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Lego Company’s Business Strategy and Information Resources Case Study


Introduction

Nowadays, Lego is one of the most popular and powerful toy companies that provide children from different parts of the world with the best brick toys and the opportunities to play with enthusiasm day by day. From the date of its foundation, 1932, the company survived several close-to-bankruptcy situations (Wieners, 2011). However, due to several successful business strategies and attention to the information system opportunities, Lego achieved tremendous success in 2015 saying that 2015 was the best year ever with a considerable sales jump (Kell, 2016). Many people admit that they are aware of Lego toys. Still, though many children want to have Lego at their homes, their families could hardly afford to buy these bricks due to high prices.

Therefore, for Lego to stay competitive, it is necessary to consider such business strategies as the investigation of customers, their needs, and interests, the possibilities to cut costs and remove all unnecessary and unsuccessful ventures which may require additional investments, continue supporting the idea of product segmentation, and promote the importance of employee education and training. In this paper, a business model for Lego will be developed regarding the business strategies and the information resources the company could use to stay competitive and successful in front of the existing technological and informative changes.

Lego’s Business Strategies Evaluation

The current success of Lego as the main toy manufacturer in the whole world could be explained by several strategic decisions made during the last decade. Several years ago, it was hard for the company to deal with mounting competition that was caused by the popularity of different video games and the spread of the Internet (Lutz, 2015). Lego was not ready to compete with several companies, and the opportunities children got with the Internet. Therefore, it was obligatory to take some new strategic steps and attract children to buy the company’s production. Though it was impossible to reduce the price policy, the attempts to cut costs were made. Several unsuccessful and unprofitable projects like Legoland parks were closed. Lego’s leaders had to focus on other issues that could change the work of the company.

As a result, the next strategic decision was to investigate potential customers, i.e. children and parents, their main interests, and personal needs. Parents usually focus on such aspects as price, safety, quality, and segmentation that could help to make the correct choice. Children want to use interesting and colorful toys, participate in games, and be close to their favorite TV or cartoon characters. Therefore, the idea to create Lego for girls regarding their age differences was one of the most successful steps (Wieners, 2011). Little ladies like to play colorful bricks, use human-like figures, and other accessories that could be used during the play. In comparison to boys, who want to guide processes and establish the rules, girls like the idea of being a part of the play. Lego’s bricks make girls’ dreams come true.

Finally, the Lego Company continues educating and training its employees so that they could communicate with customers of different ages and identify their needs in a short period. Lego bricks include such activities as a process of gathering bricks and the possibility to develop different games as soon as the bricks are gathered in one project. Employees have to understand what customers are looking for including the possible size of a set, a gender of a potential user, and a theme. The attention to the themes of the sets has to be paid. Employees should learn all new and famous movies and cartoons to prove that their product is worth buying. For example, the Lego Star Wars sets or such brands as Frozen, Ninjago, or Legends of Chima were introduced. Employees have to know their peculiarities and help parents to learn what could be interesting for their children and why. Sometimes, adults just know that they have to buy Lego for their children and pay no attention to the themes offered. Managers should help such buyers to make the right choice and get a chance to turn a potential customer into a regular one.

Information System in Lego’s Business Strategies

Lego is a company that focuses on information systems a lot. Correct identification of the information system and resources help to succeed in gathering, organizing, and using the information of customers and their needs. The business strategy chosen by Lego could be properly supported by information systems. The company could use observations and forums to learn how children like to play, clarify the peculiarities of girls’ and boys’ games, identify children’s expectations from brick sets, and investigate what size and themes could be in demand at a certain moment. It is suggested to investigate the current movie market and learn what movies and cartoons are frequently discussed. For example, many children, including girls and boys, are fond of the idea of transformations: boys like the way transformers change their forms, and girls enjoy the transformation of horses and fairies. IS could be used to understand children’s passion for all these ideas so that the company could think about new sets and improvements that could be offered. It is not enough to choose a theme and develop a brick set accordingly. It is necessary to comprehend what makes a movie or a cartoon special to choose the right direction in manufacturing.

Information Resources for Competitive Advantage

The evaluation of the concept of resource-based view in regards to the Lego Company enhances its chances to stay competitive and take the leading positions in the market. In Lego, several intangible resources have to be taken into consideration regularly. First, the company is characterized by its creativity and innovation. Each set is a new combination of bricks of different sizes and colors. Each brick has its purpose and promotes the development of a child in different ways. Another point of the analysis is the department of human resources. Professional employees, loyal managers, and educated staff – all this makes the company strong and ready for new challenges and competitions. Finally, Lego has to support its brand name and reputation. During the last decade, several successful projects were developed. People of different ages enjoyed the opportunities they got while buying Lego. Today, there is usually a good system of discounts and sales within the frames of which families with different incomes could buy a set.

Also, to comprehend the resource-based view of Lego, it is possible to use the VRIO model and identify the company’s strengths in terms of value, rarity, inimitability, and non-sustainability. For example, Lego’s leaders start paying their attention to the importance of knowledge. They spend their resources on high professional employees and train them thoroughly. Besides, Lego’s brand and segmentation are the rare aspects that make the company competitive in the marketing field. Its continuous innovations and the introduction of new themes for sets is that inimitable factor that attracts the attention of many customers. Finally, Lego’s design, insight, and property are the non-sustainable factors that are hard to repeat or overcome. When people buy Lego, they know that they get a unique and high-quality set of bricks with several functions and possible developments. Playing Lego means not only gathering interesting projects using small, colorful bricks but also being involved in a captivating process, a game, with favorite characters and numerous opportunities. Lego turns out to be an impressive empire where boys and girls find the required portion of inspiration and enthusiasm (Schmidt, 2014).

Successful Collaboration with Lego

Regarding the purposes and values of the company, its information resources, and the current technological progress, Lego has various opportunities and directions to be followed to stay competitive and take the leading global position as a toy company. One of the possible strategic suggestions that could be offered to Lego is the development of partnership relations with different companies. For example, nowadays, online shopping is a popular activity. Millions of people from different parts of the world are eager to buy things, food, clothes, drinks, and different services online. Therefore, the idea for Lego to cooperate with such e-commerce organizations as Souq or Amazon seems to be more than reasonable. In comparison to Souq that is popular in the Arab world, Amazon is an international company the services of which are available to the citizens of developed and developing countries.

Strategic cooperation between Amazon and Lego is a unique opportunity for both companies to enlarge their customer databases and investigate some new sales fields. Amazon could focus on the needs of children as their potential customers, and Lego gets access to a huge database Amazon has already got. Also, numerous sales and discounts could be helpful for both organizations. On the one hand, Lego wins certain benefits from cooperation with Amazon because fewer costs could be spent on educating and training managers in real shops, and the number of sales continues increasing. On the other hand, Amazon could offer its variety of services to people, who are interested in one particular product, a Lego set, at the moment.

Conclusion

In general, the analysis of business strategies developed by Lego is a good lesson for people on how to avoid bankruptcy and become one of the most successful toy companies in the whole world in less than one decade. Lego’s leaders do not reject that they made mistakes and wrong choices. However, they also underline the fact that they were able to take certain steps and improve the company’s situation. The investigation of its resources, the attention to information systems, and the readiness to be strategically changed make Lego strong and competitive. The company has many fresh ideas and suggestions, and its leaders understand what steps should be taken shortly. The product segmentation, attention to children and their activities, investigations of potential customers, and the ability to shut down unsuccessful projects in time – all this promotes Lego’s competitiveness and success.

References

Kell, J. (2016). Fortune. Web.

Lutz, A. (2015). Business Insider. Web.

Schmidt, G. (2014). The New York Times. Web.

Wieners, B. (2011). Bloomberg. Web.

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IvyPanda. (2020, November 3). Lego Company's Business Strategy and Information Resources. Retrieved from https://ivypanda.com/essays/lego-companys-business-strategy-and-information-resources/

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IvyPanda. "Lego Company's Business Strategy and Information Resources." November 3, 2020. https://ivypanda.com/essays/lego-companys-business-strategy-and-information-resources/.

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IvyPanda. 2020. "Lego Company's Business Strategy and Information Resources." November 3, 2020. https://ivypanda.com/essays/lego-companys-business-strategy-and-information-resources/.

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IvyPanda. (2020) 'Lego Company's Business Strategy and Information Resources'. 3 November.

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