Strategy Enterprise and Innovation


Strategy innovation is an organisation process of reinventing or redesigning its corporate strategy to drive business growth, generate value for a particular company and its customers. It requires to bring changes new value proposition, services and production process. In other words it can define as a plan made by an organisation to encourage advancements in technology or product and services (Lambert and Davidson, 2013). It usually help in investing research and development activities that are essential for an organisation. In this report the organisation chosen is Lego, a line of plastic construction toys that are manufactured by The Lego Group. It was founded in 1932 and has become famous carpenter's workshop to modern and global enterprise that is now one of world's largest manufacture of toys.

This report is going to identify and key drivers of innovation that are contributing successful in business of Lego. Along with 4p's of innovation with Ans-off frameworks its evaluation and analysing best out come from it that is beneficial for an organisation. Moreover, implementing Blue Ocean graph comparing with other competitors to know its competitive position in same product line of business.

P1 Evaluating key drivers of innovation contributing success of Lego

Lego is one of largest manufactures of wooden toys. Its open innovation is a trendy and buzzword in business of toy industry sector. There are plenty of sources that are important and fundamental need to attain success in business. In organisation Lego innovation enables successful for their business but with practical implementation it will be less effective to attain competitive edge. Whereas innovation aims to achieve idea and innovation in companies by using both external and internal sources of knowledge. The key drivers of innovation contributing success for Lego are determined below:

Clear goals:

Clear goals are most effective when things are clear in an organisation. Innovation need to be strong part of company culture and strategy (Dodgson, 2018). Many experts of Lego emphasize important part knowing their goals towards open innovation both on corporate and project of bringing innovation in toys. On the other hand on higher levels, innovation process and goals should be well define to its employees so that they work towards it to achieve its motive. Moreover, attractive innovation will also help managers of Lego to bumps up collaboration and attain competitive organisation.

Facilitating collaboration:

Facilitating collaboration play's a vital part in success of innovation. Lego are utilising its connection open for collaboration  in different countries and its create expansion in their business and trust between parties of collaboration (Johnston and Bate, 2013). It is helpful for Lego managers to expand their business in many countries, it is helping to gain more market share and remain competitive in market of toy industry.


Transparency must be their in an organisation to bring innovation and become successful in a competitive market. Lego managers are providing transparency of their to its stakeholder as well as to their customer. It is manifested in nature and valuable to bring innovation in their product and services to their potential customers. Moreover, it boost innovation and generates economic scale and promotes collaboration and problem solving across company function.

Right channels :

Selecting right mode of action is good to start face to face interaction with right customers. Its is initial for an organisation to chose right mode of distribution channel so that they are able to meet customer's requirement easily and satisfy them in efficient manner. Lego managers are choosing right mode of distribution channel in order to meet customer requirements and solving out any queries if occur. From this mode Lego are able to attain more market share in different countries and gaining competitive advantage in market of toy industry.

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Commitment is the essential for an organisation. Lego are committing to their customer to provide better quality of product and services that meet up to expectation of customer. Building trust and working on ideas from the collaboration naturally take times. Lego are building collaboration steady, allocate enough resources and commit to come up with innovation in their product and providing premium quality of service to their customers (Huybrechts, 2012). Moreover, commitment are also increase chances of bringing innovation practices and results more collaboration online and announce innovation initiatives on regular basic.

Above discussed points are the key drivers of Lego organisation in achieving success from last consecutive years. They are coming up with various strategic innovation in their products and services according to their potential customers needs and demand. Moreover, there success is fully depended on its transparency with is customer and stakeholders and its help them to become successful and remain competitive in market of toy industry.

P2  Evaluate 4 P's of innovation mix in respect of  Lego

4 P's of innovation mix is also known as innovation mix which is developed by John Bessant and Joe Tidd. This tool enable an organization to identify what innovation process can improve and bring to business (Murugesan and Gangadharan, 2012). The innovation mix consist of product, paradigm, process and position. The 4 P's of innovation mix gives direction to organization that where they need to go and in which area of business that company needs to innovate. Space of innovation support idea process of idea generation and how new idea can be implemented. Lego use innovation mix to explore possible enhancement of each area of their business. The implementation of 4 P's of innovation on respective company are describe below:-

  • Product- What to offer?:- It is most commonly understood form of innovation or improvement of product or services that a company will offer to its end users. In other word it is related to innovation of everything which is related to products and services that what offer to customers. Lego company do innovation in their products and services which help them in attracting their customers and satisfy them with new technology, new design, new ideas. The respective company do innovation like they can introduce new style or design of interlocking bricks, they can introduce more technology based toys that attract more children or customers.
  • Paradigm- How to do frame what to do?:- Through this organization can improve the way of doing business. Paradigm related to mental model that shape what an organisation or business or company is all about and thorough it the business can plan or strategies the work and objective accordingly which help them in enhancement (Gronum, Verreynne and Kastelle, 2012). Lego can use paradigm as innovation tool like they can innovate their publication and marketing method such as they can publish their toys and other products from print form to online platform, through it they can attract more customers or users and visible to wide population.
  • Process- How to create that offerings?:- It is one of the important part of every structure in company. This tool not only include the preparation processes of products and services. IT include all steps such as supplying, workflow, hiring people and training. This can enhance to increase profit and give ideas to carry out new trends. It also focus on process through which products and services are created or delivered. Process part of innovation mix help Lego to enhance and innovate their process so that smooth functioning of business should maintain, employees do their work in effective and efficient ways and through it product manufacturing process also maintain.
  • Position- Where do we target the offering?:- It is consider as position similar to position of marketing mix but it is not. Position is related to the customers or any person perception. It refers to the repositioning perception of an establish products and services or process in a specific context. In other word it is based on innovation identify to change in how specific product and services or process is innovate and how it can be use (Lechner and Gudmundsson, 2014). Lego frame their products in such way that every individual can see it, for it they make innovative products or toys which attract everyone and creative marketing and publicity to target their audience in wide number.

P3 Evaluating Ansoff Matrix on Lego

Ansoff model is invented by H. Igor Ansoff. It is also known as the Ansoff product and market growth matrix, this is a planning tool of marketing that usually aids business by determining and analysing its products and market growth. It can be determine by focusing on whether products are new or existing and is the market is new or existing. This strategical planning tool help executive, senior managers and marketers of Lego by providing frameworks through which they can devise strategies for future growth. Ansoff matrix of Lego is describe four alternative of marketing strategies- market penetration, product development, market development and market diversification, which is describe below:-

Market Penetration:- 

In this alternative it cover those products that are in existence and which are also exist in an existing market. According to this strategy there is further exploitation of products without changing the products or outlook of products. Market penetration of Lego is possibly done through the use of various ways such as promotional method of respective company, putting various pricing policies which may attract more customers or audiences or one can design the distribution that is more extensive. In it risk involve in market strategy when consumers are not familiar with the products of respective companies.

Market Development:-

It is a situation when an organization plan to expand in new market or new areas of existing market where they want to sell same products and services to different group of people (Eesley, Hsu and Roberts, 2014). For Lego development in new market for products may be prove as good strategy if they follow following strategy such as the respective firm introduce unique product with new technology, if new market is not to different from one Lego is experienced and so on.

Product Development:-

It is a strategy when a firm try to create new innovative products and services which is targeted as their existing markets to achieve growth. It involves developing products range that available to current market of company (Lowe and Marriott, 2012). If Lego wants to expand in new market they have to do research and then develop additional products, they can innovate packaging of existing products, respective company can take feedback from customers and develop their products etc.


It is most risky strategy, in it an organisation want to their market share by developing new products and services in new market. It is most risky from all four strategy because both products as well as market required to develop. Diversification is of two type related diversification and unrelated diversification. To adopt diversification Lego can first identify its new market and design and develop products and services accordingly. It can be resulted as a reasonable choice for Lego if high risk converted into high rate of return. The additional advantage for respective company is that it involves potential to enhance foothold in an attractive company and it reduce the portfolio risk of Lego.  

P4 Evaluating Porter’s generic on Lego

Poter's generic strategy model is describe by Michael Poter in 1980, it evaluate about how an organisation pursue its competitive advantage in it chosen market scope. A competitive advantage is an advantage gain by offering greater and good value to customers in comparison with competitors (Lapalme, 2012). It can be done through by offering products in lower price or by giving more benefits and services which justify high price of products. There are four strategies that a company can select to place itself on a path which leads to success. The four strategies are cost leadership, differentiation, cost focus and differentiation focus. Lego use Poter's generic strategies to determine its firm profitability as compare to industry average, description of Poter's model on respective company is given below:-

Cost leadership:-

It is commonly use business strategy which is consider as try to gain an  edge on competition. Cost leadership means that a company is leading in market by controlling cost in one way or another. In this strategy Lego can use two ways for cost leadership - First one is that a respective company can offer its products or toys on cheap price than its competitors and convince customers to pick their products and services because its less expensive selection on shelves. On the other hand Lego can adopt a cost leadership strategy by manufacturing products at low cost and charge average price for the goods, in this case respective firm can make a large margin on per unit sales then its competitors. It seems easy choice for Lego to sell their products for low possible price but they have to make sure that respective firm sustain or carry out that plan for the long run.

Cost Focus:- 

This strategy of Poter's Generic Strategies is same as cost leadership, only difference is that in it an organisation can be focused on a specific niche of market. In other word  a firm not trying to focus on whole market or everyone, they only want to sell in a small portion of the market that focus on buying  a unique or innovative products (Battistella, Biotto and De, 2012). In the case of Lego if they manufacture those products which is not available or less available in particular market, by this they stand or create a great change to succeed. But if respective firm want to deal with broad market they didn't get growth potential, so for Lego if they adopt this strategy there is opportunities to become major players within niche market.

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The differentiation strategy is exactly opposite from cost leadership strategy. According to this strategy the firm are try to take over market form a unique quality and function of a products rather than easily try to sell their products and services at less or cheap price. If an organisation want to succeed by using this strategy they required good research and development, innovation and ability to offer high quality products. In this appropriate marketing is essential so that their target audience understand benefits of their unique and innovative products.  If Lego adopt it they need to have a unique products to offer for they also need strong marketing and advertisement plan to aware their buyers or audience about the item. Without having great marketing plan and team the respective company will left with a expensive or high price product which stuck on them as their wrong decision.  

Differentiation Focus:-  

It is similar with cost focus but it except a firm to do work within a niche market by trying to stand out on a products quality and innovation basis (Teece, Peteraf and Leih, 2016). It is not a point in this strategy that a company is offering least expensive products or most expensive products, as long a company offer exact products which customers is looking for and if a company justify its high price they are able to attract and grab a huge shares of niche market. So if Lego produce or manufacture expensive products and they are able to justify cost of products they can attract the wide audience which leads to growth of the respective firm.

P5 Blue ocean strategy to compare two other competitors of Lego 

Blue Ocean Strategy is introduce by W. Chan Kim and Renee Mauborgne in a book, it refers to the creation done by  company of new, uncontested market space which makes competitors irrelevant and that create new value for consumers while reduce cost (Adner, 2012) . It is based on idea through which every enterprise can earn high profit by developing demand in a market which is non- competitive. Lego use blue ocean strategy for comparing Lego with its other two competitors that are hamleys and hot-wheels (Sako, 2012). But according to data from brand finance, Lego is valuable or famous brand in toy manufacturing and packaging products industry. Comparison of all three same level toys companies or brand are given below:-





Products Offer

Lego only offer toys which is colourful interlocking plastics bricks.

Hamleys offers all type of toys, arts &  craft, dolls, soft toys and   games.

Hot wheels is toys brand which manufacture scale models of cars toys.

Target Audience  

Lego's target audiences are kids or children whose age group is between 4 years to 8 years.

Hamleys basic target audience are children or kids.

Hot wheel's target market are young adults and children group.

Target market on basis of income

The target market of respective company on   the basis of income is high income group and some range of middle income people who spend more money.

The price of toys or products of Hamleys are reasonable and affordable by middle income group. And it also offer price discount on special occasion like Black Friday.

The price policy of Hot Wheels is affordable by their consumers of almost every income group. Respective company sold their products on reasonable price at online because they save on distribution cost.


Form the above discussed point it is conclude that there are various key drivers of innovation which help Lego to be successful, which is one of the famous manufacturer of toys and they offer their products worldwide. The respective company use four P's of innovation mix to identify innovation process which can improve and bring growth to their business. They analysis and evaluate their business and business growth by using Ansoff framework and Poter's generic strategies. Lego also compare themselves with two competitors of same level and do analysis to evaluate.


  • Lambert, S.C. and Davidson, R.A., 2013. Applications of the business model in studies of enterprise success, innovation and classification: An analysis of empirical research from 1996 to 2010. European management journal. 31(6). pp.668-681.
  • Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and internationalization in innovation. Routledge.
  • Johnston, R.E. and Bate, J.D., 2013. The power of strategy innovation: a new way of linking creativity and strategic planning to discover great business opportunities. AMACOM Div American Mgmt Assn.
  • Huybrechts, B., 2012. Fair trade organizations and social enterprise: Social innovation through hybrid organization models. Routledge.
  • Murugesan, S. and Gangadharan, G.R. eds., 2012. Harnessing green IT: Principles and practices. John Wiley & Sons.
  • Gronum, S., Verreynne, M.L. and Kastelle, T., 2012. The role of networks in small and mediumsized enterprise innovation and firm performance. Journal of Small Business Management. 50(2). pp.257-282.
  • Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal. 32(1). pp.36-60.
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