RUNNING HEAD: THE LEGO GROUP 1

The Lego Group: Adopting a strategic approach

Stephanie Elliott

21 July, 2019

Professor Carol Pitman

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Adaptability: A Leader’s Greatest Trait

The Lego brand is highly recognized, no matter where an individual finds oneself in the

world. Since 1932, the family-owned company has supplied physical and intellectual

developmental toys for customers of all ages. Its famous interlocking bricks debuted in 1949.

Recognizing the potential for success, the company decided to invest in its development

production; a decision that would prove auspicious. Having expanded worldwide, the Lego

Group had amassed great wealth and fame; however, as with any company, it would later find

itself at a crossroads. The technology boom in the late ’90s and early 2000s gave rise to

marketing fears within the toy industry. Children were setting their plastic toys aside for video

games. Experiencing their first-ever losses since their creation, leadership within the company

struggled for six years to find a way to grow and keep its relevancy. It was not until 2004 that

through the leadership of Kjeld Kristiansen that the company once again began to flourish

(Milne, 2013).

This turnaround is attributed to Kristiansen’s ability to adapt to external environmental

changes quickly. Technology was here to stay, and the company had to find a way to compete

with it. At this time, adaptability was no longer an option for companies wishing to remain

relevant within their respective industries. Leaders should know that growth is not possible if the

change is not embraced. Adaptable leaders can embrace these changes by employing three

distinct practices. First, leaders should possess a flexible frame of mind, meaning that they

should be ready to approach an issue from different perspectives. Second, adaptable leaders

should not rely on a single action plan. Instead, multiple well thought out plans are created to

ensure a solution can be applied to a problem. Finally, leaders should maintain an inquisitive

mind. Curiosity triggers the creative thinking needed for growth. In the case of the Lego Group,
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Kristiansen’s adaptable leadership was essential during an uncertain time. By thinking outside of

the box, he was able to steer the company towards embracing and adapting to the social changes;

thus, fulfilling consumer needs.

Strategic Advantage Against Competitors

The toy industry is a longstanding and enormous one. With such a broad consumer base,

there is no surprise a myriad of big-name brands exists. Companies such as Bandai Namco,

Fisher-Price, and Mattel all compete against Lego to gain the attention and business of millions

of consumers each year. Currently listed as one of the top five players in the toy industry, the

Lego Group reported 36.4 billion dollars in earnings in 2018, increasing its revenue by four

percent (Lego Group, 2018, p.9). Achieving this feat can be attributed to the company’s

adaptable leadership and strategic plan. So how does a company such as this one maintains its

competitive advantage? Simple, through a differentiation strategy. This type of strategy revolves

around the idea that consumers highly value a unique product or service to the extent that allows

the company to justify its premium prices (Johnson, 2013, p. 197).

As stated before, the Lego Group has established itself as one of the biggest toy brands in

the market. At the time of their creation, their products were unique, which greatly appealed to

consumers. Their products contain elements appealing to parents, such as the development of

problem-solving and STEM skills. For children, the products offer an opportunity to expand

their creativity and build new things never before thought off. However, the ultimate product's

appeal is in the freedom it gives its consumers to create a unique toy based on their imagination.

It is this difference that justifies the company’s pricing. Lego’s are not known for their

affordability. Depending on their type and size, these can range anywhere from $15.99 to
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$799.99. Recognizing their appeal, the company profoundly invests in their development in

order to offer high-quality sets that consumers can enjoy.

This differentiation strategy does have its disadvantages, and for the Lego Group, one, in

particular, could bring future problems. Economic fluctuations play an important role in

business. The health of the economy determines how much consumers will spend. If the

economy is good, consumers will splurge; however, if the economy is in decline, then consumers

will shy away from thoughtless spending. For companies such as Lego who depend on their

uniqueness to justify their high prices, these fluctuations will hamper their strategy. They could

be forced to lower prices or quality to be able to compete in the market. While their unique

status does provide them with brand loyalty, during economic distress, this loyalty is tested.

Looking Towards the Future

We know that a well-thought-out strategic plan should always include a way forward.

Vision statements and company goals typically delineate, where the company wishes to be in the

future and how they will get there. The world continues to change and grow at a steady pace

affecting either directly or indirectly every type of industry. As these changes occur, companies

worldwide are forced to adapt to continue to grow. It is for this reason that leaders should

account for these possible external changes within their strategies. In the case of the Lego

Group, growth can be effortlessly hindered. To avoid remaining stagnant and enable growth, it

should focus on diversifying its targeted audience and incorporating technology within its

products.

Initially, its products targeted children of all ages. As time went on and the company

began to increase in popularity, it began to create products for adults. Boasting a wide variety of

sets, the company has in recent years, tried to create products that will attract newer audiences.
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For example, in 2012, the company launched a line of sets specifically targeting a female

audience (Chew, 2015). Despite its success, the company can stand to grow even further if it

expands its product lines Delving into topics such as food, science, history, and music could help

attract new consumers. Incorporating technology can also help with that. Technology has

become an essential part of our society. To appease this base and attract newer costumers, the

company could combine its products with popular technological items. For example, children

could build a Lego set that contains interactive features such as mobility that they could control

through a tablet or phone. No matter which type of strategy the company decides to go with, the

important part is that it aligns itself with the market and social changes. Doing so will surely

enable growth and stability.

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References

Chew, J. (2015, December 30). How Lego Finally Found Success with Girls. Retrieved July 21,

2019, from https://fortune.com/2015/12/30/lego-friends-girls/

Johnson, G. (2013). Exploring Strategy Text & Cases (Vol. 10th edition). Harlow, England:

Pearson. Retrieved from http://search.ebscohost.com.ezproxy2.apus.edu/login.aspx?

direct=true&AuthType=ip&db=nlebk&AN=1418653&site=ehost-live&scope=site

Keating, K. (2018, December 10). Three Traits of Adaptable Leaders. Retrieved July 21, 2019,

from https://www.td.org/insights/3-traits-of-adaptable-leaders

The Lego Group. (2019). Annual Report 2018. Retrieved July 21, 2019, from

file:///Users/stephanie/Downloads/Annual-Results-2018.pdf

Milne, R. (2013, June 21). A play-by-play account of Lego’s decline and resurrection. Retrieved

July 21, 2018, from https://www.latimes.com/business/la-xpm-2013-jun-21-la-fi-books-

20130623-story.html