A value chain analysis is carried out by The Lego Group, so as to determine how the maximum attainable value can be offered to the customers for purchasing its toys. A value chain analysis involves three steps:
Activity Analysis: In this aspect, the organization has to analyse which all business activities will lead to more profits and sales volume of toys and which all activities that are to be controlled or eliminated which will lead to loss. In order to increase the brand image of The Lego Group, they explored new opportunities and business activities like setting up of LEGO media, developing video game software. For instance, the activities affected the sales stagnation happened in 1998, which lead to the first ever financial crisis of the group, has to be evaluated and removed (Reynolds, T. J., & Olson, J. C. (Eds.), 2001)..
Value Analysis: In this phase, the highest value that each product can come out with is analysed. Lego Group’s introduction of Fitness Program in which, the main focus of streamlining the production method, lowering organizational layers, to take up more responsibilities and high focus on customers. For giving more value to the customers and to get a good customer base, the group introduced new and improved products like LEGO Star Wars, LEGO DUPLO brand and so on.
Go Evaluation and Planning: Evaluation and proper analysis of the product lines of the group ought to be done and gauged whether any modifications have to be made so as to achieve optimal results and planned accordingly to carry out requisite actions (Mintzberg, H 1994).
Value Proposition: Analysing the value proposition for each product line is a crucial aspect in the business strategy of Lego Group. As a result of this, in 2004, Lego products earned 19% profit margins from retail selling. Around 35 percent of the overall revenue growth was from the contribution of sales volume of LEGO Star Wars product line.