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Business (-level) / Competitive Strategy, G2 (DICE4 Becky, DFLL3 Keely,…
Business (-level) / Competitive Strategy
LEGO
Crisis
By late 1990s
Expansion
and
Diversification
Straining
the company
⬆️
Dabble in various businesses
1998
Huge financial losses
1999-2003
Both sales and profits were extremely difficult
Price competition in the toy industry
1978
The patent expires
Many plagiarisms are happening
2002
Large amount of unsold inventory
Holding 40% Christmas inventory
Imitated by competitors
New fashion products
Retailers have private labels
Sales stagnate
Relatively passive
Collaboration with movies
Fluctuations in sales
2003
The company's survival is at risk
Continuation of deficit
Self-regeneration is difficult
2004
Hire a CEO from outside to improve performance
From consultant to CEO
2005
From deficit to surplus
Still non-listed company
➡️ Family company
Recovering the
“Lego-ness”
Valuing
"System in Play"
Focused differentiation
Differentiation
Increasing cultural diversity
e.g. Publishing the series of Chinese Zodiac and disabled man in wheelchair minifigures
Environmental protection
e.g. The series of flower Bouquet, tiny plants and bird of Paradise
:star: Using renewable materials:
sugar cane
Various theme
e.g. Star Wars, Harry Potter and Super Mario
Focused
Concentrating on the building blocks segment
Background
Private company
founded by Ole Kirk Cristiansen
1932
Furniture
1939
Wooden toys
1960
100% Plastic
➡️ LEGO “brick”
1969/1972
LEGO DUPLO for small kids
Targeted at children from 18 months
1978
Mini-figures
1992
Star Wars sets
1988
MINDSTORM®
Robotics with MIT
1996
First LEGOLAND
and
LEGO videogame
1990s
Brand extensions:
Clothing, watches, etc
Move away from the block
2000s
Partnership deal
Warner Bros
Disney ➡️ multi-year
First ever LEGO based movie
Exclusive contract for toy blocks
Dual strategies
Differentiation
Product features
The building blocks of any structure can be taken apart again to form something new. (My Own Creation)
Customization (indirect)
Cost leadership
Outsourcing production
eg. Flextronics
(Electronics manufacturing service provider)
3P
Positions
Resources owned or available
What do I
have
?
Product / Marketing / Systems Engineering
Paths
Opportunity, strategic options
What
else
can I do?
Touch screens / Cosmetics
Cost leadership vs. Differentiation
Dual advantage strategy
Strategic renewal
Losing alignment
Processes
Well-developed activities and routines
How do I
do
?
Technology on film, paper, and photochemical business
Dual strategies
Causes
Cost leadership
Consequences
Failing to provide real value added respectively to customers
Perform poorly
Solutions
:two: Trade-offs between cost and differentiation
:three: Successful differentiations
Reduce costs by creating more demand
Economies of scale in procurement
Adopting common components
Justify a slight price
Reflect the nature of product differentiation
To make the price increase exceeds the cost increase
:one: Clear strategic direction
Porter's generic strategies
Definition
Differentiation
Goal
Increase competitive advantage
Value creation for customers
Cost-control
Cost containment isn't a major preoccupation
How to create?
Customer value
Customer service
Customization
Starbucks
Product features
Smartphones
Complements
Apple ipod
Focus
Concentrate on particular niche markets
Distinctiveness to the customer
Differentiation focus
Exploit underserved or undiscovered segments of a target market
Excellent quality
Differentiation focus
Pursuing strategic differentiation within a focused market
Cost focus
Emphasizing cost-minimization within a focused market
Cost Leadership
How
Reduce production cost
e.g. Efficient logistics, low cost labor / materials
Offer lower prices to customers
Capture larger market share
Goal
Becoming the most efficient producer in the industry
:star: A framework that helps companies gain competitive advantage
Four possible generic strategies
Content
:one: Strategic Positioning
Generic business strategies
:two: Dual strategies
:three: Strategic renewal
3P dynamic capabilities framework
:four: Case study
LEGO
Internal attributes
:bridge_at_night:
External environment
:arrow_right:
Strategic fit
G2
DICE4 Becky
DFLL3 Keely
DFLL4 Cathy
IBS3 Lizzie
IPCM3 Vivian
DSEAS3 Dora
DFLL3 Tina
IBS3 Cyndy
Stuck in the middle
Differentiation
The source of competitive advantage
Value
Cost
The
scope
of
operations
Narrow
target
market
Broad
target
market
Broad cost leadership
Buying massive quantities of goods
from suppliers
Focused
low cost
Offering a limited selection
of consumer goods at competitive prices
Focused differentiation
Selling a wide variety of unique products for the everyday consumer
Broad differentiation
Offering designer merchandise
and providing exceptional service
FUJI FILM
Stuck in the middle
