Environmental Scan

Topics: Motorcycle, Harley-Davidson, Strategic management Pages: 5 (1449 words) Published: November 19, 2013

Environmental Scan – Lego and Harley Davidson
MGT/498 Strategic Management
November 14, 2013
Mario Ducret

Environmental Scan – Lego and Harley Davidson
Internal and external environments are very important for businesses operating globally due to local and external competitions. Healthy businesses must analyze their internal and external environments in their strategy formulation. Strategic planning requires that an organization must initially scan the environment for the presence of numerous competitors as well as analyzing physical resources and skills of the workforce. Evaluation of the internal and external environments is then followed by crucial decisions regarding long and short-term goals and finally organizes for the implementation of the plan of action. The internal and external environments of Lego and Harley Davidson companies are described using an environmental scan. Environmental Scanning

According to Wheelen & Hunger an environmental scan “is the monitoring, evaluation, and dissemination of information from the external and internal environments to key people with the corporation” (Wheelen & Hunger, 2010, p. 98). External environments are identified by the possible opportunities and threats outside the organization. Internal environments are identified by the strengths and weaknesses within the organization. In addition, successful businesses analyze the following forces that drive industry competition, threat of new entrants, rivalry among existing firms, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers, and relative power of other stakeholders. Lego’s Internal Environment

According to Metcalf & Lafranco (2013), inbound logistics, which emphasizes on raw material, is fundamental in the company’s operations. It acquires her main bulk of chemical materials from Lanxess, a German company that provides standardized ingredients without any bottleneck that may interfere with Lego’s company. Lego further focuses on their product’s future demands by ensuring proper product mix. Although it is a cumbersome and technical forecast, the company has always done it successfully via utilization of software and analytical approach in achieving their goal. Moreover, Lego has optimally managed their manufacturing process in a way that high quality products are produced with minimal incidences of faultiness and wastage. The company’s patented plastic ingredient ensures durable product and desirable colors as well as adherence to the European CE-labeling thus ensuring conformation with the European Union legislation (Hjuler & Robertson, 2009). Additionally, Lego has outsourced their distribution to DHL Excel Supply Chain in Eastern Europe hence reducing excess capacity during summer when sales are low. It further helps them to concentrate in the production services and letting experts do their distributions. Lego has also diversified their operations such as entering into a strategic partnership with organizations such as Lucas Arts and Warner Bros that has enabled Star Wars and Harry Porter act as the savior of Lego (Metcalf & Lafranco, 2013). Hjuler & Robertson (2009), posit that several businesses combinations that Lego has entered itself in make it enjoy indirect marketing thus contributing to their dramatic increase in sales. The company has been expanding their production facility closer to their customers as well as numerous promotional strategies such as conventional media and philanthropic charity. The company also uses superior prices and avoids any engagement in price strategy and associates their high prices with better quality. It has also integrated some of their programs with educational institutions as a way of improving their products. Lego’s External Environment

Considering Lego’s bargaining power, their significant supplier is within the chemical market that is very competitive thus reducing the supplier’s...
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