7/28/2019 princy4

1/10

Case AnalysisMarch 29, 2012Presented by:

Johnny Burns Cara Dickinson

Joe Martini Jaime Mizrahi

7/28/2019 princy4

2/10

2 | P a g e

Executive Summary

LEGO all started in the workshop of Ole Christiansen, who was a carpenter from Billund,

Denmark. He began making wooden toys in 1932 and by 1934 the company LEGO was formed.LEGO expanded to producing plastic toys in 1947. By 1949, the infamous interlocking plastic

pieces were crafted. The business of LEGO was ecstatic up until the 21st

century. However, with

an extreme focus on the interlocking brick concept, the wave of the internet was soon to knock

LEGO off their brick reliance.

With a high concentration on the LEGO Brick, competition providing other entertainment

needs for children from computers and video games to software and robotics, LEGO suffered a

large threat to dominance among child entertainment. LEGO witnessed this and acted by

introducing various products to keep up with the wave of technology. These new product lines

were profitable for the company, however, the brand of LEGO suffered. Confusion amongconsumers on what LEGO actually was and how to differentiate among their other products was

occurring rapidly at the employee and consumer level.

LEGO must rebrand the entire company at the local and global level to one main concept

in order to take control of their brand. The strategy to implement is known as Beyond the

Brick. This concept is driven by four simple components: Explore, Make & Create, Stories &

Action, and Next. The first step is to drive consumers to the idea of play. LEGOs mission

statement is to nurture the child in each of us and this is proven highly in the concept. Once

children are in the doors and given the opportunity of playing, they then have the ability to build

with LEGO bricks. This construction of bricks and opportunity to construct revitalizes the classicand neglected creative side of LEGO. After using hands on work with bricks, children are given

the possibilities of being involved in predefined stores, characters, or universes. Jump into an

epic battle of Star Wars, fly around with Harry Potter, or save the day with Jack Sparrow are all

possibilities. Finally, the main component is to transition consumers to other product lines from

the brick product. One example is for children to realize they have a connection with Harry

Potter and to then make that transition to a Harry Potter video game.

With the introduction of the Beyond the Brick campaign, the global and local vision of

the brand will be static. Having this focus on the heritage of where the company comes from to

then transition consumers to other product lines is ideal for the companys success. LEGO willsee extreme growth by introducing this strategy for overall brand management.

7/28/2019 princy4

3/10

3 | P a g e

Table of Contents

Current Situation and Problem Analysis ................................................... 4

Current Performance Strategic Position Corporate Governance & Key Management

SWOT Analysis ......................................................................................... 5

Strengths Weaknesses Opportunities Threats

Situational Analysis ................................................................................... 6

Strategic FactorsStrategic Alternatives ................................................................................ 8

Beyond the Brick

Independent Unit Concentration Age of Technology

Recommendation ....................................................................................... 9

Implementation ........................................................................................ 10

Evaluation ................................................................................................ 10

7/28/2019 princy4

4/10

4 | P a g e

Current Situation and Problem AnalysisAs with anybusiness, LEGOs audience has continuously changed since the company

started. Changes in childrens development and play patterns, the increase in technology

capabilities and devices, and a driven focus on getting kids outdoors has generated greatcompetition for the LEGO brand. Additionally with the increased competition, LEGO has caused

its own splintering in order to keep up with the ever-changing world.

Current Performance

Although LEGO has enjoyed decades of continuous growth and has always been

considered a symbol of a family brand, in recent years the LEGO company has faced a decline in

performance due to several adverse factors. Such decline has come in the form of dusty image

among children, a fragmented brand, decreased market share, poor management, and almost no

effective communication within the organization. This situation has been manifested in thecompany in many different ways, for example there is a lack of guidelines, follow up processes,

and independent department. The result, LEGO has lost considerable territory to its competitors.

In divergence with the past, LEGO not only competes with other toy manufacturers; LEGO now

competes with many other forms of entertainment for children, such as the digital world, which

is gaining more territory every day in todays market.

Strategic Position

Currently LEGO is mainly positioned as a children oriented organization. The brand

started focus on toys but in recent years it has expanded its products offerings to software,

accessories and lifestyle products. Although the company has made considerable efforts to

maintain its historic heritage, LEGO has additionally attempted to keep up with the newer trends

and fashions. What has occurred is that LEGO has lost part of its brand identity as it has become

a product driven organization; most of the activities are based on keeping up with what the

market desires at expenses of the company historic profile. LEGO has identified several niche

markets within its target market, theme, technological, and builder toys and decided to focus on

keeping up in each individual market (with independent departments). In other words, the LEGO

brand is currently fragmented and its identity is no longer reflected in its offerings.

Corporate Governance/Key ManagementOne of the reasons the LEGO brand is facing a rather complex situation is the

inefficiency of its management and corporate structure. With the company operating individual

departments, management has done a poor job integrating these departments within the LEGO

umbrella. There is a lack of communication within departments and with consumers; each

department is working independently on its projects. The inefficiencies that arise from this

situation have reduced the manageability and profitability of the company.

7/28/2019 princy4

5/10

5 | P a g e

SWOT Analysis

Strengths

Recognizable and credible withparents

Number one brand ranked for decades Good company values Wanting to adapt to latest trends in

market (i.e. Harry Potter, Star Wars

etc)

Entering into 3 globally diversemarkets

Weaknesses

Letting other companys gain greaterrespect among core audience

(families)

Losing business from changing habitsof children into more technical toys.

Fragmenting brand architecture withincreased product expansion

Lacking organizational structure forcommunication among executive

officers.

Opportunities

Recognizable brand is easily grownfrom being in the business for decades

Incorporating other levels of theentertainment market.

Using changing trends in technology toadvantage and use resources

Threats

Changing children toy habits andgrowth/ development

Quick changes in the popular trends Dependence of global brands and

trends

Competition

Strengths

With an evaluation of LEGO, it is clear how it has been a huge part of the toy market for

decades, which plays to its strength of pure brand recognition. The good reputation they have

carried for so long has now passed through generations and has given them an advantage in the

market. In 2002- 2003, they were considered the third most respectable company to families with

children (Shultz, 8). Seeing they are trying to work with new trends in media and entertainment

Lego can really grow their global presence.

Weaknesses

Even with LEGOs great reputation among families with children, the brand that was once a

mainstay has become diluted. The described uncoolness of LEGOs toys forced LEGO to grow

their brand into many areas; this has in turn created less brand awareness in their new products.

Their brand architecture is fragmented from product expansion and, by doing so, the

organizational structure lacks needed internal communication.

7/28/2019 princy4

6/10

6 | P a g e

Opportunities

Growth in the current market is an enormous opportunity for LEGO. With such brand

recognition, it will be easy to link other developments to the brand for fast development and

growth in the entertainment market. They supplied decades of entertainment for children and can

continue to grow with new products while updating traditional products.

Threats

Since LEGO has many traditional factors that come with their business and lack of

organizational structures, they face many industry threats. Without the proper preparations,

LEGOs competition, which is continually growing, will be able to market to the customer more

effectively. The advances of technology and ever changing trends make it difficult to have one

product while maintaining to own most of the market for long periods of time. With children

developing faster than before, and those children losing imaginative play toys to advanced

technology, is a huge threat to LEGOs mainstay toy. This threat means that LEGO must

evaluate and update their product and allow for organizational changes, as well as, continue to be

successful.

Situational AnalysisStrategic Factors

LEGOs current situation indicates that the company is facing a complex brandingproblem, but more specifically, LEGOs consumers have lost the brand image and identity that

the company enjoyed in the past. In order for LEGO to be able to efficiently reach and target its

desired consumers, so it can promote and advertise its redefined proposed image, the company

must pay close attention to four main factors surrounding its desired target market. These four

factors are namely the cycles of corporate branding: the stating, linking, involving, and

integrating cycles.

These previously mentioned cycles, in the order presented, are considered to be a

standardized set of steps corporations follow in order to brand or re-brand an organization.

Focusing on the LEGO case, we find that the first cycle, has to deal with stating or setting thefoundation that will provide the source and base for the corporate brand. The stating cycle will

provide the answer to what LEGO stands for which is to nurture the child inside each and every

one of us. The idea is that LEGO sets a new foundation where it can encounter a balance

between what it wants to become and what it was. Such balance will only be achieved if the

position proposed is in line with the heritage, image, and stakeholders perceptions.

7/28/2019 princy4

7/10

7 | P a g e

After the cycle of stating is finished, the second cycle, linking, comes into play. Linking

has to do with how the organization will use and take advantage of its current position, activities,

images, etc. to support the proposed vision of the organizations brand. In the case of LEGO, the

linking cycle will be extensively related in identifying how the different independent

departments, product lines, and overall image will enable the implementation of a desired newbrand image and identity. After conducting the linking cycle, the next factor to consider is the

involving cycle.

The involving cycle has to do with reaching the different stakeholders of the organization

and selling them the proposed brand image and identity. What this means, is that LEGO will

have to consider all the parties involved with its operations and check with each if the proposed

desired image is in lines with their perception of the company. As an example, LEGO will have

to check with its suppliers as well as its retailers to see if the proposed change is in lines with

their expected image and of the company. Additionally, consumers play a huge role in this cycle.

The last cycle is the integrating phase. After an organization has laid the foundation for

its brand, revised this proposed brand image with the own organization culture, heritage, mission

and objective, and check with the stakeholders involved, the next step is to integrate all this

process into the business environment of the firm. This boils down to carrying out the message

of a new corporate brand to the businesses and markets, as well as individuals involved with the

current performance of the organization. For LEGO this will mainly be related to advertising and

promoting its new brand image to the important parties involved.

7/28/2019 princy4

8/10

8 | P a g e

Strategic AlternativesAlternative #1: Beyond the Brick

The first alternative to developing a brand image is through a concept that has four

components/steps known as Beyond the Brick. These components are Explore, Make &

Create, Stories & Actions, and Next.

Explore Young children explore themselves and the world around them through play.

Make & Create Consumers engage in construction and building processes creating their own

universe, which revitalizes classic and neglected LEGO creative construction.

Stories & Action Consumers involve themselves in predefined stories, characters, or universes.

Next Consumers find the most innovative construction play materials that go

considerably beyond the brick.

These four stages allow for LEGO to rebuild their image based around the consumer.

These steps have direct time for implementation and will be followed in order as all of the

concepts build to the end goal of a stronger brand. Utilizing this strategy will bring growth for

the brand itself while also developing upon other product lines based out of the brick concept.

Alternative #2: Independent Unit ConcentrationSince LEGO is currently operating with individual independent silos, Alternative 2

proposes that each LEGO unit carry outs separate advertising and promotion efforts within a

single theme for the branding campaign. The idea is that LEGO generates a single brand theme

that each individual unit will have to demonstrate with it singular efforts. The main idea

proposed allows for the interaction and creativity of LEGO users by taking them to their own

universe. As mentioned before, since the company is already fragmented it will make sense that

each unit, that already knows its market, products, and how to advertise them, provides separate

advertising and promotion strategies. Although this alternative can be more costly than the other

proposed alternatives, it also offers a greater degree of possible efficiency in the way it will unifythe brand image of the company.

More in depth, we expect that the different departments of LEGOs as it are Toys,

Softwares, and Accessories, review and understand the brand theme LEGO is trying to propose,

that in this case is allowing interaction and creativity take the user to its own universe. After

understanding the central theme, each department will proceed very similar to the steps proposed

in the corporate branding cycles, in order to create a more adequately branding strategy for each

7/28/2019 princy4

9/10

9 | P a g e

of their products. In the end this will allow the organization, while internally working on

individual departments, to offer a unified image and brand to the external parties.

Alternative #3: The Age of Technology

With the LEGO brand being well known in the family market, it spreads across a wide

range of ages. Since we live in a constant changing world of computers and video games it

makes sense to keep up with the ever changing technologies available. As we see, during the past

decade or so, childrens play patterns havebecome more technological based and, in some part,

use less imagination and ingenuity with building block foundations. With this turn we bring in

the new age of LEGOs.

The new age will entail phasing out the original and physical building blocks and creating

a virtual game. This will accommodate the technology age and allow children to still design andcreate, but on a new level. The virtual game will be similar to an architectural simulation and

allow players to link virtual blocks together and have more options to create structures. The

virtual game will have layouts or blue prints of basic models but also allow for users to create

completely different structures freehand. We can also capitalize on different packages for the

game with more advanced models and advanced shapes. This will appeal to parents who can cut

back on boxes of LEGO blocks used through the generations of LEGO lovers. Introducing the

virtual world of LEGO will also bring more attraction to our theme parks because it will be a

new, real life experience for the younger generations who use the virtual game andbe a

reminiscing place for the generations before. We can cut costs of packaging, storage for large

inventory, and factories and maximize profits with an intuitive look at our future generations

LEGO.

Recommended Strategy

After evaluating the three alternative strategies, the one we decided to recommend is the

Beyond the Brick alternative. Alternative 2 Independent Unit Concentration was disregarded

as it wouldnt help getting the LEGO organization within a single corporate structure. Althoughthere were several benefits to this alternative, such as effectiveness, the high expected costs and

efficiency problem are a major setback for this alternative. Looking to Alternative 3, we

encounter a similar situation. The Age of Technology alternative is convenient as it will allow

tailoring the company to the current market demands; still it is key for LEGO to maintain its

heritage and history, for this reason the third alternative cannot be considered.

7/28/2019 princy4

10/10

10 | P a g e

Given the previous analysis of the second and third alternatives, we decided to maintain

LEGOs proposal and recommend doing the first alternative Beyond the Brick. This option

allows for many opportunities, first it permits the brand to rebuild its image and re-appeal

consumers with a fresh new look. As this happens, we expect that this alternative also engages

the market to closer ties with the brand and products. This option will also allow for flexibilitywithin product development given the age groups and theme groups already determined by the

organization. Besides the brand, product, and market development options of this alternative, we

consider the Beyond the Brick option to be the one easily to implement by LEGO, as the

company already has the structure and resources for such project. By using the Beyond the

Brick option, we believe LEGO will experience an extreme positive impact on its overall brand.

Implementation

As mentioned before, the Beyond the Brick alternative is the easiest and smoothest

alternative available to implement. Currently, LEGO has the resources, structure, and

infrastructure needed to support this alternative. We believe the most important action to support

this alternative is the corporate management buy-in. If the managerial leaders of the

organization believe and support this option, we expect that this creates a top-down or

trickledown effect through the rest of the organization. The action plan has already been created

and the only thing needed is to follow each step carefully and dont try to rush results. With top-

management committed to the idea, it wont be difficult to implement the plan. Still there are

some areas that should be deal with precisely and carefully if LEGO want this alternative to

succeed, being getting every department of the organization together, and unifying research

methods, procedures, evaluations, follow up and other type of techniques.

Evaluation

Successful evaluation and control of the first alternative will be needed to succeed with

this option. We recommend evaluating the different parties within the organization, as well as

departments, products, suppliers, retailers, consumers, or any other type of entity involved. We

believe the right way to asses these different areas of the organization are based on statistics,

data, and surveys that apply to each section. For example we can measure a product by looking

at sales data, or distributing follow up surveys or calls to customer or retailers. Similarly we can

evaluate different departments of LEGO to see if they are working more integrated, for that we

can measure at communication data as well as distributing survey among the employees. There

are different options of how to evaluate and assess each entity involved with the LEGO

organization, by doing so effectively, the alternative implemented would be constantly checked

and assed to see if the implementation and impacts are as expected or not, something that will

allow to adapt to different situations and strategies.