Lego Case Study

Exam 3

Questions 1 - 3 pertain to the 'Lego' case, and questions 4 & 5 pertain to the 'Ikea' case:

1. LEGO’s movie-themed products, keyed to popular film franchises such as Harry Potter, Lord of the Rings, and Spiderman, include detailed construction plans.  Do you think this is the right strategy? Why or Why not? Justify your assessment of Lego's strategy.

LEGO’s detailed construction plans for their products are the right strategy. LEGO’s products can contain hundreds or even thousands of pieces, are very detailed, and can be complex.  Without these construction plans, some of their products would could not be constructed correctly.  If the products do not turn out as advertised on the box or television, it is a possibility LEGO would lose customers.  The construction plans are there to assist in the building of their products.  The detailed plans are there to ensure their products are enjoyed as intended.

This strategy is sound because the instructions assist children with the building the products and the final product is as advertised.  Without the instructions, the more complicated products offered by LEGO would not be able to be assembled.  For example, LEGOs Taj Mahal has almost 6,000 pieces.  This is an iconic piece and LEGO fans are eager to be able to purchase and assemble this product.  

2. Using Porter’s generic strategies framework, assess LEGO in terms of the company’s pursuit of competitive advantage.

LEGO’s pursuit of competitive advantage in terms of Proter’s strategies framework is one of differentiation.  

There are other brands that are similar to LEGO, but the most notable would be nanoblocks.  Nanoblocks also have products like the Eiffel tower and other iconic structures.  However, LEGO’s alliance with Disney and Lucas Films is what sets them apart.  LEGO also has the superior branding in this space.  Whenever you think of building block toys, you think LEGO.  Whether it’s nanoblocks, or another brand, LEGO is the term used for the building block toys.  

LEGO started with a narrow target, but with the alliance with Disney and Lucas Films, they have broadened their target market.  With the addition of LEGO friends, LEGO has expanded to specifically target the female market.

3. Assess the key strategic decisions made by Jorgen Vig Knudstorp after he became CEO in 2004. What would be the advantages and disadvantages of the strategies introduced by Jorgen Vig Knudstorp.

The key strategic decisions made by Jorgen Knudstorp was to reduce the number of SKUs, color options, and the reduction of suppliers.