Lego Case Study

QUESTION 1

What are the “traditional” resources and capabilities of Lego?

➢  The Lego brick-design patent was the one of the most significant resource that the company had in its initial years as it allowed them competitive advantage in the market and create a brand that was difficult to overpower in future when the patent expired and competitors would look to compete against Lego with similar toys.

➢  The free-form building play sets (Focused on education and learning): The Lego sets comprised of various free-form interlocking elements like the bricks, doors, trees, windows, wheels, roof tiles and others. These elements enabled kids to build with an open mind and express their imagination into creating unique structures.

➢  Manufacturing (Operations): The Lego group run one of the biggest injection moulding operations in the world. Lego’s manufacturing facilities were strategically well placed in Denmark, Switzerland, USA, Korea and Brazil according to their biggest markets. Each facility operated independently and developed relationships with their local suppliers. Also with changing times, Lego focuses on continuous product development with innovation and new technologies has fostered strong capability to new develop products as per the changing market demands.

➢  Strong Distribution System: TLG distributed their products through wholly owned sales companies that covered respective national market. TLG set a standard for good customer service b providing a daily delivery system which allowed retailers to minimize inventory.

➢  Capability of providing superior customer experience: Lego has encouraged an environment that always focused on superior customer experience. They try and get close to customers and provide total customer experience through Lego brand shops, Lego theme parks and Lego.com

➢  Customer focused innovation: Focus on continuous product development with innovation and new technologies has fostered strong capability to new

develop products as per the changing market demands.

➢  Lego’s Global existence in most major economies has established a strong and famous brand amongst customers that gives them competitive advantage over low cost imitators.

➢  One of the major capability that LEGO had was that of producing high quality

toys for kids as Lego’s believed in “Only the best is good enough”.

Question 2

What additional resources and capabilities were necessary to transition into theme-based kits? How did Lego develop these?

➢  Developed interesting stories through licensing famous characters: To get stories that customers were interested in, LEGO leveraged the popularity of movie characters from star wars, harry potter and others. They had to license the use of these characters into their products. It was something that Lego had previously never done.

➢  The most important resource to develop theme-based kits were specific design skills that would bring different characters from the movie world into Lego elements and figures. To look realistic, Lego developed new production methods along with new moulds for these kits.