1.0 Introduction When it comes to playing fun with creativity, imagination and caring, Lego toys which are produced by Lego Company will be a choice instilled in the consumers mind. The Lego group was founded by Ole Kirk Kristiansen in 1932 that was the first generation in his family to run the company before passing it on to his son and to his grandson Kjeld Kirk Kristiansen who currently serves as the current CEO of Lego group. The companys main headquarters is situated in Billund which is a small town located Jutland Denmark. The Lego Group is currently ranked as the second largest toy manufacture company in the world surpassing being just behind Mattel company. Lego Group aims to make their toys product more unique than their competitors by enabling a child to explore the possibility in them by making full use of their creativity when playing their notable brick set product which requires the full creativity of a child in order for them to build their desired object with the brick set. The concept of the brick toys was only founded in the year 1958 as the idea of combining two bricks together makes it unique and can stimulate more on the childs brain activity. This enables the child to develop their creativity through playing and learning with the Lego set as the company does not fully focus on the concept of fun in their products but concentrating more on the process of learning on their products. Besides manufacturing toys product in more than 130 countries, the company also manufacture several learning materials such as storybook which features different Lego characters with different storylines. The company was named twice as Toy of the Century in which they still manufacture old-fashioned toys but is able to stand on top in the competitive market in the 21st century as mainly due to the uniqueness of their Lego bricks set which offer the learning process during the childs play.

2.0 Strategy Analysis Strategy analysis is defined as the initial stage during the process of the strategic management process which consists of the advance work which is required to be completed if one wishes to formulate and implement strategies effectively. (Lumpkin, 2012) Analyzing an organizations goals and objectives requires an organization to possess both a clear articulated goals and objectives so conducting the hard work of an individual throughout the organization would meet toward common ends. In the analysis of an external environment, managers needs to supervise and observe their environment as well as paying close attention to their competitors to make sure they do not out run their business in the competitive industry. When assessing the internal environment of a firm, the firm is able to identify both of its strength and weakness which can dig out the success and failures of a firm in the industry with its useful framework. Strategy analysis helps Lego to analyze their internal and external factor to help then gain a competitive advantage in the market in order to more successful than their markets.2.1 Scenario Planning Scenario planning is defined as the process of identifying trends surrounding the company to predict its future in the market by carrying flexible long-term plans. To increase their Asia markets, Lego Company applied scenario planning as a strategy to attract potential Asia consumers (Girard, 2013). The companies currently are in construction of a Lego factory in China which is expected to be completed somewhere around this year. By building a factory in China, the company will be able to generate more amount of profit as China is a low wage country which will help them in reducing production costs. A high demand of Lego products in the Asia markets also help the company to gain better Asia market shares.3.0 SWOT3.1 Strength Lego Companys strong product and brand portfolio are their strength in surviving in the competitive toys business industry. They are the pioneer behind the birth of the Lego mini figures which is a small plastic articulated character that symbolizes the company. This proves of their astonishing brand equity in the US market as consumers there recognize Lego for its brand uniqueness. Besides producing their own mini figures, the company also do licensing with other firm in order manufactures well-known characters mainly from movies or TV shows such as Harry Potter and the Simpsons into their Lego figures to attract larger fan base into their market. And since many of those characters are made from the US film industry, many Americans will purchase their favorite characters to support their countrys own star. As Lego company also plays a role in a childs education by encouraging them to make full use of their creativity to build the Lego set. This can increase their market shares as well as parents will choose their brand when purchasing toys for their children as the Lego set enables them to have fun while learning too.3.2 Weakness Despite Legos brand uniqueness success in the market, the price for a Lego set can be quite pricey as a single set of Lego cost between 30 to 40 Ringgit Malaysia with just a single character with their vehicles along with a few Lego accessories. The high cost of their product could prove to be their weakness in the long market run as new competitors can enter the toy industry market with cheaper toys product than them stealing away Legos consumers forcing Lego to lower their price in order to fight back. Lego Companys profit can be hurt drastically if done so as they mainly focus on one single category of toys. Another weak link in Lego Company is that most of its Lego products are mainly focused on male as they only produce one Lego products which are Lego Friends Set that features five girlish Lego characters with multiple sets which are for girls. If Lego Company can manufacture more girls set Lego products, they can expand their market wider as majority of girls will also be attracted to their markets. 3.3 Opportunity Lego Company can reach out to licensing deal with more company to produce wider variety of characters in Lego figures. For example, they can reach out to more sports company to produce famous athletes such as Ronaldo or Kobe Bryant in Lego figures to attract the sports fans into their market too. Lego Company can also reach out to the US to build a factory there so their products are able to reach the US markets easily which can make their markets bigger. By doing so they also help in reducing the unemployment rate there as they require workers to help run the factory.3.4 Threat Despite being financially success in the toys industry business, Lego Company still faces threats which prevent the company from reaching out its full potential. In todays generation, majority of kids are more attracted to electronic gadgets such as smart phones or computers and less to action figures toys compared to back then due to technology advancement. Lego Company should find way to fit their product into the gadgets industry such as producing more Lego video games or comics so gadgets user can reach out to their products easily. Also nowadays parents want their kids to have a socialize and healthy lifestyle so they would encourage their kids to participate in more outdoors activities instead of staying indoors playing toys such as Lego. Because of that kids will be more exposed to outdoor activities such as basketball so they will be less exposed to Lego products as playing Lego products usually require one to stay indoors. Lets assume that in the US there is no Legoland so even participating in outdoor activities, kids will not be exposed to Lego products causing the customer loyalty in the US to be weaken and sales to drop drastically. 4.0 PEST4.1 Political Product safety is every companys priority to their consumers to make sure the best product is delivered to their consumers without flaws. Whereas in Lego company case, the government might ban the plastic materials used to build the Lego toys product fearing that the kids as they might swallow the Lego toys causing harm among them. When government bans the plastic materials, Lego company might need to find substitution materials to replace their previous product material. In other case the company can create a bigger size Lego product such as action figures so that kids may not recklessly swallow the product due to its size.4.2 Economy The toys educational industry has proven to be economically stable during the previous few years. Whether the children are building with classic blocks, designing dolls, playing in virtual worlds or mashing up play patterns, the toy manufacturers are providing the kids more freedom to play toys according to their style.( Appell, 2014) The toys education industry is improving well so Lego needs to improve their product in order to fit into the industry well. Legos business will improve the economics on both the domestic and external market. For example, the US market has great opportunity for Lego Company to expand their markets to reach out to more potential consumers.

4.3 Social In social segment, there is several segmentation which Lego Company can focus to improve their segmentation in the market. For example, if they focus on the popularity growth of the social, the company may shift their markets to the place where popularity of young generation is more as they are the companys potential buyer. Staying ahead in the popularity growth segment allows the company to frequently have buyers to purchase their product.4.4 Technology With the advancement of todays technology such as the creation of website allows segmentation to be conducted easily in Legos company. For example, in Legos website, it contains history, products introduction and price to allow their consumers to have more details on their desired Lego products before purchasing it in their nearby toy store. 5.0 Porter Five Forces5.1 Bargaining Power Of ConsumersThe power of Legos consumers are quite high as they have low switching costs between alternative toys and even substitute products in form video games and television. Though other toys company such as Mattel tries to gain the upper hands by surpassing them in the bargaining power, Lego Company does try to make their product different by offering their consumers different themes of Lego set such as star wars, lords of the ring which put them in different standards with their competitors. They even produce several Lego video games such as Lego Star Wars to outshine their competitors. Lego company must also make sure they produce enough units to their retailers such as Toys R Us or Wal-Mart to maintain their bargain power as consumers usually visit toys store to purchase Lego products.

5.2Bargaining Power Of Suppliers Lego company makes sure that their suppliers have high bargaining power as they depend on them on the plastic and chemical materials needed for every production of their bricks product. They ensure that the materials value is equal to the materials quality to guarantee budget not being wasted on unsourced materials. Lego company must make sure that they do not violate their partnership agreement with their suppliers otherwise they might lose them forcing the company to find other suppliers which is time consuming.5.3 Threat Of SubstitutesSubstitutes are high on Lego company as kids nowadays are more interested in playing gadgets devices rather than traditional toys. Lego company also produces other product besides bricks such as Lego video games to kids who are more interested in playing gadgets devices. The purpose of doing it is to provide better technologies and service to their consumers than their substitutes. This allows kids of todays generation to reach out to the companys product easily too as they do not need to just play with their toys set in order to know about the company.

5.4 Threat Of New EntrantsThe chances of new entrants penetrating Lego company are weak as the product manufactured by Lego is unique and is a one of a kind brand which can only be produced by them. Legos partnership with several notable filming firms such as Lucas arts allows them to create unique movie characters in Lego figures which contribute to their big success in the market. This causes new entrants to require high investment in order create a product which is as unique as Lego and good marketing strategies which can make them an instant brand identity which is very a tough goal to be accomplished.5.5 Competitive Rivalry Within An IndustryCompetition rivalry of Lego company within an industry is also fairly low as they do not have many competitors which produce a product akin to theirs. Examples are Best-Lock from Hong Kong and Mega Brands from Canada which compete with Lego company at a lower price. Due to Lego companys long history in the industry, they have created a strong brand image to their consumers mind making them to think of their company first whenever they wishes to purchase a brick product instead of their competitors.

6.0 Strategy Formulation With the use of strategic formulation Lego group is able to accomplish sustainable competition benefits. With well-planned and integrated strategies, it is able to help Lego company to overcome any crisis problem which will lead to bankruptcy. 6.1 Industry Life Cycle Four stages are involved in every industry life cycle process which is introduction, mature, growth and decline stages. These are stages which Lego company had to undergone in order to be successful today. In the introduction stage, Mr. Olek Kirk Christiansen came up with the idea of creating Lego bricks product which are made of plastic that comes in multiple shapes and sizes (Sully, 2011). In the growth stage, lego products have reach out to the markets and demand for the product starts to increase gradually. The company is currently raising in the growth stage as reports shows that the company is earning more each year such as earning a net profit of 5613 million in 2012 but it would gross to a net profit of 6119 million in 2013. In the mature stage, the sale of lego products has reached its peak as sales volume and competition gets more intense. Everyone is already aware of Lego products in the market due to their success in the growth stage and will keep purchasing the product whereas competitions between Lego company and other toys firm also become stiffer as their competitors such as Mattel will start producing more and better quality toys product in order to penetrate their sales in the market in the process also influencing Lego companys sales. In the final stage which is decline stages, new products start to replace old products and the prices also competes intensely. Lego company start to produce newer products to keep out with the latest trends to keep their consumers interested in their products while prices also change due to newer materials and technology involved in their new products production.6.2 Differentiation Differentiation strategy is defined as a strategy used to make a companys product more unique than their competitors to attract different customer segments. The differentiation strategy applied by Lego company has been done more than a decade which has instilled their consumers with a strong mind set of their products mainly due to their brick toys which is a one of a kind product making it very unique in the market. Because of their products uniqueness. Lego company has a strong brand name in the toys industry which also makes their Lego sets to have sustainable value in the market. Earlier in 2014, a new movie called The Lego Movie was launched by warner bros which feature a film based in a Lego world theme. The movie itself not only helps in promoting the company, but also in bringing their products into a newer level of production from a toy set to a movie. This allows the company to create a new customer segments as they are able to attract the movie fans into their market once they saw the movie. 6.3 Overall Cost Leadership Overall cost leadership deals with providing the consumers with their products at the lowest price. This strategy is vital to be done in the presence of cost advantage in order to earn profit and in the same time giving their competitors a hard time to compete with them. High market shares can be achieved by the brand of Lego if they were to apply the strategy into their strategy formulation as the company had always sold their products at a higher price thus creating a barrier between the rich and the poor in purchasing their products. Lowering the price of Lego products will also increases the consumers purchasing power giving them higher chances of purchasing due to the price which is affordable by them. 6.4 Focus Strategy Focus strategy is a strategy in which a company concentrates its resource on entering and or expanding in a narrow market or industry segment to maximize consumers satisfaction. Lego is currently applying this strategy in the strategy formulation and the result has been well satisfied. The strategy is also risky to be conducted as targeted segments may not remain long for preferences from the market and ideas involving imitation of products by their competitors. However the company has gained well feedbacks from their Lego movie production as Lego fans will continue to talk about the movie for years to come until the release of its sequel and competitors are unable to imitate it. Lego company produces variety of Lego characters which is adored by the markets. 6.5 Corporate Strategy Corporate strategy is defined as the direction an organization takes and the methods involving various business operations cooperating to accomplish organization goals. By applying corporate strategy into their strategy formulation, it can give Lego the upper hand advantage in the long run of its business by easily defining their objectives and its operating business lines which will escort them to accomplish their goals. 6.6Market Penetration With good marketing penetration strategy implemented, Lego has earned double-digit sales growth in the U.S for eight continuous years. Legos licensed and the firms own brands have been well received by the public (Kell, 2013). Lego A/S reported that the US market sales rose to 26% in 2012 due to the U.S consumers strong demand for the toy makers iconic construction sets. The high growth simplifies that the company easily penetrated their competitors as a mix of licensed and Legos product which resonate well with their consumers. Every opportunity of penetration Lego company does in the existing market is less risky as the company has alternative sales channel such as auctioning their product in eBay to increase their sales volume. The companys contract agreement to several famous franchises such as Star Wars or Marvel Heroes is also the companys strength in market penetration as it offers product uniqueness to their consumers.6.7 Marketing Development Since Lego company aims to develop their marketing strategy to the Asian market, there are chances for Lego sales to grow saturated which can result in better sales and market shares for the company. Lego company has reach out their marketing development worldwide which increases sales volume as well as brand awareness for the product. The company is able to differentiate variety of market potential based on culture difference among country allowing the company to reach out to variety of consumers around the globe. For example, the company distributes their avengers super heroes set to be sold worldwide as the avengers are iconic superheroes icon culture which are adored by many. 6.8 Product Development Product developments of Lego company mostly occur in the headquarters situated in Denmark. The company already has listening post in Los Angeles to help in keeping up with the latest trends in the toys industry so the company is up to date. The creative team consists of more than 180 designers from around 24 nationalities. Lego bricks are manufactured at Legos factory located in Denmark, Hungary, Czech Republic and Mexico which are location the company have been chosen carefully in order for the companys manufacturing plant to be near to their important markets in Europe and North America. Lego company plans to expand their growth in the educational materials zone on their product to reach out to the preschools, and educational institutions scattered around the world with their Lego learning materials. Lego Company currently directly contact their consumers through its own sales channel, clubs and collaboration programs aiming to reach out easily to their consumers through greater contact methods by expanding offers available directly to their consumers. 6.9 Corporate Parenting Corporate parenting is defined as a company which controls another company by owning an amount of profit made by the other firm. Lego company is owned by two organizations which are KIRKBI A/S that owns 75% of the company and the Lego Foundation which owns 25% of the company. Both of the organization belongs to the Kirk Kritiansen family and Kjeld Kirk Kristiansen who serves as the current chairman of the company but the decision making process of Lego company still has to go through Jorgen Vig Knudstorp who serves as the president of the company. Having a parent company helps Lego company to minimize their exposure to risk as a parent company may in their privilege protect a business owners interests by minimizing its exposure to risk and by keeping creditors to a distance while reaping the benefits of the companys operation goodwill. A company has the ability to eliminate cash from an exposed operating company to a holding company on a tax free basis (Wright, 2011). Parent company helps benefit to the company. For example, Honeywell Primus company manage to take advantage of Zing to gain benefits in its operational control and costs with high-speed information network that converts engine data to alerts and maintenance requirements. The Zing service help saved the company diagnoses and successfully repaired an AOG issue in just a matter of hours which help saved the company from spending at a cost of $8500 for a last minute charter flight which saves the company executive on schedule (http://www.primusepic.com ). Lego company can take advantages of their parent company to overcome several market turbulence problems which helps the company to stay ahead in the market.7.0 Strategy Evaluation Strategy evaluation focuses mainly on the analysis and assessment of interventions at the level of strategic goals. In every business environment every strategy which have been implemented contain pros and cons effect which have to be carefully considered before commencing decision making process to accomplish organization goals. Lego company have to carefully select their optimal strategy which they see best fit for its organization goal and objectives based on their capability.7.1 International Strategy And Globalization It can be observed that the global world is gradually altering due to economic problems which move the potential consumers to achieve better living standards. Lego company can use it increase the companys revenue as the purchasing power of the consumers in the market are rapidly growing. By applying this strategy, knowledge also needs to be applied in the international marketplace which is required in the implementation of a marketing strategy. In order for the companys brand image to be recalled well by their consumers, Lego company needs to choose a better mode of entry to penetrate the market easily.

7.2 Licensing Licensing allows firms to penetrate international market quickly sine commitment in huge resources and capital are unnecessary. By applying licensing into their company, Lego company protects the companys product from their competitors such as preventing them imitating their products at a lower price to compete with them in the market. Currently, the company has gained licensing in the production of their own Lego video games and storybook which features different Lego characters and storylines used making imitation very difficult for their competitors.7.3 Franchising Franchising gives firms the permission of using the companys brand name to distribute their products from distributors under terms and condition agreed to be committed by both parties. Franchising enables a firm to have the opportunity to build their own capital as well as their earnings although initial fee is required to be paid in setting up the brand and the proven business format. High risk is involved in the process as high trust is needed in approaching the franchisee as the company needs to make sure that the franchisee can be reliable to distribute the companys product. Sine Lego company has no problem in distrusting their own name and product, franchising strategy is not recommended for the company to apply.

7.4 Wholly Owned Subsidiaries Wholly owned subsidiaries provide the company a full control of their operation. High risk is also involved as every decision making needs to be carefully planned to make sure the firm does not lose significant amount of profit when applying the strategy. Sufficient resources are necessary to be collected to increase better possibility and market share value. Lego company is capable of applying this strategy as huge capital and resources outlay is already featured in their current capability.7.5 Exporting Exporting strategy is defined as the strategy to allow the companys product to reach out to the international markets. Currently, this strategy has been applied by Lego company for more than a decade now as their products has reached out to more than 130 countries around the globe. They apply this strategy by building factories scattered throughout the globe such as in the USA, Mexico, and United Kingdom which give them easier access to foreign markets resulting in profit gained back to be successful.

7.6 Joint Ventures Joint venture is a legal organization which agreed to a short term of partnership in which the firms are liable for a transaction of mutual profit (http://www.law.cornell.edu/wex/joint_venture). Akin to partnership, joint ventures can be participated in numbers of 1 or more during business transaction activity. They are used widely to penetrate forces preventing them to enter foreign markets. Throughout the years, Lego company had already established their brand image strongly throughout the globe allowing more consumers to know of their existence in the market. This strategy is not applicable to the company as their products are already notable in the local markets.8.0 Strategic Implementation Strategic implementations are vital to be conducted after a formulation strategy to keep the companys original strategy to continue without any disruption. It enables Lego companys strategy to be applied into the market. 8.1 Leadership Leadership are important for every for every firms when it comes to the decision making process as they are the key to making to company a success in the market. A good leader takes the lead of the company with clear vision of the companys goals and motivates his employees to work harder and make the company a success (http://www.mas.org.uk/management-advisory-service/what-makes-a-good-leader.html). They are the reason behind every companys success. Legos company vision is Invent Future of Play which the company stresses on having fun while learning. By having every employee in Lego Company to have the mutual direction to help develop the company, it increases employees commitment which allows Lego Company to accomplish their goals easily. Lego should apply transformational leadership style into their leadership strategy to improve their leadership performance. Transformational leadership style is a leader process in rely on high levels of communication from the companys management to achieve goals (http://smallbusiness.chron.com/5-different-types-leadership-styles-17584.html). The leaders in this process always motivate employees to improve their productivity through communication and visibility. In Lego case, if they were to apply this into their leadership strategy, the employees will always work harder each day due to encouragement from their leaders. It also enhances their productivity which causes them to always generate ideas during meeting to give advice to aid the company to penetrate the market. It also gives their employees confidence to always voice out their ideas instead of keeping it to themselves The leaders of Lego company mainly focus on the primary object within the company and gives the smaller task to the employees.

8.2 Change Management Change management helps Lego company to improve their competitive advantage by developing flexibility which are vital in implementing changes required to meet markets needs. It also aid in discovering the flaws of the previous strategy applied which prevented the company from reaching out to its full potential. Previously in 1958, the Lego bricks were modified in terms of design which evolved them into the Lego bricks sold in the market today (http://history1900s.about.com/od/1950s/qt/lego.htm). By adapting to the markets current competition, traditional toys produced by Lego company previously needs to reformed in order to fit into the current trend. Technologies have been playing a vital role in Lego toys production since day one to help Lego company to be updated with the latest trend to have competitive advantage in the market. Change management strategy is applied by Lego company as it helps them to be updated with society changes which will bring impact to the firm.8.3 Corporate Governance Corporate governance is a system of rules practices and process which determine how a company is being directed and controlled. By applying corporate governance into their strategy, Lego company are able to build up their brand image in terms of environmental, health, safety, people, culture, responsibility and human rights. Lego company hopes to ensure high environmental standard in their brand image without harming any environmental factor. Lego company has phrase of Only The Best Is Good Enough which simplify how the company handle their business. It takes a long time to build consumer confidence which is why it is vital both the brand value and sustainability are reflected in the innovation process so that the company are able to continue to live up to high expectations they face (http://danishresponsibility.dk/danish-responsibility/innovation-and-sustainability-lego-create-consumer-confidence). The company is very high on committing their business on a very high standard through high ethics and integrity. This includes to always be committed to their consumers, stakeholders, expectations from institutes and entities by not violating their agreements between both parties (about.lego.com). Health and policy is applied to Lego Company as they do not wish any harmful exposure such as injury to their consumers when purchasing their products. Lego Companys sustainability and responsibility hard work put emphasize on the children around the world and their desire for learning while playing. Each day, the company brings those ideas to the companys production team to help make the desire wish come true to help build a better tomorrow for them (http://aboutus.lego.com/en-us/sustainability).9.0 Conclusion In conclusion, a good strategy management is needed by Lego company in order to have a clear direction for the company to stay in the long-term business. Having a clear strategic management can lead to several improvements to the company as well. By applying strategy management, Lego company can have a better view of the market to analyze the latest trend in society so they can fix changes to their products in order for it to fit in. After the analysis process, Lego Company formulates strategy to help the company in achieving its goals easily. The final strategy applied will be implementing strategy which involves predicting and determining the companys future in the market. By implying a good strategy management, Lego company is sure to increase their sales in the market and fewer problems will arise in the company.