LEGO Groups Marketing Success due to Life Cycle Thinking, Changing Operation Management and Issues - Case Study Example

Case Study Name Institution Course Lecture As Drejer (2002) states, Operation management is the process of managing and directing both the physical and technical functions of an organization. It particularly deals with manufacturing, production and development of products. Operation management deals with issues of instruction in process of management, manufacturing and production. Factory management, equipment supervision, production, industrial labor, trade, policy; system analysis materials and cost control are issues of concern in operation management. Operation management requires skills; creativity, rationale, analysis and knowledge of art, applied sciences and technology. Effective operations management ensures that business operations and issues are efficient in rations of using less resource and effective in meeting customer necessities. Operations management is important since it encompasses both services and goods. It also effectively and efficiently manages the productivity in an organization to ensure high productivity. This leads to economic growth and development and facilitate employees being paid high wages as well as lead to a boost in company's competitive advantage. Operations management is also imperative as it plays a strategic role in an organization's competitive success. This paper seeks to discuss operation management and operation issues facing LEGO group in meeting production, innovation and competitive advantage. The LEGO group is worlds’ fourth manufacturer of play equipment and fifth major producer of toys. It was established in 1932 in Denmark by Ole Kirk Christian, a carpenter. He introduced the company’s chief product the LEGO bricks and manufactured a tube to connect the bricks. Despite its success, LEGO Group has operational issues in innovation management. This is because of fear of competition from other companies’ especially the Asian company. Also, they wish to follow rules and regulations. This puts them in a dilemma on whether to publish or protect their innovations. The innovation management processes in Lego group need a supplementary and systematic approach to define and test its strategies. The LEGO group needs to work with the trends of the world and work with risks in different projects and innovation. To aid the assessment process it is essential to have research data in a database (Drejer 2002). Data is entered into the spreadsheet as a database, and all the requisite report on innovation is collected from that data. This helps the project managers as they have enough detail for qualitative analysis on the innovation. This helps safe on time as well as avoiding damage and loss. In addition, it facilitates innovation process. To rebuild profitability, the company needs to modify every aspect of its innovation often. That means eliminating inefficiencies and risks. Also, it should enhance the essence of innovation and capacity alignment with the market to compete with other companies. This is not a simple matter for the Lego Group; it requires insuring itself and employees of its industries from risk. The leadership needs to recognize and facilitate innovation in a creative yet conservative approach. As a way of analyzing this issue, handling as an assessment procedure is recommendable for Lego Group. It involves systematic assessment on risk to ensure action and accountability involved in an innovation (Chase, 2006). It also defines the net risk involved in making new steps in the process of production. Risk is first identified, assessed and its impacts determined. The assessment can be done through quantitive analysis to come up with the estimated value of loss or gain. Generally, it should indicate the expectable impact, loss or damage. Therefore, the assessment value is critical as it aids in implementation of the risk management plan. LEGO organization implements business projects, to include a definition and method of handling risks and opportunities (Chase, 2006). The method need to recommend appropriate and effective security controls for managing the risks before an innovation process. Life cycle thinking framework (LCTF) is the process of making people and companies much aware of the manner in which their innovations affect the environment. It creates awareness on pollution that comes as a direct outcome of utilizing a raw material in the production process. Although it is nearly impossible to undergo consumption of products (raw material) without environmental impact, Life cycle thinking framework helps people to formulate sustainable and conservative strategies. These strategies are meant to curb environmental degradation. LCTF is essential as it enables an organization to reflect on the entire life-cycle of a product. This is because production process of products has different environmental impacts in the different phases of cycle. For example, some raw materials have adverse ecological consequence when processing but are easy to use and recycle. The LCTF helps to study the environmental aspects and impending impacts all through the product’s life. It focuses on raw materials, production, packaging, use and disposal. The innovation and production processes need to consider the availability resource materials. LCTF analysis and measures the impact of production process in a society. It considers all inputs and outputs at different stages of life cycle. In addition, it considers different categories of environmental degradation in use of a specific resource, the impact on human and animal health. Natural and non renewable resources are continually declining. The laws and regulations expect companies to create and use sustainable yet, environmental friendly resources. Making LEGO Company conservative and sustainable requires huge investment. As Foss (2012) said, companies need to revolutionize and re-innovate methods of production in order to produce goods and services. Innovation has a valuable impact on the accomplishment of sustainable development. LEGO Company works comprehensively on innovation and development. It uses services and business innovation as a tool for achieving sustainability. It hence, shifted its source of raw material from wood to plastic in an attempt to prevent deforestation, soil erosion and air population. The concept of sustainable innovation as Foss (2012) dictated, means renewable, responsible, clean, zero waste and finance feasibility in society. It aims at getting new and superior ideas for innovation. LEGO group works to sustain zero level of waste by recycling products during the manufacturing process. Substances are used in consideration to their reusability after disposal. Life Cycle Thinking encourages a wider view during the development of products and services. It aims at consideration of material selection, production process and into consumer consumption and the end of life cycle. Browning & Crossley (2001) observed that, the global sustainable development challenges are majorly caused by emission of carbon. LEGO group centrally uses electric energy in the production process-plastic as a raw material is melted, casted and cooled in the production of bricks. The process require large amount of power. LEGO group uses renewable energy which emits less carbon emissions. The products of LEGO group considers environment during the process of production. LCTF promotes innovation which aims to generate new ideas in order conserve the society and environment. As the population constantly grows; the utilization of natural resources increases. As a result, it may lead into an imbalance in the demand and supply of resources. According to Alter (2008), the impact includes pollution, soil degradation, deforestation, desertification and climatic change. Continuous utilization of natural resources has elevated effects to the environment. It also causes the global climatic changes and the crisis of non renewable sources of power. …..Recommends, use of technology as a solution for the innovation of efficient and new sources of power to reduce the impact on the environment. Lego group traditionally used oil as a source of energy. In its innovation it introduced hydro electric energy. As Browning & Crossley (2001) states hydro electric power helps to produce energy by utilizing inputs which is easy renewable, environmental receptive and ensure consumption of less power. This helps to cut down cost of production thus improving the company’s global business operations. This is because lower cost of production automatically leads to an increase in profits Lego has sustained and conserved itself and its’ environ as a company; by using new eco pleasant power source. LEGO innovation had great influence from customers demand for environmental responsive products. Customers demanded for new and conservative products. As a result LEGO was compelled to build up new technologies, innovations and strategies. The application of quality man power, conservation of natural resources and ample capital indicates implementation of LCFT in LEGO. Therefore demonstrating a company aimed at innovation to transform and conserve society (Alter, 2008). Therefore, increasing productivity and gaining competitive advantage due to attainment of customer demands for environmental friendly products. Life Cycle Thinking encourages a wider view during the development of products and services. LEGO group works to sustain zero level of waste by recycling products during the manufacturing process. LEGO Company has pioneered the beneficial and proactive use of life cycle thinking in product development. This has been attained by adopting and adapting LCTF to design and modify technology. This has moved it towards the foundation and use of more design driven techniques for LCTF. Its’ alliance with science has promoted the development of strong relationships with LCTF in management, innovation and accounting. The group considers national and national regulations concerning issues of corporate social responsibilities. It always checks on employees’ work place to ensure employee safety. The group constantly strives to ensure favorable working environment for its employees. It protects employees, stakeholders and communities from environmental harm during its productions process. As a result LEGO group has thrived for many decades progressing constantly in its production, innovation and sustainable growth. Unlike its rival company’s’, some of which, have closed down. Others have deteriorated due to poor use of LCTF. Therefore LCTF is an essential aspect in designing, planning, controlling and improve an organization. The fact that LEGO group has applied it has made it improve its production. Capacity building fills the gap that exists between innovation and production process. It is a systematic development of an organization’s internal systems. It aims at improvement of organization’s processes, infrastructure employees and its external relations. This is aimed at realizing success in the organization. Capacity building seeks to improve the performance of vocations in units, departments, and the whole organization (Potter et al, 2004). It is essential as it aim at improving a company’s performance through designed reflection, planning and action. Particularly, capacity building is an in depth development of the skills and resources to attain organizational objectives. Thus organizational capacity building involves organizational training. The fact that LEGO group holds board meetings shows that they embrace capacity building. They facilitate in getting updates and implementing changes in technology. Meetings provide a platform for discussion on changes (Alter, 2008). For example, changes in technique of production, prices and existence of latest equipment. LEGO group has also built capacity by developing and improving its infrastructure, products and production process. It has moved from use of wood to plastic and finally adapted use of acrylonitrile. Also it has expanded variety of components for example gears, motors floors, universal joints and flags. It has adapted technology and invented computer and video games. These changes in design and products from traditional to modern product have helped to increase demand for its products. As well as created competition advantage through innovative production that helps cut down on production cost. In re –building its capability, LEGO group needs to create a very skilled and empowered workforce. The employees should work together as individuals, groups, teams to execute tasks (Chase et al, 2004). The organization should use a flexible and decentralized structure with a decentralized authority to manage departments. Education and training should be availed constantly to all employees. The training needs to aim at developing individual competence, value, attitude and talent. LEGO group should enlighten employees on need to learn, develop and to build strategies in technology and customer feedback. This must be controlled and designed to improve productivity and gain competitive advantage. Lego group needs to allow its employees to absorb knowledge from external sources. Integrative capability building allows firms to absorb knowledge from external sources. For example institutions of higher learning, course, seminars, induction and meetings (Chase et al, 2004). Also, they should encourage, motivate, reward and expect innovation from all departments of the organization. There should be research and development to link learning and knowledge to products and production process. LEGO Company needs innovation as a mechanism for designing new knowledge, improving productivity and competitive advantage. To increase competitive advantage LEGO group need to survey and apply scientific methods of research. Further analysis and solving complexities, innovation process and performances in each department should be encouraged. This helps to create inter and intra competition in the organizations. LEGO group therefore needs to invest resources in development, training, mentoring and learning of employees. All the managers and employees need to take part in planning and development strategies. LEGO should show commitment by showing interest in staff learning and encourage on and off-the-job innovations. In addition offer proper compensation and benefits helps to increase production and innovation. The firm should form routines. Routines are patterns of communications that embody flourishing solutions to specific problems. These patterns are resident in group behavior and individual behavior. Collaborations and partnerships can be a source for new organizational learning which helps firms to identify dysfunctional routines and avert risks. Building risk management strategies is another capabilities building aspect (Chase et al, 2004). It bridges production and innovation; digital, experimental, and learning while promoting organizational capabilities for competition in global networks The dynamic capabilities in LEGO group should be re-designed. This is through adaption of continuous radical changes in communication that opens up to new ideas, offer time for reflection and promotes enduring relationship. In concrete, LEGO group should as a practice, link human resource, planning, orientation and management of performance in the organization (Crisp et.al, 2000). As a consequence, this will help to maintain threshold, capacity, standards and hence guarantee competitive survival. The manufacturers, designers and sellers of different products and services in LEGO group should acknowledge the specialized needs of some of their customers. In turn they should respond to their tastes by offering customized products or services to these group of customers. LEGO group requires improving on marketing and promotion to increase supply chains and value network. Marketing fills the gap of realization in that, it communicates or promotes messages about the superior quality, enhanced services and better offer distinct to a particular product or service in comparison to the rest. Promotion aims at linking value to the price. In marketing, customers’ value and needs are considered. The sum total of benefits such as price, quality, delivery, relationship between the customer and the supplier should be communicated in interesting ways for customer to take them into account. Successful marketing based on customer value promote success to a business and endear long-lasting customer relationships. There are different marketing strategies used for launching or promoting sales. First, product strategy focuses on improving quality of the items or services. For products, they can bear the brand’s logo, slogans; incorporate a popular color or giving them names that customers can enjoy. Crisp et al (2000) stated that it might also involve an expansion of product or service line by including customized products or service. In turn, customers select products or services that represent their needs. The strategy communicates fresh concepts and variations in a product or services. Secondly, marketing in LEGO need to focus on distribution strategy where products and services are marketed through regions and locally specified shops. Marketing attempts to respond to varying demand in different seasons. Thirdly,LEGO should embrace marketing to provide information to customers about industry trends in various geographical areas and outlets. They guide customers to store outlets where they can order or purchase services and develops relationships. LEGO group requires marketing as it acts as a promotional strategy by communicating with customers in various ways. Information about products and services may be passed via Internet, in person or through direct mailing. Customers are informed about the unique qualities of LEGO products and in most cases make the bulk of promotional strategy. Finally, marketing focuses on pricing strategy where they may set high prices that signal prestige or luxury. At times it can offer low prices to sell high quantities products and services. Value pricing as stated by Crisp et al (2000) can also be practiced to increase customers’ comfort. Therefore, marketing and promotion are essential ways of building capability in LEGO Company .They create exposure and demand thereof increasing innovation, productivity and competitive advantage. In summary, LEGO group is a large, traditional organization that has changed its operation management and issues. Through research and development it has planned, designed and controlled innovation. The Company’s management realized the need to deal with operational issues to transform products and production process. They restructured their products and productivity into an environmental friendly way (Potter et al, 2004). The global competition has made it vital for LEGO to increase its focus on innovation, and thus advanced technology. To accommodate this need, requires flexible structure that allows the company to rebuild the organizational capabilities. Thereby improving sustainability through lower production cost, lower energy consumption, less waste and a healthy social and work atmosphere. References Alter, S 2008 Service system fundamentals: Work system, value chain, and life cycle IBM Systems Journal, 471, 71-85. Browning, M, & Crossley, T F 2001 The life-cycle model of consumption and saving Journal of Economic Perspectives, 3-22. Chase, R 2006 Operations management for competitive advantage New Delhi: Tata McGraw-Hill. Chase, R, Aquilano, N & Jacobs, F 2004 Operations management for competitive advantage Boston, Mass: McGraw-Hill. Crisp, B R, Swerissen, H, & Duckett, S J 2000 Four approaches to capacity building in health: consequences for measurement and accountability Health Promotion International, 152, 99-107. Drejer, A 2002 Strategic management and core competencies: theory and application Westport, Conn: Quorum Books. Foss, N 2012 Innovating organization and management: new sources of competitive advantage Cambridge New York: Cambridge University Press. Post, R & Post, P 2008 Global brand integrity management how to protect your product in today's competitive environment New York: McGraw-Hill. Potter, Christopher, and Richard Brough "Systemic capacity building: a hierarchy of needs" Health policy and planning 195 2004: 336-345. Rebitzer, G, Ekvall, T, Frischknecht, R, Hunkeler, D, Norris, G, Rydberg, T, & Pennington, D W 2004 Life cycle assessment: Part 1: Framework, goal and scope definition, inventory analysis, and applications Environment international, 305, 701-720. Read More