THE LEGO GROUP: A YELLOW-BRICK ROAD TOWARD
SUSTAINABILITY? CASE STUDY SOLUTION
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pl
SYNOPSIS
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Sa
It is January 2024, and the LEGO Group (LEGO) based in Billund, Denmark, has welcomed Annette
Stube as its new chief sustainability officer.3 Stube’s role promises to position LEGO as an industry leader
in sustainability but is also expected to bring challenges. Just months prior, LEGO’s commitment to
manufacturing its toy bricks entirely from sustainable materials by 2032 encountered a setback (and media
n
scrutiny), when a promising material sourced from plastic bottles failed expectations.4 The fervour evoked
tio
memories of the 2014 backlash from environmental activists for LEGO’s long-standing partnership with
Shell plc (Shell), a global oil and gas corporation.
lu
The case traces LEGO’s journey toward sustainability and highlights the need for Stube to define a vision
for keeping LEGO on track for its ambitious environmental goals.
So
OBJECTIVES
• Identify a company’s sources of sustained competitive advantage through the application of the value-
rarity-inimitability-organization (VRIO) framework.
• Understand the contextual embeddedness of strategic partnerships during their formation and over time.
• Explore how the reputational risks associated with a strategic alliance can materialize in an adversarial
campaign implemented by external stakeholders.
• Devise crisis-communication strategies and distill lessons learned.
• Develop recommendations for a long-term sustainability strategy that maintains the sources of competitive
advantage identified through the VRIO framework and avoids any perceptions of greenwashing.
The Case Solution Starts From page 5
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pl
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ASSIGNMENT QUESTIONS
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1. How has a product as simple as a brick turned LEGO into the largest toy company worldwide? What
is the secret to LEGO’s sustained competitive advantage?
2. Considering the important role of strategic partnerships in LEGO’s approach to growth and
So
diversification, what were the likely reasons for LEGO’s alliance with Shell in the 1960s?
3. In 2014, nearly 50 years after the foundation of the LEGO-Shell partnership, Greenpeace initiated their
“Save the Arctic” campaign. What had changed, and why did Greenpeace address LEGO instead of Shell?
4. What lessons can LEGO glean from its past challenges regarding the dissolved partnership with Shell,
as well as its more recent setbacks concerning the usage of sustainable materials?
5. How can Stube advance LEGO’s leading role in sustainability, in light of its prior experiences? How
can she help LEGO avoid perceptions of greenwashing?
The Case Solution Starts From page 5
, e
pl
ANALYSIS
m
1. How has a product as simple as a brick turned LEGO into the largest toy company worldwide?
Sa
What is the secret to LEGO’s sustained competitive advantage?
To that end, the VRIO framework, first introduced by
n
Jay Barney in 1991 (see Relevant Readings), provides a useful tool (see Exhibit TN-1 for a suggested board
plan). discuss each dimension of the framework in turn while probing students with
tio
additional questions to highlight important nuances.
After the application of the framework, it should be clear that, even though its toy bricks may be imitated
lu
by competitors using reasonable effort, LEGO still enjoys a sustained competitive advantage for three main
reasons: (i) its generation-spanning emotionally charged customer loyalty across age ranges;6 (ii) its
So
ecosystem of bricks, sets, and strategic brand collaborations; and (iii) its continued introduction of new,
high-quality products resulting from a tightly-controlled yet flexible production process.
The Case Solution Starts From page 5
, EXHIBIT -1: VALUE-RARITY-INIMITABILITY-ORGANIZATION FRAMEWORK
VALUABLE (V) RARE (R) INIMITABLE (I) ORGANIZED (O)
Do LEGO bricks provide value to Are LEGO bricks rare in the Can LEGO bricks be easily Does LEGO leverage its
the consumer? company’s competitive space? imitated by competitors? competitive advantage?
At least three categories of value The LEGO system combines While LEGO bricks can be copied, LEGO has created a well-
are provided by LEGO bricks: several elements of rarity: the LEGO brand remains difficult to organized business model:
imitate:
e
1. Educational value. The 1. Simplicity and complexity. 1. Strong brand management.
versatility of the construction LEGO bricks come in a wide 1. Unique historical LEGO has invested heavily in
pl
systems fosters creativity, conditions. LEGO’s early building and extending its
imagination, and problem- investments in plastic brand offerings to reach
m
solving skills in children, moulding (and the resulting broader audiences across all
including sets that allow for
Sa
2. . 2. 2.
2.
n
tio
lu
3.
So
3. 3.
3.
The Case Solution Starts From page 5
SUSTAINABILITY? CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
It is January 2024, and the LEGO Group (LEGO) based in Billund, Denmark, has welcomed Annette
Stube as its new chief sustainability officer.3 Stube’s role promises to position LEGO as an industry leader
in sustainability but is also expected to bring challenges. Just months prior, LEGO’s commitment to
manufacturing its toy bricks entirely from sustainable materials by 2032 encountered a setback (and media
n
scrutiny), when a promising material sourced from plastic bottles failed expectations.4 The fervour evoked
tio
memories of the 2014 backlash from environmental activists for LEGO’s long-standing partnership with
Shell plc (Shell), a global oil and gas corporation.
lu
The case traces LEGO’s journey toward sustainability and highlights the need for Stube to define a vision
for keeping LEGO on track for its ambitious environmental goals.
So
OBJECTIVES
• Identify a company’s sources of sustained competitive advantage through the application of the value-
rarity-inimitability-organization (VRIO) framework.
• Understand the contextual embeddedness of strategic partnerships during their formation and over time.
• Explore how the reputational risks associated with a strategic alliance can materialize in an adversarial
campaign implemented by external stakeholders.
• Devise crisis-communication strategies and distill lessons learned.
• Develop recommendations for a long-term sustainability strategy that maintains the sources of competitive
advantage identified through the VRIO framework and avoids any perceptions of greenwashing.
The Case Solution Starts From page 5
, e
pl
m
Sa
n
tio
ASSIGNMENT QUESTIONS
lu
1. How has a product as simple as a brick turned LEGO into the largest toy company worldwide? What
is the secret to LEGO’s sustained competitive advantage?
2. Considering the important role of strategic partnerships in LEGO’s approach to growth and
So
diversification, what were the likely reasons for LEGO’s alliance with Shell in the 1960s?
3. In 2014, nearly 50 years after the foundation of the LEGO-Shell partnership, Greenpeace initiated their
“Save the Arctic” campaign. What had changed, and why did Greenpeace address LEGO instead of Shell?
4. What lessons can LEGO glean from its past challenges regarding the dissolved partnership with Shell,
as well as its more recent setbacks concerning the usage of sustainable materials?
5. How can Stube advance LEGO’s leading role in sustainability, in light of its prior experiences? How
can she help LEGO avoid perceptions of greenwashing?
The Case Solution Starts From page 5
, e
pl
ANALYSIS
m
1. How has a product as simple as a brick turned LEGO into the largest toy company worldwide?
Sa
What is the secret to LEGO’s sustained competitive advantage?
To that end, the VRIO framework, first introduced by
n
Jay Barney in 1991 (see Relevant Readings), provides a useful tool (see Exhibit TN-1 for a suggested board
plan). discuss each dimension of the framework in turn while probing students with
tio
additional questions to highlight important nuances.
After the application of the framework, it should be clear that, even though its toy bricks may be imitated
lu
by competitors using reasonable effort, LEGO still enjoys a sustained competitive advantage for three main
reasons: (i) its generation-spanning emotionally charged customer loyalty across age ranges;6 (ii) its
So
ecosystem of bricks, sets, and strategic brand collaborations; and (iii) its continued introduction of new,
high-quality products resulting from a tightly-controlled yet flexible production process.
The Case Solution Starts From page 5
, EXHIBIT -1: VALUE-RARITY-INIMITABILITY-ORGANIZATION FRAMEWORK
VALUABLE (V) RARE (R) INIMITABLE (I) ORGANIZED (O)
Do LEGO bricks provide value to Are LEGO bricks rare in the Can LEGO bricks be easily Does LEGO leverage its
the consumer? company’s competitive space? imitated by competitors? competitive advantage?
At least three categories of value The LEGO system combines While LEGO bricks can be copied, LEGO has created a well-
are provided by LEGO bricks: several elements of rarity: the LEGO brand remains difficult to organized business model:
imitate:
e
1. Educational value. The 1. Simplicity and complexity. 1. Strong brand management.
versatility of the construction LEGO bricks come in a wide 1. Unique historical LEGO has invested heavily in
pl
systems fosters creativity, conditions. LEGO’s early building and extending its
imagination, and problem- investments in plastic brand offerings to reach
m
solving skills in children, moulding (and the resulting broader audiences across all
including sets that allow for
Sa
2. . 2. 2.
2.
n
tio
lu
3.
So
3. 3.
3.
The Case Solution Starts From page 5
