Evaluating Leadership Effectiveness, Competitive Advantage, and Growth Strategies forThe LEGO Group

Evaluating Leadership Effectiveness, Competitive Advantage, and Growth Strategies forThe LEGO Group

From the time that LEGO group was created, it has shown exceptional leadership, even in the toughest of moments. In 1970 and 1980, when the economic environment was difficult, the company was successful and continued creating innovative products while venturing into new markets. Under the leadership of Kjeld, the brand of LEGO became unique and established as a brand the was unique and iconic. The basis of success for the company was innovative products, international growth, and effective leadership. The success of the LEGO group was renowned, so much so that they received the Distinguished Family Business Award of IMD.

The leadership of LEGO was an objective, as can be seen in 1995 when there was a set of major 10-year objectives. Plans were created, initiatives were launched, and resources were made available. Overall, the objectives were to grow sales by 100 to 200% over the course of 10 years, become the best brand known among families with children, and create four LEGOLAND parks. LEGO’s leadership planned to enter alliances with partners in areas such as games, clothing, and films (Jensen, 2013). The management style that was introduced was more decentralized to make the organization’s management stronger and not depend a lot on Kjeld.

Kjeld was realistic enough to step down when the company was facing problems that were unfamiliar to him. A new chief operating operator was employed, but the fluctuations still continued, and Kjeld stepped back in. He would later hand the position of CEO to Jorgen, who was a 35-year-old Executive Vice President. In 2005 the company started to realize profits again. Jorgen was a strategic leader with powerful plans. His new management style focused on the improvement of capital structure and core business, distribution and sales, costs, supply chain and quality, and innovation.

LEGO Group Competitive Advantages

Product differentiation

The toys developed by LEGO are multi-functional compared to the ones produced by competitors, which may only have one or two functionalities.

Powerful brand

Under the leadership of Kjeld, the brand of LEGO became unique and established as a brand the was unique and iconic. As a result, it attracts customers and is more trusted by parents with children. Among the objectives created in 1995 was to become the best-known brand and this was actualized.

Partnerships and Alliances

LEGO group has multiple alliances with companies in industries such as film, clothing, and games. This has helped the company to stay ahead of the game and ventured into different areas.

Exceptional Leadership

LEGO group has had some of the best managers of all time. For instance, under the leadership of Kjeld, the brand of LEGO became unique and was established as a brand that was unique and iconic. The basis of success for the company was innovative products, international growth, and effective leadership.

Larger market coverage

Compared to most of its competitors, LEGO has expanded to wider markets and has reached more customers. As a result, it is more popular and has increased sales volumes.

Challenges to LEGO Group Strategy

Geographic scope and market presence

A gaping challenge is balancing the high growth markets. Although the target markets for LEGO are well established, they stagnant and mature to a certain degree. It is hard to tell from the uncertainties in the global market whether or not the market growth and balance are optimal.

Handling growth

Although the LEGO’s strategy is to expand, the expansion of production needs significant funds. The company has a healthy cash flow and equity ratio. However, the challenge will be to maintain a high and successful innovation level. Increasing the capacity and hiring more than a thousand new employees require organization resources that are significant. The challenge is whether or not the company can cope with its growth and how it should be strengthened.

Girls – pursuing the growth opportunity

The company has appealed more to boys than girls. However, it has tried to adapt its products and communications to girls. The challenge is that there is a large female market, it is hard to tell how the success should be followed up.

Navigating the competitive arena

LEGO’s competitors watch them closely and some like Mega and Mattel partnered and created a playing universe for girls. It is uncertain if the company should change their strategic agenda given the competitors. The challenge is the extent to which the company should respond to the initiatives of its competitors or pursue its agenda.

Fitting in the digital and new media age

Despite multiple attempts, the company has not succeeded in playing in the new media age. Companies have grown into big companies such as the gaming companies. LEGO group, on the other hand, has not succeeded. The challenge is whether or not the company should have new initiatives in the area or stick with the development it already has.

Education and play

The company created a new business unit to create educational products. This unit has witnessed growth, but there is an uneven distribution of sales in the different regions. There is uncertainty about how this affects the company’s brand in the different markets

Strategies that LEGO can take

Diversification Strategies

This is a growth strategy where a company starts selling new products on the market. It requires enough planning as it may be risky. Although the LEGO group has taken some steps to diversify their offerings, they can still do more, especially in the digital and media age (Favaro, 2015). It is essential that marketing research is carried out to determine what can best fit in the market, or which products can have better potential in the market.

Acquisition

LEGO group can consider acquisition as its strategy for growth even further. It can purchase another company and expand its operations. This strategy might be risky, but diversification strategies are riskier (Suttle, 2018). This is because the market and products are already established. To consider an acquisition, the company must determine in advance what it wants to achieve. This is because the implementation of this strategy requires significant investment.

Pricing strategy

Here LEGO group can use price wars to win customers. The philosophy here can be to maintain the return of customers by offering products at low costs and attractive, which will increase the volume of sales. The company can set the price markup slightly or significantly lower than that of the competitors. This strategy must be coupled with a reduction of the overhead production costs, for instance conserving the energy used within the organizations and the labor. Automation, for instance, can help in reducing the amount of money spent on labor and the value passed down to customers through reduced prices on the products

References

Suttle, R. (2018). Growth Strategies in Business. Retrieve from https://smallbusiness.chron.com/growth-strategies-business-4510.html

Favaro, K. (2015). Diversify or Focus? The Best Strategies Do Both. Retrieved from https://www.strategy-business.com/blog/Diversify-or-Focus-The-Best-Strategies-Do-Both?gko=2daea

Jensen, A. B. (2013). The LEGO group: Adopting a strategic approach. In Exploring Strategy (pp. 544-548). Pearson Longman.

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Evaluating Leadership Effectiveness, Competitive Advantage, and Growth Strategies forThe LEGO Group

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