Strategic Management

ASSIGNMENT- LEGO CASE STUDY

Submitted to- Dr. Kartik Dave
By- Kunal Anand
S213F0020
SBPPSE, MBA (2021-23)
AUD, Delhi
 Lego Case
Resources and Capabilities

 First mover advantage- Lego has a niche for itself in the market, as it was the first of its
kind- durable and simpler which made it a huge success. It placed itself as a company for
which children were to die for and parents have this impression that it is educational. Starting
from wooden blocks, it ventured into plastic mold ones and then shifted to electronic ones.
Lego was able to do all of this on the basis of its various resources and capabilities. Being a
first of its kind, provided Lego a competitive advantage over its competitors.

 Continuously upgraded designs and quality- Unlike other toy manufacturers, Lego opened
space for the children to utilize their own imagination and creativity. Lego made this happen
by coming up with strategic advancements continuously upgrading from free- form building
blocks to story driven kits utilizing all the space gathered from contemporary cartoons,
Hollywood movies, and comics. Lego affirmed its position in the market by continuous
improvement and abiding by its tagline- ‘Only the best is good enough’.

 Unique manufacturing and marketing capabilities- Lego focused on continuous product

development by coming up with new innovative ideas. This was boosted by the operations
team of Lego which came up with new ideas like the biggest injection molding operations.
When it comes to marketing TLG didn't conduct much advertising; instead, the company
sought to interact with its clients in settings it owned and managed. "One of our primary
strategic initiatives as a firm is to become closer to consumers," one corporate official said. . .
The greatest places to accomplish this are places where we can control the entire customer
experience, like Lego.com, Lego land theme parks, and Lego brand stores.

 Superior customer service and experiences made Lego stand out. They made it possible by
coming up with Lego brands and Lego theme parks. Having a good share in the toy markets
of major economies proved to be a knack for the brand and thus proved helpful in establishing
a good market image and customer loyalty which further helped in Lego earning a knack
against its low cost imitators.

Sustainable Advantage

Sustainable advantage breeds from the strategic position which any company holds in the market. It
rests on the fact that how that company caters to the three most important aspects:
-serving few needs of the customers
-serving broad needs of the customers
-and serving broad needs of many customers
As Lego was first of its kind, it was the first one to come up with children-friendly blocks. This
made Lego stand out as they were very simple to use and were very durable.With time, Lego made
product improvements starting from free form building blocks to story driven ones. For this Lego
partnered with and acquired licenses from the characters like cartoons, Hollywood, etc.

The organization of the innovation processes gives the business a long-lasting competitive edge. This
long-lasting benefit started when LEGO was the first to invent a system of bricks that allows pieces
from many themes to work together. LEGO made a constant focus on product safety, developing
high-quality items that meet or exceed the strict international safety rules for toys because customers
demand excellent quality and satisfaction from the LEGO brand products.

By developing immersive brand experiences in physical shops and convenience stores that provide
customers one-of-a-kind experiences like customized tiny figurines and self-portraits produced from
LEGO bricks, LEGO is investing in the retail ecosystem in order to utilize the power of its brand.
This makes LEGO a valuable brand due to the reputation and customer’s higher confidence level,
which is costly to imitate and takes years to reach. LEGO reputation creates a competitive advantage
that is sustained in comparison to competitors.

To serve the broad needs of many customers, Lego didn’t stop at toys only so it came up with Lego
based theme parks, video games, Lego Mindstorms, an “intelligent brick” with programmable
computer controls and sensors, was the first integration of computer technology with Lego bricks.
TLG learned that users were hacking the software to add new
capabilities, so it responded by adding an explicit “right to hack” to its software license, making the
Mindstorms source code publicly available and holding fan competitions. “We came to understand
that this is a great way to make the product more exciting,” said Mads Nipper, executive vice
president for products and markets.

TLG also pursued numerous other brand extensions. These included acquiring an intelligent toy
company in California, establishing a design studio in Italy and a media group in the United
Kingdom, launching a Lego Education Centre offering after-school activities, and partnering with
Steven Spielberg to develop Lego movies.

TLG even attempted to make Lego into a lifestyle brand by introducing Lego-branded
clothing, watches, bags, and accessories. The firm even explored launching a Lego-branded car as the
“ultimate family vehicle.”31 In order to provide opportunities for cross-selling products, TLG also
made forays into television and film production and Lego-branded books and magazines.

All of this proved to be potent tools for Lego to earn sustainable advantage.