Business Environment of LEGO


  • Unit No: 1
  • Level: Undergraduate/College
  • Pages: 20 / Words 4961
  • Paper Type: Assignment
  • Course Code: L/508/0485
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Organization Selected : LEGO


Business environment is a combination of all the internal and external factor that directly affect entire functions of company such as customers, management, workers and so on. Mainly, the business environment is dynamic as it continuously changing. Along with this, it is totally different form one place to another and from region to region. For example, political condition of UK is totally different from another country (Bovee, 2010). This will aid organization to attain various opportunities in which they easily improve their performance level at market place. Current report is based on LEGO, is a line of plastic construction toys. It is a privately held business organization that serve various products like, LEGO interlocking plastic bricks and so on. This project discussed about different types, purpose of business organization with its legal structures. Relationship between organizational functions which is relate with organizational structures is also mentioned in this project. Along with this, positive and negative affect of macro environment on business operations are also mention in this project. At last, Strengths and weaknesses interrelation with external macro factors is also discussed.


P1 Different types and purpose of organizations and its legal structures

As per current scenario, various type of business organizations are operate their activities to accomplish their target in appropriate time span. In this, some companies are operating for making profitability and other work for society development. Thus, it is important for manager to effectively understand the purpose of business so that they can easily established their positive image. Mainly, there are three type of organization such as private, public and voluntary. All these are operating their activities with their specific purpose.

Private organization:

These type of business are owned by small family, provide investors for attaining success at market place. In this there is no control of legal bodies because it is owned by private people. The main aim of this type of business organization is to gain profitability level. For this they serve their quality products and services to customers. Along with this, they try to introduce their business at higher level in order to enhance their productivity level (Bryman and Bell, 2015). LEGO is private company as it is a line of plastic construction toys which are produce by the LEGO group. This company was established in 1949 with the name of The LEGO Group in Denmark country. In this they operate their business in delivering new and innovative services to customers with the purpose of attaining profitability level at market place.

Purpose of LEGO: The main purpose of The LEGO Group is to enhance their productivity level by delivering quality toys and plastic bricks. Along with this they try to make their customers base strong. This will help them in increasing their brand image in market place and at the same time also capture market share form its rivals (Buckley and Casson, 2010).

Legal structure of private organization: It consist various examples of owing a business activity. All these can be understood by following points:

  • Sole Trader:This type of business is operated by single person with the purpose of generating money. Along with this, all the decisions and liabilities is highly owned by an individual. A single person who start and control business is also able to pay credits and attaining profits as well. One of the main benefit of this type of organization is to take quick decision. On the other side, drawback of this business is that it required lots of investment to operate organizational activities.
  • Partnership:When two or more than two person comes together for operating business is called partnership. Along with this, all the partners are sign deed of partnership in which they are able as well as responsible for all kind of debts and profits. In this, all the partners share responsibilities to control the business.
  • Limited company:This type of business organization has separate legal identity and operated by board of director. Along with this, there are limited liabilities which is based on guaranteed ratios.
  • Cooperatives:These kind of business activities are owned by its employees with the purpose of generating profits. In addition to this, it is necessary for all the workers to contribute within the organization to make effective control on the business activities.

Public organization:

These type of business organizations are control by government bodies. It is wide in nature as they operate their business with the purpose of providing betterment to society. Along with this, they provide their share from IPO in order to raise their funds. Thus, it is vital for them to utilise their resources in optimum level in order to provide number of benefits to society (Commander and Svejnar, 2011). Bank of England is public organization, which is the central bank of the UK of Great Britain and Northern. This bank was established in 1694 as it is world's 8th oldest bank. Along with this, it is owned by stockholders. The bank is responsible for managing monetary policy.

Purpose of Bank of England: The main purpose of this bank is to work for monetary stability. In addition of this, they serve financial services to larger number of customers (CuervoCazurra, 2011). Bank also provide personal banking services for workers in order to enhance their living standard.

Legal structure of public company: It includes various term which can be defines the legal activities are as follows:

  • Central government:It includes all the administration department which helps in regulating the country. Along with this, UK government develop various rules and regulations which shared by state and central agencies.
  • State government:It is refer to the separate unit who operate government functions. Along with this, it is consider as an important as it provide control to education institutions and many more with the purpose of providing them betterment.
  • Local government: It includes all the public administration in which they cover all the local part of economic. In this, the main aim of this is to improve the policies to enhance the economic growth.

Voluntary organization:

These type of business organizations are operate their activities for improving the economic condition. It is not regulated as well as controlled by any kind of legal authorities. Along with this, it is refer to non- profit organizations in which they put their efforts for providing social welfare by giving advantages to society. UNICEF (United Nations Children's Fund) is a voluntary organization as they provide developmental assistance to children and their mother. They also provide emergency food and health care services to children's.

Purpose of UNICEF: The main purpose of this organization is not generating profits but also provide unique programs to children's with the purpose of realize them about their rights (Gebauer, Paiola and Edvardsson, 2010). For this, they provide various development programs to children and mothers for their betterment.

P2 Size and scope of range of different types of organizations

In market place, every business organization having their specific size and scope in which they operate their activities. With the help of this company easily improve their performance level at market place (Halbert and Ingulli, 2011). In this context, size and scope of various organizations are as follows:


  • Size:LEGOis a line of plastic constructions toys which is privately held firm in Denmark. This company formed in 1932 with the purpose of providing quality products such as vehicles, building and working robots. Along with this, they also produce new products like they change the design of kiddicraft bricks.
  • Scope: In this, LEGOoperate their business for attaining profitability level by delivering LEGO bricks to young children. In addition of this, six bricks of LEGO of 2* 4 studs which can be combined in approx 915,103,765 ways. Under this, the designer employees are more than 19000. As the main aim of this company is to provide quality products and services to its customers as per their needs.

Bank of England:

  • Size:Bank of England is central bank of UK which established ion 1694 with the purpose of providing banking services to public. It is world's 8tholdest bank as it operate their activities in various countries. Along with this, it is privately owned as well as control by stockholders.
  • Scope: As Bank of England operate their activities for providing services to public for their betterment. In addition of this, bank tackled two main areas by ensuring the functions efficiency such as monetary stability and asset purchase facility. As a central bank, they are not offer customers banking services but it manage public facing services.


  • Size:United Nations Children's Fund is voluntary firm which provide humaniyarian and developmental services to mother and children. It is established in 11 December 1946 by United Nations General Assembly. They operate their activities in 190 countries with the purpose of delivering development services to children.
  • Scope:As a voluntary organization, UNICEF work for development of children and mothers then they provide emergency food and healthcare services. One of the main purpose of this company is to promote health and well- being to children (Hamilton and Webster, 2015). In addition of this, they also established various policies and programs for betterment of society.


P3 Relationship between different organizational functions and how they link to organizational objectives and structure

Every business organization having some specific objectives and they operate their functions accordingly. As LEGO operate their business in various countries in which they affected by various factors. Thus, it is important for manager to effectively evaluate their activities for making appropriate results (Hilton and Platt, 2013). Along with this, company also set different organizational functions for execute their activities with the purpose of attaining desirable objectives in appropriate time frame. In this the main aim of this organization is to generate larger profitability by delivering quality services to its customers. For attaining the same, LEGO provide new and innovative services to make their strong customers base. In addition of this, company make their LEGO bricks effective which may leads in attaining competitive advantage form its competitors. Mainly, company manufacture LEGO brand toys which consisting interlocking plastic bricks. For attain success at market place, company define various functions such as HR, marketing, finance and many more. All these functions of department are highly interrelate with each others. This will help in attaining objectives in an appropriate frame. In this context, interrelation of organizational functions of LEGO are as follows:

Marketing department: For understanding customers taste and market trends, marketing department play important role. In this manager of company undertake an effective research in order to understand customers needs. With the help of this, LEGO can easily serve their toys and attain customers satisfaction. This department is relate with production function as it helps in delivering quality products and services as per customers taste. It contribute in attaining set goals and objectives in appropriate time frame.

Human resource department: It is one of the important department of business organization as it helps in recruiting as well as hiring skilled and capable workers who are able to perform all the task in effective manner. In this, manager of The LEGO is to make as well as develop policies and strategies to make their process appropriate. Along with this, the main purpose of this department is to prepare compensation, performance appraisal and many more (Kang, Lee and Kim, 2010). This department is relate with marketing function because the manager of marketing help in finding the able employees which helps in attaining desirable objectives.

Finance department: Enough finance resources are play important role in managing entire activities of the firm. This department is responsible for making as well as preparing budget for providing adequate finance to all the department (Kian Chong, Shafaghi and Leing Tan, 2011). With the help of this, LEGO easily attain its objectives and at the same time also enhance their productivity level.

Production department: This is one of the effective and important department through which LEGO produce their quality toys to fulfil their needs and wants. In this marketing activities and are highly relate with production department. Thus, it is important duty of manager to evaluate customers needs and wants before manufacturing products. This will helps in increasing the chances of attaining set objectives.

Organizational structure: It define various based which implement by the company at the time of producing its products and services. As all can be understood by following points:

  • Geography based:LEGOorganizational structure is based on various regions. Like customers are from various regions so that firm serve their services accordingly.
  • Function based:In this, the organizational structure is segment as per its functions which is set by the company like, marketing, human resource, finance and many more.
  • Product based:Under this, LEGOsegment on the basis of products which is manufacture by company by considering customers requirements. In addition of this, LEGO serve toys to children as per their needs and wants. In addition of this, the organizational structure is based on its products.
  • Customers based:In this, company segment their services as per customers buying behaviour as it helps in satisfying their needs and wants in an appropriate way.


P4 Positive and negative impacts the macro environment has upon business operations

Macro environment consists different kinds of factors which impact on business operations, decision-making and profitability in both positive and negative manner. It affects a firm majorly when it conducts business on international level (Klapper, Lewin and Delgado, 2011). As LEGO Group is the largest toy making company of world in terms of revenue so, in order to determine impact of macro environment upon operations, PESTLE analysis is going to done by management in following manner:

Political factors: It has observed that LEGO firm has made policies to not participate in political event. This makes difficult in controlling intellectual properties which further impact on supply chain.

  • Positive impact:For reducing cost of production and enter into such market area where sales volume can be increased, LEGOGroup needs to follow political situations. It will give advantage to this firm to run operations in a smooth manner (Klapper and Love, 2010).
  • Negative impact:Some political rules like high import duties in some nations, stop LEGOto enter in such market era. Therefore, to reduce cost of production and make them more competitive, this firm force to outsource its production line in developing countries.

Economic factor: Economical crises of a country majorly impact on performance of a company in terms of production and sales. In this manner, performance of industries in toy sector including LEGO Group not seems to be satisfactory especially in Europe because of Euro Zone crises.

  • Positive impact:Outsourcing goods in other developing companies help this firm in decreasing production cost.
  • Negative impact: As LEGOGroup is founded by Danish Company so, due to outsourcing commodities in European countries and products are not manufactured by labours of this country, it increases chances of not welcome by devotees. This would produce negative impact on sales performance and profitability as well.

Social factors: It is duty of every organisation in a country to invest their funds for society development. So, in this manner LEGO Group has promised to UNICEF for make an investment of near about 8.2 million dollars in upcoming years.

  • Positive impact:As products of LEGOGroup are most closely connected to children in emotional manner, therefore, it gives advantage to this firm to manufacture such goods which acts in healthy way on minds of them (Prajogo, 2016). Long term relation can be made by John Lewis through developing a proper plan where CSR activities took place.
  • Negative impact:Today, children are seemed to be mature more as compared to earlier days so, demand of them related to playing toys are increased at fast rate. It would negatively impact on existing goods of LEGOGroup as this firm has to make improvement in production.

Technological factors: In toys industries, they have to modify their technologies on regular basis so that higher expectation of customers can be fulfilled.

  • Positive impact: By advancement of technology and collaboration with Texas instrument, products of LEGOare manufacturing in high superior manner which are helpful not only for playing but also education purpose (Ullah and Lai, 2011). In this context, one of the best product is Ninjago characters which is creation of animated series.
  • Negative impact:Due to growing demand in new media age, it is difficult for toy industries to keep interest of customers towards products in large manner. Any kind of change will lead to risk of failure.

Legal factor: Each company of a country are needed to follow rules and laws of marketplace where it carriers operations or transactions.

  • Positive impact:Rules and regulations regulated by government helps a firm in securing its intellectual property and ideas. In this manner, one of a reputed company of China named by Coko has made same products like LEGO, so due to legal laws this firm has to apologize in front of LEGO.
  • Negative impact:Because of legal laws, every organisation has to be cautious as well as careful about its design which consumes much time in securing and making use of patents.

Environmental effect: It is mandatory for all toys or manufacturing firms to concern more on waste system in order to protect environment.

  • Positive impact:Usage of Eco-friendly toys help children from avoiding many kind of bacteria and frugal infections that comes from plastic products generally.
  • Negative impact: As per environmental standard ISO 14001, all firms deal in constructing sites are certified due to climatic changes. Therefore, LEGOGroup need to produce wooden toys in place of plastic ones.


P5 Internal and external analysis of organizations in order to identify strength and weaknesses

Both internal and external factors are highly affect the business activities in positive and negative manner (Welford, 2013). Thus, it is important responsibility of LEGO manager to evaluate entire factors with the purpose of reducing negative impact on company. With the help of this, firm improve their overall performance at market place and at the same time also established competitive place. For this, LEGO conduct SWOT analysis are as follows:

Strengths: It is referred to those area where company is best in their operations. As there are some strength of LEGO:

  • Toy with a difference:LEGOconsider as a set of bricks which can be used in 915 , ways and combinations. This is main strength through which company operate their business in success level.
  • Creative expression:LEGOis a toy company which defines creative expression through which kids gain skills who are regularly play with LEGO
  • Variety of options:LEGOdefine variety of options which helps in evaluating creativity in LEGO This will contribute in inviting number of customers towards its products.
  • Tie- ups with movie franchises:As company is associated with Harry Potter along with they also has movie titles which may contribute in inviting more attention towards its products and services (LEGOGroup – SWOT Analysis, 2017).
  • Multiple Themes:LEGOtoys consist multiple themes which define new and creative experiences to children. With the help of this, they provide lots of memories for adults and children as well.
  • Attention to detail:LEGOhas quality toys which is always papular as they easily grab attention of customers. As intrinsic detailing in every toys define a perfect detail which helps in increasing sales of the company at market place.


  • Expensive: LEGOtoys are more expensive as compare to another companies so that middle class people are fails in buying its products.
  • High cost of research:Under this, LEGOUSP is relate with appropriate age group toys. As company tries to make new design which required lots of research which increase overall cost.
  • Taste of customers: LEGOproducts are only for kids age group as everyone can not taste its products. Thus, few kids are know about Logo toys.
  • Cost of materials: LEGOtoys are made by ABS plastic which is consider as a high grade plastic and it is also more expensive.


  • More parental focus on creative toys: LEGOfocus on development of children in which they invest in toys. For example company is beneficial for developing brain and skills as well.
  • Increase in activity driven learning: As various schools are focus on learning thus LEGOmanufacture interesting toys that help children to increase their core concepts. The results is that various schools are investing in toys and it is consider a high opportunity for LEGO to enhance their brand image (Werther and Chandler, 2010).


  • The threat of substitution: LEGOtoys are more expensive as some time it is not affordable by customer. So that focus on cheaper building blocks toys.
  • Counterfeits: As there are various counterfeits are available in market which is produce of cheap plastic. Thus, it is consider a major threat for LEGObecause it reduce the sale of the company.

P6 How strengths and weaknesses interrelate with external macro factors

For attaining success at market, company needs to evaluate the external macro factors with strength and weaknesses. This will helps in determining the ways to enhance productivity level of the company. LEGO is biggest company as they operate their business in international level with the purpose of grabbing attention of the children towards its toys (Wild, Wild and Han, 2014). For analysis this, LEGO conduct PEST for defining the interrelation with strength and weaknesses are as follows:

Political: Every country has their political condition which directly affect the LEGO activities because they take source from another countries. This will directly affect the production cost.

  • Strength: The main strength of this is that LEGOmake their products more competitive which enhance tits brand image.
  • Weakness: Due to political condition, it is difficult for LEGOto control intellectual properties as well as supply chain also.

Economical: Under this 80% product outsourcing in European nations along with 20% is based in Billund.

  • Strength: By this LEGOcan easily reduce their production cost and making their products more attractive.
  • Weakness: Due to this, the product cost is high which is difficult for middle class people to consume. This will negatively affect the brand image.

Social: LEGO offer their products to children with age group of 3 to 15. along with this, kids are more demanding towards the toys.

  • Strength: Due to this, LEGOeasily produce new and innovative toys which invite larger number of kids in front of toys. This will increase the profitability level of LEGO.
  • Weakness: Under this, LEGOdoes not having any kind of accurate and successful strategic plans which may increase risk factors. As it negatively affect on overall performance of the firm.

Technological: As per current scenario, new generation use digital gadgets as compare to traditional toys. Thus, LEGO also use digital technologies within their production line to make quality and digital toys.

  • Strength: The main strength of this is that LEGOcan enhance their brand image and customers base as well.
  • Weakness: Due to this, cost of the company get increased because its products are more expansive in which some customers are not able to consume. This will reduce the productivity level.


From the above mentioned report it can be summarised that, business environment is effective combination of internal and external factors which influence entire business activities in positive and negative manner. For this, company have to consider all the factors of business environment before executing entire activities of the firm. It helps in enhancing the chances of attaining desirable growth at market place. Along with this, business environment is complex in nature as it directly affect the decision making process of the company. Various type of business organization such as private, public and voluntary are also comes under business environment. For attaining success at market place, it is important for manager to effectively analysis internal and external factors in order to reduce the chances of arising any kind of negative issues. This will contribute in attaining desirable goals and objectives and at the same time also also increase the chances of establishing competitive image at market place.

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