Introduction
Lego is a toy-making company founded in Billund, Denmark (LEGO 2014). In this essay, Lego’s value and core competencies will be identified based on the PEST analysis, Porter’s Five Forces and the Value Chain Analysis.
PEST Analysis
Political
Government policies affecting a reduction in the corporate tax level, or an increase in import taxes in developing economies, will have an impact on the Lego Group due to the wide distribution of products to more than 130 countries (LEGO 2014). Furthermore, safety-related legislations for toys in different countries require Lego to comply and adhere to these strict requirements.
Economic
Shifts in the macroeconomic conditions can critically affect Lego’s sales, as an increase in disposable …show more content…
Therefore, Lego's superior manufacturing quality in its plastic bricks, coupled with the advantage of adopting innovative technology over its rivals has attracted consumers of all ages. Moreover, its toys are able to retain its resale value due to the brand’s popularity in the resale market (Eaton 2012). Furthermore, it allows the user to build endless combinations which foster patience and problem-solving skills. Parents also tend to associate Lego to be educational for their children as the products are directed towards enhancing a child’s creativity (Frick, Tardini and Cantoni 2014).
Value Chain Analysis of Lego Group
Outbound Logistics
Lego consolidated and outsourced its distribution to logistic expert DHL in a new single center in Prague (Cooke 2009). These strategies not only allow it to move its supply chain closer to Europe and Asia to boost sales, but also reduce the capacity of storing excess load during non-promotional periods which drive down excess cost.
Operations
Lego established a team of 160 employees to focus solely on product innovation and creative designing in an open innovation process model by gathering feedback from customers and retailers as well, on user habits for future product portfolio (Jensen …show more content…
Competencies
Lego’s innovation, product development and technological advancement are its distinctive competencies. Firstly, the company implemented "Shared Vision", by integrating innovation into its business plan from being product-focused to company-focused (Elmansy 2014). Furthermore, through the reconfiguration of existing toys without increasing cost, and by embracing collaboration with enthusiasts known as the Lego Community, it has led the company to greater heights in customer satisfaction (Kastelle 2013).
Secondly, it undergoes a meticulous product safety assessment that involves the development of the mechanical and physical safety of the toys, and further established processes to maintain product quality control through stringent regulatory standards, and by constantly engaging consumer's feedback on quality, play and building experiences (The LEGO group
Lego is a toy-making company founded in Billund, Denmark (LEGO 2014). In this essay, Lego’s value and core competencies will be identified based on the PEST analysis, Porter’s Five Forces and the Value Chain Analysis.
PEST Analysis
Political
Government policies affecting a reduction in the corporate tax level, or an increase in import taxes in developing economies, will have an impact on the Lego Group due to the wide distribution of products to more than 130 countries (LEGO 2014). Furthermore, safety-related legislations for toys in different countries require Lego to comply and adhere to these strict requirements.
Economic
Shifts in the macroeconomic conditions can critically affect Lego’s sales, as an increase in disposable …show more content…
Therefore, Lego's superior manufacturing quality in its plastic bricks, coupled with the advantage of adopting innovative technology over its rivals has attracted consumers of all ages. Moreover, its toys are able to retain its resale value due to the brand’s popularity in the resale market (Eaton 2012). Furthermore, it allows the user to build endless combinations which foster patience and problem-solving skills. Parents also tend to associate Lego to be educational for their children as the products are directed towards enhancing a child’s creativity (Frick, Tardini and Cantoni 2014).
Value Chain Analysis of Lego Group
Outbound Logistics
Lego consolidated and outsourced its distribution to logistic expert DHL in a new single center in Prague (Cooke 2009). These strategies not only allow it to move its supply chain closer to Europe and Asia to boost sales, but also reduce the capacity of storing excess load during non-promotional periods which drive down excess cost.
Operations
Lego established a team of 160 employees to focus solely on product innovation and creative designing in an open innovation process model by gathering feedback from customers and retailers as well, on user habits for future product portfolio (Jensen …show more content…
Competencies
Lego’s innovation, product development and technological advancement are its distinctive competencies. Firstly, the company implemented "Shared Vision", by integrating innovation into its business plan from being product-focused to company-focused (Elmansy 2014). Furthermore, through the reconfiguration of existing toys without increasing cost, and by embracing collaboration with enthusiasts known as the Lego Community, it has led the company to greater heights in customer satisfaction (Kastelle 2013).
Secondly, it undergoes a meticulous product safety assessment that involves the development of the mechanical and physical safety of the toys, and further established processes to maintain product quality control through stringent regulatory standards, and by constantly engaging consumer's feedback on quality, play and building experiences (The LEGO group