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Zhou Jing -SM9633 - Was Helpful
Business Research Methods (DMS 502)
University of Nairobi
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Part 1 Location Choice Introduction The location factor that breeds Lego’s manufacturing plant establishment in Vietnam involves the different factors of FDI location decision which capture the multiple aspects of the decision. These drivers can be classified as the economic and institutional environments, the industrial cluster environment, and firm-level factors: all these elements bring value propositions that can be of great help to Lego in the long term and its strategies. Economic & Institution Factor First of all, economic conditions and institutions play a major role in this sphere. Vietnam offers FDI an attractive destination because of its; Is a rapidly developing economy, enjoying a relatively youthful population, and has a relatively low labour costs. The country has had rather high GDP growth rates, approximately 6 to 7 % in recent years, which means that the market is stable and growing. Also, with the large population emphasis in Vietnam, its population is both young and large, which guarantees a large and growing labour force and consumer market. Due to cheaper labour as compared to other countries in the region, manufacturing costs are low and it is favorable to keep the prices low. On institutional structures, Vietnam has exhibited a good the shown a good progress in the improvement of the business climate. The government has put in measures that seek to encourage FDI and these include tax holidays, bureaucratic efficiencies, improving on physical infrastructure. Vietnam has been internationally recognized and is
considered more attractive by participating in several FTAs such as CPTPP and EVFTA which help improve market access conditions. Industrial level: The fact that there is already well-developed industrial clusters in Vietnam will pose a lot of advantage to Lego. The new factory is to be located in Binh Duong Province and the latter is one the prominent industrial provinces in southern Vietnam. It is characterized by a high level of concentration of suppliers, manufacturers, and logistics that would mean that supply chain issues could be easily managed, and the lead time is brought down considerably. Vietnam’s location near Ho Chi Minh City, one of the Southeast Asia’s fastest-growing economy hubs, grants MSEs access to good infrastructure such as ports, roads, and airports that are essential in procuring raw materials and shipping out products. Furthermore, as it has already been pointed out, electronics and high-tech industries are characteristic of Vietnam, and this aspect is also in harmony with the company’s focus on innovation. The local technology clusters and cooperating with the local technology clusters and utilizing the knowledge within these clusters can give Lego a boost when it comes to improving the utilization of technology within Lego’s production line, specifically in the aspect of automation, robotics, and the smart manufacturing systems.
Resource Portfolio and VRIN Analysis Lego’s resource inventory comprises of both the physical and non-physical resources that are vital to the firm’s competitive stake. The resources can be analyzed with the help of the VRIN framework (Valuable, Rare, Inimitable, and Non-substitutable). Valuable: The brand recognition and logo design of Lego is very strong and the brick shaped toy is immediately recognizable. The brand itself is a logo of creativity and quality that can attract a lot of customers including different generations. Furthermore, the company’s focus on innovation regarding Lego sets and licensing the company with popular franchises is a very valuable addition to the mix by managing to maintain and develop the desirability of the products. Rare: There is nothing similar to a Lego brick and the way these toy bricks can click into one another is inestimable. Until today there have been many knock offs, but none of the other brands has matched or even offered the standard and fit of the authentic Lego blocks. In addition, the Lego product portfolio containing a vast variety of specialty themes, and intellectual property licenses including Star Wars and Marvel are precious commodities. Inimitable: Lego Company has unique production systems and quality assurance that is hard for its competitors to copy. It also pays a lot of attention on the production aspect as it advances in technology and quality control to produce good quality products. Further,
organisational reputation and consumers’ loyalty are another key factor that gives the brand a competitive advantage important for competitors to imitate. Non-substitutable: This is because where Lego is concerned, the experience of constructing with Lego bricks is unique or, in other words, non-substitutable. Although there are other construction toys available in the market, the advantage, stalward brand name and product line of the lego toys cannot be easily challenging. There are added advantages of educational as well as developmental aspects of Lego play that add even more value to the product. Ownership Advantages (Os) Lego's ownership advantages can be categorized into three types: They are as follows The first type of leverage is known as Oa or asset based leveraging The second type of leveraging is known as Ot or the transaction based leveraging Lastly, the type of leverage is known as Oi or the information based leverage. Asset-based (Oa): Brand Reputation: A key intangible resource that Lego has is the brand which is an asset-based competitive advantage. The brand defines creativity, the quality, and innovation that give the company a competitive advantage over the other brands. Intellectual Property: The organization has many patents and trademarks regarding the design of the bricks and related toy sets, which protects the market part of the company.
Zhou Jing -SM9633 - Was Helpful
Course: Business Research Methods (DMS 502)
University: University of Nairobi
