Strategic Management

Strategy, enterprise and innovation: A case study on Lego


Strategic innovation of the company is effective for all the conglomerates for developing proper tactics as well as enhance innovation and creativity (Valkokari, 2015). Through innovation management and strategic planning, the company try to enhance their productivity and improve quality of their products so that it is possible for the company to retain the customers in the market and establish the brand successfully by improving brand reputation and customer’s satisfaction (Sahut, and Peris-Ortiz, 2014). The aim of the study is to analyse the innovation and strategy of the company Lego as well as evaluating the Blue Ocean strategy through which the company Lego can establish the brand in the market.

Background of the company

The Lego Group is a reputed toy manufacturing company in Billund, Denmark and the organisation are famous for its innovation and creativity in the toy industry where it is successful in retaining the customers in the market by delivering high quality and creative playing objects to the children. The company is also successful in increasing their revenue by improving innovation and creativity and it is helpful for the brand to increase the revenue per years where there was approximately 25% increase in the profit margin per year and the company is also famous for its high operating income and net income in the market (Lego, 2018). Through innovation and creativity, the company is able to gain high market share and retain long term customers successfully. The company Lego always focus on creativity and innovation through which it attracts the audiences in the market where the organisation delivers high quality playing objects to the child. The company also use core marketing tactics of promoting the brand, improving environmental footprint through maintaining climate change, waste management, resource utilisation and implementing cost cutting technique to deliver quality products to the child at effective price which further helps to strengthen their customer’s base (Lego, 2018).

  • Mission statement of the company: Inspire and develop the builders for tomorrow
  • Vision statement of the organisation Lego: Inventing the future of play

The mission of the company is to inspire and develop the builders for tomorrow where the purpose of the company is to inspire and encourage the children to think creatively, reason systematically and realise their potential by utilising their skill to solve the puzzle. Additionally, the vision of the company is to invent the future of play where the company develops playing material for the children in such an era of globalisation and digitalization where they can realise the human possibilities (Lego, 2018).

Identifying and evaluating the Key drivers of innovation contributing the success of Lego

There are certain key success factors in the company Lego through which the brand is successful in establishing their business and attracting the customers in the market with their quality and innovative playing products for the children. The key success factors of the business are such as,

  • Creating imagination power of the child through creative thinking
  • Enhancing creativity by developing attractive and interesting playing products
  • Providing learning opportunities
  • Caring the children
  • Maintaining quality and innovation of the products
  • Customer centred approach
  • Open ended innovation
  • Blue ocean strategy of the company

The above-mentioned factors are contributing in achieving success for the company through which the organisation can gather their customers in the market and gain highly competitive advantages through increasing their market share in the playing industry. Customers driven approach of the company is one of the key success factors where the organisation try to improve engagement with the consumers of the brand so that it is possible to acknowledge the actual demand and personal preferences of the audiences in the market. The marketing promotional activities in this regard are helpful to improve two-way communication where the customers and the business representative of Lego can interact with each other and choose the best products for their children. Updated technology, digitalisation of the playing kits and building blocks of the company are the main innovation through which the company strengthen their customer’s base ad meet the expectations of the consumers by delivering quality and creative products according to the needs and preferences of the consumers. Open innovation of the company is another effective factor that contribute in the success of the company where continuous innovation and creativity of the organisation is effective to attract more audiences at the market and establish the brand at the international playing industry where the children are attracted towards the products and playing kits delivered by the organisation (Vala, Pereira, and Caetano, 2017).

The games such as Mindstorms NXT Robot Toy, Adam Reed Tucker and Bob the Builder toys are the examples of latest innovation of the company, which helps to improve the skill and knowledge of the children and enhance their skill and creative thinking successfully. In 2017, the company Lego Group introduced the significance of innovation in the market by launching physical and digital play such as LEGO® BOOST and LEGO® Life that empowers the children in physical and digital creation for identifying effective outcome. On the other hand, these innovation and creative playing kits are helpful for the children to understand social networking where interaction with the LEGO characters and creation of LEGO playing kits. These are the latest innovation of the company where it helps to build reputation and capture the imaginations for both boys and girls in the society and apart from that, it helps to explore the innovative ideas to bridge the physical and digital play world. In addition to these, the skilled and experienced workforce of the company are another success factor of the organisation where it is possible to develop attractive playing products for the children in the society which are effective to retain more long-term customers for the organisational quality products and efficient services provided to the customers. Continuous growth and increasing revenue of the organisation are the effects of the skilled and experienced workforce where the employees are efficient to develop innovative products and serve the customers creatively. The skilled workforce is one of the important success factors which is necessary for innovation and creativity of the organisation through which the company Lego is successful in strengthening their customers base ad running the organisational operational activities strategically. Lego mainly tries to acknowledge the children’s preferences and interest and develop innovative playing kits which can meet the market demand and fulfil the expectations of the children (Lego, 2018).

Strategy and innovation framework in Lego for analysing different approach and opportunities

The strategic analysis including SWOT and Porter’s five forces analysis are useful in this regard to understand the strategic position of the company as well as acknowledge the current market trend and opportunities of Lego in near future. the SWOT analysis of the company are discussed further,

As per the SWOT analysis, the company is successful in raising their innovation and creativity for developing creative products for the children in the market. Highly skilled workforce and latest technology are helpful for the company Lego to introduce innovative products for the children. it further helps them to expand their business across the world by delivering quality and innovative gaming products to the children which can attract more audiences in the market across the international markets. On the other hand, there are some weaknesses which such are as costly manufacturing products and the inflexible market trend which may worsen the company’s position in the market. However, there are some opportunities which are helpful for the company Lego to expand the market through developing innovative and creative games for the children which may attract the parents successfully. Technological advancement and innovation are the major opportunities through which the company can manage their operational activities and supply chain to serve the children with creative gaming products. The major threats for the business are high competition, changing needs of the parents and high demand for the computerised game. In this context, the company can utilise their strength and garb the market opportunities for securing future sustainable development (Rothaermel, 2015). As per the Porter’s five forces, the company’s analysis can be described below, Hereby, through the above analysis, it can be understood that, the company has good position in the market, but there are low threats of competitors and substitute products like computerised video game and changing demand and preferences of the parents which can be mitigated through continuous innovation and creativity through which the company Lego can grab the market opportunities of high demand, market trend for innovative gaming products for the children, market expansion and technological advancement.

Analysing Blue ocean strategy of Lego to achieve success

As per the blue ocean theory, the companies try to create market space and focus on product differentiation and cost minimisation so that the business can run their operational activities efficiently and manufacture the products in a large scale with cost effective way where it is possible for the company to serve the quality products to the customers at lower cost. This further helps the company to gain highly competitive advantage in the market and gain high market share (Apanasovich, Heras, and Parrilli, 2016; Nylén, and Holmström, 2015). The company Lego is also focusing on Blue ocean theory through developing effective technology for producing the quality products at lower cost so that the company can attract the customers and deliver quality products at lower price. Moreover, product differentiation

helps the company to expand their product line to attract the audiences in the market for long run with different gaming products for the children. Additionally, the company also aims at innovation and creation for creating values for the customers which in turn provides an opportunity to the company to attract the non-customers as well as create and capture new demand in the market across the international countries.

The company focuses on Product and Marketing Development (PMD) for developing innovation within the existing products where the company is successful to enhance their sales volume by 95% with their product line. On the other hand, the concept of Lab is another creation of the company Lego where it is helpful to develop new products and physical play concept in the market. Through this process, consumer insight in the market can be predicted and the company can acknowledge the needs and preferences of the customers and analyse the market trend for developing new innovative products to attract more child in the market. On the other hand, Community, Education and Direct (CED) is another innovative practice at the workplace of the company where the organisation focuses on arranging training and development program for the employees for enhancing digital innovation and online playing experience. The knowledge and technical skill of the employees are effective in this regard to develop new creative products where the leaders and the managers try to encourage the employees for creating new thoughts and develop innovative products as per the market trend

and customer’s needs. The Lego group focuses on continuous innovation and creativity through utilising the organisational resources and using the technological advancement so that it is posisbel for them to develop new products for the children (Forbes, 2013).

The company also focuses on supply chain management for expanding their business across the globe and in this regard the cash management, profit distribution, engagement with the suppliers and green supply chain management are effective strategic planning for enhancing innovation and creativity as well as creating values for all the stakeholders including the suppliers, employees, managers, distributors and product manufacturer and the end customers. The Sales and Operation Planning (S & OP) process is also effective where the company try to operate their business activities proficiently to increase their sales volume and profit level in each year. Retailer’s relationship and distribution are another strategic planning where the company develops string relationship with the retailers and the distributors where they manage the sales of the organisational products in the market (Prajogo, 2016). Lego focuses on cooperation and high communication with all the stakeholders for running their operational activities strategically for contributing in continuous improvement of the quality products and efficient services so that it is easy to meet the expectations of the parents and create values for then by delivering quality and innovative products at effective price (Lego, 2018).

High level of organisational management and operational framework as well as well-disciplined framework are also the contributing factors behind the success of the company Lego where the company focuses on developing appropriate organisational culture and enhance collaboration and communication at work where all the employees share their skill and experience to develop new creative product that may attract more customers in the market. Hereby, blue ocean theory is effective in this company Lego, where continuous innovation and creativity are contributing factors for Lego’s success in which the company aims at values creation, technological advancement and developing quality product that attract more parents at the international markets. These factors further help the company to gain high market share through improving their sales volume and profitability. For example, the company Lego movies during 2009 is another creation which attract more non-customers in the market which in turn provides a scope to the company to create new market share and strengthen their customer’s base. During 2010, the company focuses on creating new network through social media and strong network connection in the gaming world to attract potential buyers in the market and this further helps the company to introduce innovative products that

care create values for the consumers. In addition to these, Lego Universe is another creation of the company where the organisation Lego also focuses at online gaming products rather than only focusing on physical games. This practice further helps the company Lego to attract the customers who have high preferences o online and internet gaming practice. this create new customer base that helps to strengthen their customer’s base through innovation and creation by utilising technological advancement (Forbes, 2013).

Hereby, the blue ocean strategy of the company is the main contributing factor behind the success of the company Lego where the organisation tries to strengthen their market position and grab the new opportunities of market expansion across the globe through technological advancement, innovation and creativity. In this context, the company focused on increasing the market share in the USA and the Eastern Europe as there is rapid growth in the gaming industry which provides an opportunity to the company Lego to expand their business and strengthen their customer’s base through delivering high quality and innovative gaming products to the customers. Developing the innovative products and enhancing creativity in the level of gaming increases the product line of the company which in turn helps to retain long term customers and meet tehri expectations and increase their interest to play the innovative gaming both physical gaming and online gaming. Expansion of electronics activities, engagement with eh customers through the online website of the company as well as two-way communication an inefficient service of the company Lego is effective to enhance creativity and build trust and loyalty among the customers.


It can be concluded that, the company Lego is the largest toy manufacturing company in Denmark focusing on creativity and innovation for attracting the audiences in the market by delivering high quality and creative products with latest technology in the era of globalisation and digitalisation. Lego’s success depends on the factors such as customer centred approach, latest innovation and creativity to serve the customers, technological advancement, caring the children, maintaining quality of the products as well as open ended innovation and blue ocean strategy of the organisation through which Lego is successful to enhance brand reputation and establish the business at the international market. As per the SWOT analysis and Porter’s five forces, the company has the opportunity to expand their business through innovation framework where all the experienced employees try to develop creative products for the children which in turn helps the company to strengthen their customers’ base in long run. Blue Ocean strategy in the company is also effective for creating values for the customers as well as inspiring the new generation in the society by enhancing their skill and abilities for critical thinking and getting proper solutions of the puzzles created by the organisation.


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