loyalty but they have potential to be
a global company.
CONCLUSION

To finish with, LEGO has suffered crises during the early 2000s, due to many external but
also internal factors.
However, it managed to make a huge turnaround by focusing on its core competencies.
Moreover, the company developed a huge competitive advantage on its competitors.
In order to keep that advantage, LEGO needs to keep on focusing on its core
competencies and use them to develop its products without forgetting its partnerships
with famous brands.
Thanks
for listening!
Sources:

- https://www.lego.com/en-gb/aboutus/lego-group

- https://www.lego.com/en-us/aboutus/lego-group/annual-report

- https://www.quora.com/Who-are-Legos-competitors

- https://fr.wikipedia.org/wiki/The_Lego_Group

- https://www.lego.com/

- http://www.robertsoninnovation.com/what-we-can-learn-from-lego/

- https://www.statista.com/statistics/282870/lego-group-revenue/

- https://rctom.hbs.org/submission/lego-from-bricks-to-clicks-what-you-missed-since-you-last-played/

- http://www.pfsweb.com/blog/the-lego-story-and-pfsweb/

You might also like