After outsourcing to Flextronics, LEGO Group decided it was more cost effective to keep manufacturing setup in house. With this move, LEGO supply chain can develop much faster through the best, leanest and highest quality solution at all times (Pearce &Robinson, pg 12-2, 2011). Now that LEGO Group has regained the control of the manufacturing process, they decided to establish a slogan; “Only the Best is Good Enough”. In other words, they want only the best from start to finish, from the making of Lego’s to selling them on shelves in the store. Alternative Solutions
1. Come up with new ways to differentiate themselves from other “Manufacturers” that try to imitate Lego. This can be done through extensive marketing strategies, implementing new categories or even expanding to new, untapped markets. 2. Increase market shares in Eastern Europe and invest in emerging markets (China, India and Mexico). Once LEGO Group has done this; they will be able to expand their portfolio and even the company itself. 3. Find a way to increase placement in movies (they have began to do this). Movies are a very great way to showcase what Lego’s are capable of doing. Expanding the minds and creativity of today’s children. Selected Solution to the Problem
With Lego trying to differentiate themselves from other manufacturers, they can certainly continue with the themed Lego’s they have been. By continuing to keep track of today’s trends of children in the middle to upper middle class, they can stay ahead of the competition. Once Lego has established the trends among the selected demographic and even ages, they can implement a strategy to produce Lego products that will appeal to middle and upper class children.
Another part of this solution would be tapping into other countries that currently don’t have Lego’s. By getting into these untapped markets, they can easily expand their current portfolio. With this expansion, they can also find trends in these areas that maybe have been discovered yet. This would be like when “Hello Kitty” started up in Japan. Within a few years, Hello Kitty was making a huge splash within the U.S. Implementation
Implementation would begin by looking at the target audience. In this instance, it would be the untapped market that currently doesn’t see Lego. There maybe a imitation Lego like building block and this would in a sense, hurtful if they sell theirs for less. Along with implementation, Lego would look at either manufacturing in the selected untapped markets, or import from their established manufacturer locations. This could be a win-lose, win-win, or a lose-lose. This step is very crucial to the success of LEGO Group.
Once implementation has been developed, it is now time to move on to executing. During this stage, logistics, warehouses and even shipping of the Lego’s will be finalized and executed to expand into untapped markets. Along with the execution, they must supervise every aspect to ensure that they are providing the products that the demographics who are want or looking for. Recommendations and Conclusion
With expansion into Eastern Europe or even investing in emerging markets, LEGO Group cannot go wrong. With Lego wanting every child to expand their minds by providing only the best to help children unlock that creativity within themselves. By increasing product placement in movies, expanding Lego friends segment and even providing “Direct to Customer” activities, the LEGO Group can drastically expand there already powerful, unique Lego brand.
Gvozdev, E. (13 Dec 2013). Lego: Strategy Analysis & Business Model. Retrieved 20 February 2015 from http://www.slideshare.net/egvozdev/lego-case-strategy-analysis