Market and Business Models

Porte uses five strong forces that he believes shape a market and assists in exposing the strengths and weaknesses of an industry. The forces are applicable in identifying the structure of a market and its corporate strategy. PESTLE points out factors that may affect an organization like competition form new entrants, power of supply, purchasing power and the threat from similar products. All these factors are collapsed under political, economic, sociocultural, technological, legal, and environmental factors. In his forces, competition in the industry, new players, seller power, customer power, and threat by substitute all point to the definition of a market and its ability to remain afloat during stiff competition. If a company employs the five forces, it can always be at an advantage over others. The ambitions of the Lego group was high and of great vision. It was on the eve of breaking even. The competition had now become very stiff, and this was threatening their existence. Further, the threat of online video games was imminent.
The company’s plan of making a profit has to change when a new development like the change from physical to virtual happens. For a company to attract investment, new staff is hired, and the levels of motivation for both management and staff need to be improved. The business plan is, therefore revisited and updated in anticipation for new trends and challenges. For LEGO to survive the change, it had to diversify. The company refocused its model to look at its core tangible product while at the same time allowing itself to explore other areas of entertainment. It explored the gap between digital media and physical LEGO products. Businesses handling both physical and virtual products are expected to simultaneously focus on improving both their business and operational models.

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