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LEGO Case Study

Case studies are an essential learning strategy in business classes as they provide an opportunity for you to critically analyze events that have taken place in real-life businesses. This develops your critical thinking and research skills as you research the competition and industry in which your business resides in order to formulate a recommendation for the challenges faced by the company.

For this unit, review the Marketing Spotlight: LEGO case study in Chapter 5 of your textbook. This assignment will be comprised of two parts; one part will ask you to respond to questions, and the other will require you to complete a case analysis.

Part 1

Evaluate this case and respond to each of the following questions using both theory and practical managerial thinking.

• How does LEGO manage to constantly reinvent its business?
• What role did marketing research play in LEGOs market success?
• What differentiates LEGO from its competitors? Is LEGOs competitive advantage sustainable?
• Analyze how the company has built a strong customer relationship with their target market.
• Review any potential ethical implications with LEGO. How are they aligning with good ethical practices?

Your Part 1 response must be at least two pages in length. Follow APA Style when creating citations and references for this assignment. Note that you will submit Part 1 and Part 2 in one document.

Part 2

Complete a case analysis of LEGO. This requires that you conduct research on LEGO beyond the case study material in the textbook. In the case analysis, you will look at the situational analysis, problem, and alternatives, and you will provide a recommendation. Refer to the instructions below as you construct your analysis.

Situational Analysis

• Discuss the external environment through the compilation of a PEST (political, economic, sociocultural, and technology) analysis.
• Discuss the internal and external environment through the compilation of a SWOT (strengths, weaknesses, opportunities, and threats) analysis.
• Determine the next steps for a business after evaluating the current market position within an industry.
• Examine how data analytics support global marketing strategies.

Problem

• Identify at least one organizational problem that LEGO is currently having or one that you project it will have in the future. Base this on your research and critical thinking.

Alternatives

• Compile three or four potential marketing-related solutions to the problem above. Remember that these are potential alternatives; you will not select all of the alternatives to solve the problem.

Recommendation (Marketing Strategy)

• Select one or two of the alternatives above to solve the problem that you identified in this case analysis and determine marketing strategy solutions for a company.
• Discuss your rationale for choosing these and not the others. Include supporting research that will increase the depth of your analysis and determine marketing strategy solutions for a company.

In order to successfully complete Part 2 of this case study, you need to review the video and task learning guides (TLGs) below. The following resources will provide you with the skills to research industries/competitors.

Business Insights: This database provides extensive information on companies, industries, and countries worldwide. In addition to country data, market research reports, SWOT analyses, and other types of business research and analysis, the database includes case studies and additional articles from peer-reviewed scholarly journals.

Mergent Market Atlas: This database provides specific company details and reports for publicly traded companies. For example, typing “Apple” into the company search bar will provide details about the specific company, such as the company location, contact information, industry affiliation, and basic financial market details. Use the tabs across the top of the page for further information.

IBISWorld: This database is another great resource for company and industry information. Typing in a company name or keyword related to the industry you would like to explore will bring up a list of industry reports and information related to the search term. This database’s primary focus is on the industry at large rather than the individual company, though some information about industry-related companies is included.

Business Source Ultimate: This is one of our bigger databases. This main screen can be used for industry research. You can search for an industry using the NAICS/Industry Code box near the bottom of the page.

You can search for specific company information by entering a company name in the Company/Entity box near the bottom of the page, where you will also find an option to search using the Ticker Symbol box.

ABI/INFORM Collection: This database can be used to look for articles on specific companies as well as company and industry information. If you type in a company name, you can change the dropdown box that says “Anywhere” to “Company/organization COMPANY.” You can add any keywords you want in the other boxes to narrow your search.

Part 2 must be at least four pages in length. Follow APA Style when creating citations and references for this assignment. Support Part 2 with at least three sources outside of the textbook. As aforementioned, keep in mind that Part 1 and Part 2 will be submitted in one document.

Resources

The following resource(s) may help you with this assignment.

• LEGO is one of the worlds most recognizable toys. The small, colorful building blocks have spawned countless sets, figurines, video games, and even movies and theme parks. LEGO is built on a very simple concept: Each block fits together with every other block, which creates an endless combination of buildings, robots, cars, and anything else the user can think of. LEGO employs a design-thinking approach to its product innovation, keeping things fresh with new releases that utilize the colorful bricks in creative ways. In 2017, LEGO became the worlds largest toy manufacturer and is one of the strongest brands across all industries.
  The LEGO company began in 1932, in a small shop located in Billund, Denmark. Carpenter Ole Kirk Christiansen sold wooden toys, stepladders, and ironing boards with his son Godtfred. Two years later, the pair named their business LEGO, short for the Danish words leg godt, which translate to play well. During the next several years, LEGO expanded its product line to include wooden ducks, clothes hangers, and simple wooden bricks. It wasnt until 1947, when LEGO purchased a plastic injection-molding machine, that it began to mass produce plastic toys that served as the predecessor of the modern LEGO brick. In 1957, LEGO created the interlocking plastic brick, and the following year it introduced the stud-and-tube coupling mechanism that became the model for all future LEGO toys. LEGO bricks became wildly popular among customers, and the company began expanding worldwide in the early 1960s. In 1964 the company started selling sets, which included the parts and instructions to construct a particular model. Soon thereafter, theme sets from movies and books such as the Harry Potter, Star Wars, and Jurassic Park series became some of the most sought-after childrens toys in the world.
  LEGOs growth and expansion slowed at the end of the 20th century. Birth rates had declined, and children were less interested in toys that didnt offer instant gratification. The many theme parks that LEGO opened around the world failed to turn a profit because of the companys unfamiliarity with the hospitality industry. LEGO began churning out increasingly complex and unique sets to draw in more customers, but sales failed to grow. The increased complexity of LEGO bricks also made production more complicated and inventory harder to manage. Major retailers ended up with large portions of inventory unsold, even during holiday seasons. In 1998, the company suffered its first financial loss, and by 2003, LEGO was on the verge of bankruptcy.
  In 2004, Jorgen Knudstorp was promoted to CEO, only three years after arriving at the company. Knudstorp, who had previously worked at McKinsey & Company, began turning the company around and improving businesses processes, cutting costs, and better managing cash flow, which stabilized the company. To revive the popularity of LEGO toys, Knudstorp focused heavily on innovation and emphasized market and consumer research. Knudstorp believed that in order to rekindle the emotional connection between customers and LEGO toys, LEGO had to deeply understand each customers desires and behavior.
  LEGOs shift toward basing decisions on extensive research reduced complexity in production and ensured the success of its product releases. In 2011, the company launched the LEGO Friends line, an effort to attract more girls to the brand. The companys market research led to the insight that girls preferred to use their LEGO sets for roleplay, whereas boys enjoyed strong narratives and backstories, such as those offered by the Ninjago and Legends of Chima sets. Both girls and boys enjoyed the building aspect of LEGOs. The LEGO Friends line offered more sets and locations like shopping malls, juice bars, and creative labs, so girls could use their figurines to roleplay. The line caught on strongly in markets worldwide, including China, Germany, and the United States.
  LEGO also established the Future Lab, a secretive research and development team that is responsible for creating some of its most innovative and successful toy lines ever. Future Lab teams are made up of industrial designers, programmers, marketers, and even master builders, who brainstorm to generate modern products. During an annual one-week field trip to Barcelona, Future Lab teams extensively brainstorm and produce prototypes from the bins of bricks, animation software, and professional-quality digital cameras available. The most successful prototypes generated are pursued back in Denmark, where viable ideas are launched into production. LEGO toy lines created by the Future Lab include LEGO Mindstorms, a robotics platform created in partnership with MIT; LEGO Fusion, an augmented-reality application; and LEGO Architecture, collections that model the worlds most famous buildings.
  In 2017, LEGO surpassed rival Mattel to become the biggest toy manufacturer in the world. Though LEGO has enjoyed great financial success since its all-time low in 2003, company studies have indicated that kids spend less and less time playing with physical toys every year. In an increasingly digital age, LEGO must continue researching its customers and experimenting with innovative product lines to stay at the top of the toy industry.39
  Questions
  How does LEGO manage to constantly reinvent its business?
  What role did marketing research play in LEGOs market success?
  What differentiates LEGO from its competitors? Is LEGOs competitive advantage sustainable?