The internationalization process of LEGO Group - a case study

Pavel Služevský

Master's thesis

Abstract:

The aim of this thesis is to provide an insight into the internationalization process of the LEGO Group, and the main focus is to analyze the LEGO Group's internationalization steps and process with a known internationalization theory-model, namely the Uppsala model by J. Johanson and J. Vahlne (1977), that originated in Sweden. This model focuses on the gradual increase in involvement, and the gradual commitment to foreign markets, with a strong focus on current experience and knowledge and the gain of new experience and knowledge with each step along the process of internationalization. The available research done with this model suggest that companies begin with low-risk, low-commitment modes of entry, for example exporting through shipping/export agents, followed by higher-risk higher-commitment modes of entry, such as own exporting companies, establishing sales subsidiaries, or wholly owned production facilities abroad. Therefore, the underlying concept is that companies gradually move into a market as they gain more knowledge and experience and reduce uncertainty in the new market. Moreover, the Uppsala model deals with the preferences of firms to enter certain markets that are close to their home country in terms of psychic distance, which could be explained in degrees of differentiation in language, culture, political systems, and other factors affecting communication, cooperation, understanding, and generally the sentiment in the new market entered about the services/products offered and the companies themselves. The Uppsala model is one of the most widely used and influential models of internationalization and is being continuously updated by the authors. As mentioned before, the focus is on the internationalization process of the LEGO Group analyzed by the Uppsala model. LEGO is a Danish company with focus on plastic bricks - toy brick sets - that allow children and adults to explore their creativity and imagination. Today, LEGO is known all around the world for their iconic bricks and mini-figures, so we could say that their internationalization choices and decisions led them to become a global leader in the toy industry. At the beginning of this research, it was expected, based on the knowledge about LEGO, that LEGO Group's internationalization processes were in line with the Uppsala Model theory, and this expectation was later challenged. The research for this thesis was conducted mainly on the internet - through research papers, theses, case studies, newspaper articles, and blogs. (Hult et al., 2020) (HKT Consultant, n.d.) (Angola Transparency, n.d.

Abstract:

The aim of this thesis is to provide an insight into the internationalization process of the LEGO Group, and the main focus is to analyze the LEGO Group's internationalization steps and process with a known internationalization theory-model, namely the Uppsala model by J. Johanson and J. Vahlne (1977), that originated in Sweden. This model focuses on the gradual increase in involvement, and the gradual commitment to foreign markets, with a strong focus on current experience and knowledge and the gain of new experience and knowledge with each step along the process of internationalization. The available research done with this model suggest that companies begin with low-risk, low-commitment modes of entry, for example exporting through shipping/export agents, followed by higher-risk higher-commitment modes of entry, such as own exporting companies, establishing sales subsidiaries, or wholly owned production facilities abroad. Therefore, the underlying concept is that companies gradually move into a market as they gain more knowledge and experience and reduce uncertainty in the new market. Moreover, the Uppsala model deals with the preferences of firms to enter certain markets that are close to their home country in terms of psychic distance, which could be explained in degrees of differentiation in language, culture, political systems, and other factors affecting communication, cooperation, understanding, and generally the sentiment in the new market entered about the services/products offered and the companies themselves. The Uppsala model is one of the most widely used and influential models of internationalization and is being continuously updated by the authors. As mentioned before, the focus is on the internationalization process of the LEGO Group analyzed by the Uppsala model. LEGO is a Danish company with focus on plastic bricks - toy brick sets - that allow children and adults to explore their creativity and imagination. Today, LEGO is known all around the world for their iconic bricks and mini-figures, so we could say that their internationalization choices and decisions led them to become a global leader in the toy industry. At the beginning of this research, it was expected, based on the knowledge about LEGO, that LEGO Group's internationalization processes were in line with the Uppsala Model theory, and this expectation was later challenged. The research for this thesis was conducted mainly on the internet - through research papers, theses, case studies, newspaper articles, and blogs. (Hult et al., 2020) (HKT Consultant, n.d.) (Angola Transparency, n.d.

Keywords

internationalization, lego, lego group, uppsala, uppsala model, analysis, case study, international, management

Language used: English

Date on which the thesis was submitted / produced: 5. 4. 2024

Thesis defence

• Supervisor: prof. Dr. Stefan Eckert

Technical University of Liberec

Faculty of Economics

Master programme / field:
International Management / International Management