Abstract
As a company, LEGO is doing well since it has control of over 8% of the global toy market, while still retaining its status as a family company. The instant essay is an evaluation of the Case Study that focuses on the status and growth of the company from its advent to its attaining the status of a global player in the toy industry. Based on a careful perusal of the case study alongside external research, it is evident that LEGO has an effective form of leadership that combines transactional and transformational leadership. Under the leadership, the company has been able to grow, through inter alia a competitive advantage based on superior product quality. As the company moves into the future, it needs to adjust its products to meet market needs and also diversify geographically to emerging third world markets.
Key Words: Transactional Leadership, Transformational Leadership, Competitive advantage, geographical expansion and innovative evolution.
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Introduction
Leadership, competitive advantage, and growth strategies are not only intertwined concepts but also fundamental to the success of a company. Leadership in this perspective relates to how a company is guided, controlled, and managed (Dartey-Baah, 2015). Competitive advantage relates to what gives a company and its products an edge over the competition (Elshaer & Augustyn, 2016). Finally, growth strategies relate to the planning that results in the expansion of a company in volume and scope. It is inter alia the combination of these three factors that have enabled the LEGO Group to succeed in a rapidly changing industry.
Effectiveness of LEGO Leadership
The leadership approach that has be en undertaken at LEGO through almost a century of existence has been effective primarily due to its ability to adjust to the situations in which the company has continually found itself. LEGO commenced as a family company making wooden toys within a small locality. Today, the company makes a combination of high-quality plastic toys and electronic child entertainment products on a global scale. The massive transition has been made while retaining the organization as a family company. The leadership style employed can thus be defined as a combination of transactional leadership and transformational leadership (Dartey-Baah, 2015). Transactional leadership has enabled LEGO to gradually build relationships with different entities as and when the situation demanded. It has also enabled the company to build a powerful and effective supply chain management on a global scale. The relationships and supply chain system have contributed exponentially to the success of the company and can thus be defined as effective. Conversely, the company has had a transformational leadership approach, based on innovation in leadership, production, and products. The company began with wooden products but kept on adapting. The move to plastic toys was risky since it was novel but eventually is paid off. Even in management, the company has not shied away from adjusting as and when the situation demanded, including handing over active management to a non-family member. The combination of transformational and transactional leadership has been so successful that the company controls over 8% of the global toy market.
Competitive Advantage and Its Challenges
LEGO’S competitive advantage has always been based on the premium quality of its products and the superior value that the products bring to the targeted customers. The company begun with wooden products and soon shifted to plastic so as to improve the quality of the products. The plastic product was patent protected for a time, then the patent ran out. From then on, the company sought to make better, more durable, and safer products than the competition. For example, one of the safety issues relating to plastics is its safety to children, based inter alia on the components of the paint used. LEGO goes out of its way to ensure that the quality of the paint used is safe for even the youngest children who use their toys. The primary challenge kindred to this competitive advantage relies on the high cost of producing superior quality products (Elshaer & Augustyn, 2016). Substandard products can be made at an exponentially lower cost thus being sold at a price so low that LEGO cannot be able to compete with it effectively. This challenge has a greater impact in the emerging markets where product quality is not well regulated. The sheer volume of the products made by LEGO, however, mitigates this challenge. Further, the company can develop a sustainable loyal market base, once again to the quality of its products.
Recommended Growth Strategies
For the company to retain its level of success and keep on growing, it needs to combine the growth strategies of innovatively evolving, and geographically expanding. Innovatively evolving entails continually changing the nature of its products to match the needs of the market. The global market for toys keeps on changing and LEGO needs to keep on changing its products to meet it. For example, physical toys were first replaced with the TV, then the smartphone, and will in future be replaced by the internet of things. The growth is like a pyramid where the most developed communities adopt the change first, then the rest of the world follows gradually (Gereffi, 2015) . Currently, the main market share for LEGO is the developed world, more so the European Union and the USA. Innovation is needed so as to retain this market. However, there are other parts of the world where traditional toys, TV, and smartphones respectively still have a market for decades. The products currently being marketed by LEGO do not need to be phased out as they are still marketable in these markets including developing countries. LEGO, therefore, needs to expand to these countries to combine the sales of new products and the sales of old products in new markets.
Conclusion
A company that has faced hardships over a period of over a decade then recovered and expanded can be considered as having effective leadership. In the 1990s, LEGO was considered as being on the verge of collapse but its owners able to make the necessary sacrifices, including a control to save the company. Regarding competitive advantage, LEGO has always used superior quality as a marketing tool and it has worked so far. As it moves into the future, the company needs to combine innovative evolution and geographical expansion as a growth strategy.
References
Dartey-Baah, K. (2015). Resilient leadership: A transformational-transactional leadership mix. Journal of Global Responsibility , 6 (1), 99-112
Elshaer, I. A., & Augustyn, M. M. (2016). Direct effects of quality management on competitive advantage. International Journal of Quality & Reliability Management , 33 (9), 1286-1310
Gereffi, G. (2015). Global value chains, development and emerging economies. MERIT Working Papers 047 , United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
