Introd

uction
The development of economic integration and globalization of trade activities is progressing
strongly and significantly impacting society and communities in various aspects. Additionally,
global technology and supply chains are key drivers encouraging multinational corporations
to participate more actively in the global economy, aiming to maximize benefits in terms of
customer demand, goods, capital, and cost-effective labor in different countries. This has led to
a powerful and rapid process of economic globalization like never before.

Since 1988, Vietnam has been seizing opportunities for labor market and economic
development that the government has allowed through direct foreign investment (FDI). With
advantages in cheap labor costs, strategic geographical location, and favorable policies for
foreign enterprises, Vietnam has attracted multinational corporations from Denmark, South
Korea, Singapore, and Japan. Currently, FDI contributes 19% of GDP and provides 35% of
formal employment for workers, despite comprising only 3% of the total number of businesses.

With the comprehensive economic cooperation between Vietnam and Denmark spanning over
50 years, the trade relations between the two countries have witnessed strong development.
Bilateral trade volume has increased 5.8 times during the period from 2000 to 2020. Notably,
the establishment of a new factory in Binh Duong by LEGO, the world's leading toy company,
marks its globalization process in the Vietnamese market. In this assignment, I will analyze key
globalization factors and subsequently discuss the benefits and challenges in its operation.
Additionally, this assignment will provide specific evaluations along with examples of
LEGO's short-term and long-term strategies in the Vietnamese market.

Introduction of company (LEGO)

In the mid-20th century, the LEGO toy company became a global sensation and continues to be
successful today with its incredibly creative and high-quality building toys. The first LEGO toy
factory for children was established in Denmark in 1932, producing safe and innovative wooden
toys. Recognizing the potential of plastic toys, in 1949 LEGO began constructing multiple
factories to create the iconic products that define their brand. Currently, amidst the ongoing
globalization trend among multinational corporations, LEGO has invested in five factories and
numerous retail locations in various countries. Among these, LEGO is building a factory to
provide employment for 4,000 workers, aiming for sustainable development and delivering
quality toys to the Asian market with an investment of over 1 billion USD over the next 15 years,
all powered by solar energy.

I. Key factors that drive global commerce and trade

The process of global economic integration is increasingly being strongly promoted among
nations in order to leverage the different advantages of each region. Although globalization is
not a new concept, it has been in existence since 1870 according to Mishkin (2006). However,
in recent decades, despite tariff barriers and political issues, the integration and exchange
between countries have become stronger and interdependent in various aspects such as socio-
cultural, political, and economic relations. Some key factors driving this strong integration
include cost, market, environment, and competition. In this assignment, I will analyze and
evaluate each of these factors specifically.

1. Cost driver

Factors influencing an industry's economics include cost globalization drivers. These consist of
chances for global scale or scope economics, experience impacts, cost differences
between nations or regions reflected in sourcing efficiencies, and technological advantages. .
Firstly, the cost differential in production includes cheap labor costs, favorable rental costs,
and the cost of raw materials as a significant driving force for multinational enterprises. These
organizations can obtain significant reductions in overall production expenses by moving
manufacturing and production operations to areas with much cheaper labor costs. In addition to
increasing profit margins, this cost effectiveness makes it possible to implement more
aggressive pricing approaches in global markets. For example, China’s rise as a “world factory”
since the late 1970s has been attributed to the strategic coupling of local assets, particularly
low–cost labour in the coastal regions. These export-driven regions have faced previously
unheard-of difficulties since 2000, particularly the growing cost of labor and land, labor
shortages, policy changes, and the declining market demand of western advanced economies.
As a result, labor-intensive manufacturing firms have been moving from China to lower-cost
locations, such as inland China and neighboring Southeast Asia. Few studies have been done
on the expansion of cross-border production to neighboring Southeast Asian countries, such as
Vietnam, Indonesia, and Cambodia, in contrast to the many that have been done on the internal
industrial relocation within China, i.e. from the coastal regions, such as the PRD and YRD, to
the mid and Western provinces and cities, such as Wuhan, Chongqing, and Chengdu (He and
Wang 2012; Yang 2009, 2013).

Global scale and scope economics represent significant efficiencies and benefits that
companies can realize by operating on a global scale. Global scale economics focus on the
cost benefits derived from increasing production levels, where firms experience reduced
costs per unit as fixed expenses are distributed over a larger output. Conversely, global scope
economics emphasize the benefits gained from offering a diverse range of products or services
across various markets. According to McKinsey's research on the Asian market, Singapore's
GDP per capita stands at $51,000, significantly exceeding that of Laos by over 30 times and
surpassing Cambodia and Myanmar by more than 50 times, even outpacing the United States.
The income disparity among ASEAN countries is also pronounced, with a standard deviation in
average incomes over seven times greater than that of EU member states. This variation in
purchasing power necessitates that multinational companies customize their products (Global
scope strategy) to cater to diverse price points across different Asian markets. This
diversification allows the supply chain of multinational businesses to benefit from flexibility in
product distribution to demand markets, share skills and resources within the same
ecosystem, and optimize profits and valuable resources, thus avoiding waste.

 Evaluation :

Leveraging cost advantages such as lower labor costs, inexpensive raw materials, and the
benefits of global scale and scope economics in the Asian market presents both significant
benefits and challenges for LEGO. On one hand, these factors enable LEGO to achieve
substantial cost efficiencies, facilitating competitive pricing and enhanced profit margins while
increasing production capacity to meet global demand. Moreover, the diverse and rapidly
growing consumer base in Asia allows LEGO to expand its market reach and customize
products to cater to varying consumer preferences. based on a comparative study of labor costs
in different countries by the Reshoring Institute (2012), Nowadays, industrial firms are leaving
China and establishing new plants in developing, low-cost nations like Vietnam, Malaysia,
Thailand, and Mexico.

While the benefits of scale and scope provide significant opportunities for LEGO, they also
present challenges, particularly in ensuring consistent quality across various manufacturing
sites and understanding cultural differences in consumer behavior. Historically, LEGO has
occasionally overreached its capabilities, as evidenced by its ambitious expansion into theme
parks, book publishing, and specialty toys, which ultimately led to a substantial decline by 2004.
Following this setback, the company underwent a successful recapitalization, refocusing on its
core business of building kits. This strategic shift resulted in a remarkable recovery, with sales
reaching approximately $3.5 billion in 2011 and generating profits of $1 billion. By 2012, LEGO
had surpassed Hasbro to become the second-largest toy manufacturer in the world (Kim Girard,
2013). although this is a challenge, LEGO needs to be serious about coming up with an
effective approach to a potential market like Asia.

2. Market driver

Nowadays, the market driver is becoming increasingly attractive and brings immense benefits,
prompting investors and multinational corporations to seize opportunities for customer needs
converge around the world and global marketing. First of all, customer globalization is the
emphasis on the market or product, which means focusing on consumer groups who are looking
for the same advantages or demands that the same technology can fulfill, emphasizing their
commonalities regardless of where they live. (Svensson, 2002). Onkvisit and Shaw (2009)
identified it was more challenging and stressful to operate across markets than at domestic.
However, cross-cultural flows, movements and exchanges still occur largely between local
places and identities, made up of cultural and social differences (Knight, 2000). Based on Reza
Selim's report in 2024, japanese retail giant Seven & i Holdings wanted to see huge growth for
its 7-Eleven convenience store chain globally and would accelerate its entry into Europe, Latin
America, the Middle East, and Africa. Seven & i Holdings is ramping up global expansion for its
7-Eleven chain, aiming for 100,000 stores worldwide by 2030. The above demonstrates the
great success of multinational corporations when approaching different cultures, yet they still
consistently have similar shopping needs without significant changes. While globalized products
and brands may succeed in some markets, Businesses can still completely face other
challenges. For instance, Diallo and Siqueira (2017) noted that in Brazil, consumers' purchase
intention and their past brand experience are influenced by their awareness of a company's own
price in a moderately medium manner. But in Colombia, this position becomes less significant.

Furthermore, global marketing can also be crucial and bring several benefits for the
expansion strategy of multinational companies. A well-implemented international marketing
plan can improve a business's reputation and brand image internationally. Customers'
perceptions may be positively impacted by this increased visibility, which may raise brand value
overall and foster loyalty and trust (Gabriel Fairman,2013). For example, One of Nike's key
strategies for international marketing is to collaborate with prominent athletes and sports teams
across the globe. The brand's ambassadors are widely recognized in every market where Nike
operates, including Tiger Woods in the United States, Cristiano Ronaldo in Portugal, and the
Liverpool football team in the United Kingdom ( Bree Recker, 2023)

 Evaluation :

The convergence of customer needs on a global scale presents significant opportunities for
companies like LEGO to enhance their market positioning. By strategically understanding and
adapting to shared customer preferences across diverse cultural landscapes, LEGO can
effectively expand its product offerings. This alignment not only broadens the appeal of LEGO's
products but also facilitates entry into new markets, ultimately driving revenue growth and brand
recognition.

However, Cultural sensitivity is a crucial challenge to take into account for businesses
adapting to customer needs converge around the world, especially for brands like LEGO that
want to appeal to a broad range of consumer tastes. There are serious hazards to a brand's
reputation when something that is seen proper or acceptable in one cultural setting is viewed as
undesirable or irrelevant in another. According to Anette Mikes ( 2013) , products that are
popular in the West aren't necessarily well-received in Asia. Expanding the product line locally
and obtaining licenses associated with particular film franchises could be an expensive solution.
One LEGO executive stated that the company's biggest danger in Asia could be "diminishing
play time and the threat of a disruptive educational product innovation."

Moreover, The establishment of a consumer community is a significant benefit of

successful global marketing, particularly for a brand like LEGO. By fostering a sense of
belonging among LEGO enthusiasts, the company creates an engaged customer base that can
be leveraged during market entry into new regions. Lego has recognized the significance of
community engagement in their marketing approach. For ardent adult fans to exhibit their work,
exchange ideas, and meet like-minded people, the association organizes conferences and
meetups. In addition to giving everyone a sense of community, these events give Lego insightful
feedback from its more seasoned fan base.

3. Enviroment driver

The worldwide competitive environment within an industry is largely determined by the

government's global control mechanisms, which have an impact on all other elements of the
global strategy. These motivating factors include the existence or lack of advantageous trade
policies, technical standards, laws, and regulations, as well as competitive rivals or clients that
the government operates or subsidizes.Tax incentives and political stability are pivotal
factors in shaping the landscape for Foreign Direct Investment (FDI) in Asian markets. Firstly,
Many Asian nations strategically employ tax breaks, reduced corporate tax rates, and various
fiscal incentives to create an attractive investment climate for foreign investors. Investors often
compare tax burdens across countries that are similar in market size and geographic location.
While the international tax competition tends to increase, tax rate cuts in these countries are
considered inevitable (Van Cuong Dang,2021). These measures serve to lower operational
costs, thereby enhancing the potential return on investment.
However, The implementation of tariff reduction to attract foreign investment still has its
drawbacks. there is no concrete evidence that this tax cut will help attract FDI inflows in ASEAN
countries. The reduction in tax revenue will decrease infrastructural investment, causing a
decline in the provision of public goods and services and distortions in allocating government
resources.
In addition to tax incentives, political stability is essential drivers of investor confidence. A
stable political environment, characterized by predictable policies and the rule of law, mitigates
risks associated with investment and encourages long-term commitments from foreign
investors. A total of 111 investment-promoting regulations were passed by 108 nations in 2016,
106 of which were developing nations (UNCTAD, 2017). Particularly in developing nations
where foreign investors are known to have significant bargaining power, these developments
demonstrate how FDI can influence a state's sociopolitical climate by boosting the government's
willingness to support a stable sociopolitical environment and lower political risk to foreign
investors. (Assi Okara, 2023). Effective administrative frameworks include strong anti-
corruption measures that have brought more benefits to foreign investors by enhancing
transparency and accountability, further reassuring investors about the integrity of the
market.

 Evaluation
Tax incentives provided by various Asian nations represent a critical benefit for reducing
operational expenses for multinational corporations, including LEGO. For LEGO, these
incentives not only lower production costs but also facilitate the implementation of
competitive pricing strategies, enabling the company to maintain market share and drive
sales growth in increasingly competitive environments. Political stability serves as a
fundamental pillar for fostering a conducive investment climate. A stable political environment
bring several benefits for LEGO to pursue strategic investments in new manufacturing facilities,
research and development centers, and regional headquarters. Additionally, a politically stable
environment strengthens the company's ability to interact with local stakeholders in an
efficient manner, which facilitates more seamless operating procedures and improves overall
business resilience. The factory located in Jiaxing, China and Vietnam is the clearest evidence
of the sustainable development of the political environment in the Asian market and the ambition
to expand market share in these two potential markets.

4. competitive driver

In the increasingly interconnected global marketplace in which multinational corporations

(MNCs) operate, competitive pressures greatly influence their performance and strategy. The
benefits of these dynamics of global competition to multinational corporation is Innovation and
R&D, Risk Diversification. Firstly, The necessity to respond to diverse consumer preferences
and rapidly evolving market trends encourages firms to engage in robust R&D activities. To
align with global development trends and consider China's specific national conditions, the
domestic economic growth model has entered a critical period of transition from traditional
factor-driven mode to innovative-driven mode. Technological innovation has become the
primary driver leading China's economic development (Hansen et al., 2020). By developing
unique products and adopting advanced technologies, MNCs can better meet the demands of
global consumers, differentiate themselves from competitors, and capture greater market share.

Although Innovation and R&D have brought many benefits and are an environment that
promotes healthy competition, trademark copyright or intellectual property rights are an
issue that Asia has taken seriously recently to support FDI attraction. An understanding of these
other factors is essential for lawmakers, policymakers, researchers, businesses and investors in
these economies. IP practices in China have strengthened, both to attract foreign R&D and to
protect Chinese intellectual property. This is still a work in progress—concerns persist about
enforcement of IP laws and contractual arrangements that require the sharing of IP—but there
has been progress ( Jim Euchner, 2020)

Furthermore, One essential Benefit utilized by multinational businesses (MNCs) to control and
reduce risk is Risk Diversification. Multinational corporations (MNCs) can manage possible
risks related to market volatility, political unpredictability, and economic swings by dispersing
their operations throughout several geographic regions. Some businesses are shifting to a
"China plus one" strategy, which involves distributing production between China and a
Southeast Asian nation like Vietnam, Indonesia, or Thailand, as a result of the U.S.-China trade
war. However, regional issues such as the 2004 tsunami or the Asian financial crisis of 1997
make the case for greater geographic diversification (Shih Willy, 2020)

 Evaluation:

Thus, in a robust competitive environment through the strategy of Innovation and R&D, Risk
Diversification has brought LEGO benefits in terms of Competitive Advantage and
Financial Stability. Through innovative practices, LEGO has distinguished itself in a highly
competitive toy market. The incorporation of advanced technologies, such as augmented
reality in product experiences, enables LEGO to remain relevant in a swiftly evolving
marketplace. Research suggests that companies prioritizing innovation can attain superior
market positioning and customer loyalty.
Moreover, Operating in diverse markets allows LEGO to spread its risk across various
geographic regions. Risk diversification can mitigate the impact of localized economic
downturns or political instability, ensuring a more stable revenue stream. However, Risk
Diversification could lead LEGO to serious challenges such as brand inconsistency. As LEGO
expands into various markets, the need to adapt products and marketing approaches to local
tastes must be balanced with the preservation of the brand's core identity, which can lead to
potential conflicts in brand messaging and a serious decline in revenue and market share.

II. Strategic opportunities and challenges associated with operating in a global

enviroment

1. POLITICAL

Political stability is a core factor for Vietnam to attract foreign investment. In the context of
conflicts and turmoil occurring in many places around the world, Vietnam is evaluated as a
country with stable political conditions under the unified leadership of the Communist Party
of Vietnam. This foundation provides foreign partners with confidence in creating a safe
investment environment in Vietnam. Vietnam's current economic achievements are also
attributed to its multi-dimensional foreign policy and integration into the global economy.
Additionally, Vietnam has expanded its export market to countries in the European Union
(EU), the United States, and Japan. Currently, our country maintains diplomatic relations
with 193 countries worldwide, including strategic and comprehensive partnerships with 30
nations, as well as economic relations with over 230 countries and territories. Vietnam has
also signed 16 free trade agreements (FTAs), including several new-generation FTAs.

 The goal for swift global economic integration and multilateral foreign policy have given
LEGO an opportunity to develop a long-term strategic plan. The establishment of
LEGO's large-scale production factory is a milestone marking this collaboration and clear
evidence of Vietnam's political stability advantage in attracting foreign direct investment.

2. ECONOMICAL

The biggest advantage of Vietnam's economic situation in attracting foreign investment is the
fast and sustainable GDP growth rate. According to Minister Nguyen Chi Dung, in 2024,
Vietnam's GDP is estimated to grow by about 6.8-7%, surpassing the target range of 6-6.5% set
by the National Assembly. This growth rate is among the highest in the region, considering the
global economic challenges such as high inflation, prolonged political conflicts, and the
slowdown of major economies. This success not only signifies recovery after the COVID-19
pandemic but also demonstrates the effective macroeconomic policies of the government.

Despite achieving many accomplishments, the Government also acknowledges that Vietnam's
economy still faces limitations: Exchange rates and inflation pressures from external sources
remain latent factors that impact the stability of the economy. The trade surplus primarily relies
on foreign investment, indicating a low level of economic autonomy. This creates instability in
the face of global trade policy changes.

 The limitations and potential risks of the market economy in Vietnam still exist. However,
with a sustainable GDP growth rate, which is a core factor, Vietnam is attracting foreign
investment. This presents an opportunity to expand market share, build a loyal
customer base for LEGO, which is currently operating there. The stable GDP growth
rate reflects the rising middle and upper class in society, leading to a strong potential
demand for LEGO products. Specifically, LEGO has increased revenue by two percent
in a declining market and expanded its supply chain in the Asian market by establishing
a large-scale production facility in Binh Duong, Vietnam. Additionally, they have
expanded their retail distribution system nationwide, demonstrating that this is a good
opportunity for LEGO to increase market share and brand reputation in the developing
Asian market.

3. Social

With a sizable population, a comparatively youthful demographic, and the most abundant
workforce in history, Vietnam is about to reach the "golden population structure" era.
Approximately 1 million Vietnamese individuals reach working age each year, giving the country
a significant competitive edge in luring in foreign investment for socioeconomic advancement.

Despite having abundant human resources, the quality of labor remains low in Vietnam,
primarily in agriculture and rural areas, failing to meet development requirements. Currently,
there is a severe shortage of highly skilled technical labor and workers in certain service sectors
(such as banking, finance, telecommunications, and tourism) and emerging industries. The
proportion of trained workers is still low, and industrial skills, physical strength, and work
etiquette are weak, resulting in low competitiveness.
With the advantage of a young workforce, which is considered a significant opportunity for
LEGO to maximize production cost efficiency by leveraging the advantage of low labor
costs. However, the quality of the workforce is not yet high, and it mainly focuses on agriculture,
poses a challenge for LEGO in reducing its capacity to innovate, as the labor supply does
not meet the needs of developing high-tech production areas.

Technological

Currently, the world is entering the Fourth Industrial Revolution, and Vietnam is also seizing the
opportunity to keep up with the trend of digital transformation and the application of
artificial intelligence in the operations and production of private enterprises. This trend has
been particularly accelerated during the COVID-19 pandemic, prompting many businesses to
make significant changes by fully utilizing technology and artificial intelligence to drive economic
growth in the country. According to the Chairman of CMC, Vietnam is entering a special period
of major technological changes. Digital transformation and artificial intelligence are not just
trends; they have become essential requirements for businesses to survive and thrive.

 Digital transformation has significantly influenced the growth of e-commerce

platforms, providing substantial opportunities for multinational corporations such as
LEGO. By incorporating e-commerce into its business strategy, LEGO is able to reach a
wider range of customers than it could through conventional retail channels. According
to research, customers are increasingly choosing to shop online due to its accessibility
and ease. This change makes it possible for LEGO to reach previously
underrepresented demographics and emerging markets.

4. Legal

The government promptly adjusts, simplifies, or modifies policies to stimulate investment

and create a fair competitive environment between domestic and foreign investors. Specifically,
the government issued Decree No. 35/2017/ND-CP on April 3, 2017, which regulates land use
fees, land rental fees, and water surface rental fees in economic zones and high-tech zones
with higher incentives than regular investment projects. Currently, the highest preferential tax
rate is 10% for a 15-year period, with a 4-year tax exemption and a 50% reduction in taxes for
the following 9 years for new investment projects in certain specialized fields such as
information technology, software, renewable energy, and environmental protection.
Although Vietnam's policies are very attractive to foreign businesses, nowadays, as many
countries have shifted towards a knowledge-based economy, the intellectual content in
products and services is increasingly significant and decisive. In developed countries,
intellectual property is considered a crucial asset, most valuable for each enterprise. Despite
Vietnam having established policies to protect intellectual property for businesses, there is still
no clear legal framework to deter individuals or organizations from violating it. This remains a
significant challenges for multinational corporations.

 The cooperation between Denmark and Vietnam, combined with attractive FDI policies,
has brought many opportunities for LEGO with Favorable Investment Climate. That
opportunity help LEGO with a conducive environment for establishing manufacturing and
distribution facilities. These policies can reduce operational costs and enhance
profitability, making Vietnam an appealing location for investment. However, this also
comes with risks and challenges for LEGO in protecting their brand, products, and
creativity. Currently, there are many counterfeit LEGO toys in Vietnam, and there has
been insufficient government action to address this issue. This directly impacts LEGO's
revenue and reputation for product quality.

5. Enviroment

Currently, Vietnam is increasingly concerned about environmental protection in the

management and operation of private enterprises, especially large-scale production enterprises.
The state's attention to environmental protection obligations is demonstrated through the
national standard policy ISO 14001:2015, which encourages businesses to be responsible for
protecting the environment, not producing industrial waste, and using environmentally friendly
materials.

However, the pollution caused by industrialization has revealed many shortcomings and
created significant pressures on the environment, ecosystems, and biodiversity of the country.
Environmental pollution continues to evolve complexly, with many hotspots and deteriorating
environmental quality in various places, especially in industrialized areas. The pollution situation
is increasingly severe and hinders the country's sustainable development goals.

 The current pollution situation in Vietnam is putting pressure on economic infrastructure

and public health. However, this situation presents an opportunity for LEGO to
 enhance brand recognition as a responsible business committed to sustainable
development and environmental protection. The company has planted an additional
50,000 trees in construction areas, demonstrating its environmental responsibility and
concern for sustainable development in the future.

I. Diversification strategies of LEGO

Successful strategic planning is largely responsible for Lego's success as a well-known toy
corporation that has captivated generations. By embracing innovation, using partnerships
and collaborations, and understanding the power of nostalgia, Lego has developed a
powerful brand identity that resonates to its target demographic (McLaughlin Justin, 2023).
The 40-year-old toy manufacturer had financial difficulties in the early 2000s and came
dangerously close to going bankrupt in 2003. However, in order to broaden its market
reach and appeal to a variety of customer demographics, LEGO has deliberately extended
its product ranges beyond traditional building kits after concentrating on vertical
integration. Three main approaches can be used to understand this strategy for product
diversification: digital products, robotics/STEM items, and themed sets. Introducing
themed sets is a major part of LEGO's product diversification, which was made possible by
partnerships with well-known properties like Marvel, Harry Potter, and Star Wars. By
leveraging the current fan bases of these franchises, this tactic successfully increases
LEGO's attractiveness and draws in new clients. Additionally, LEGO has created a variety of
 digital products, like as video games, smartphone apps, and augmented reality (AR)
experiences, in response to the growing digitization of play. This diversification is in line
with customer preferences for technologically advanced and interactive play experiences.
Lastly, another crucial component of LEGO's product diversification strategy is the
company's foray into the educational sector with robotics and STEM-focused products
like LEGO Mindstorms and LEGO Boost. LEGO enhances its position as a leader in
educational toys and helps children develop critical abilities by matching its product offers
with educational objectives (THB team, 2024).

II. Strategic Challenges Faced by LEGO in the Context of Risk When Operating a
New Factory in Vietnam

1. Supply Chain Vulnerabilities

There are a number of supply chain risks that come with establishing business in a new region.
LEGO's operating efficiency and product quality may be severely impacted by possible
disruptions in the purchase of raw materials, transportation, and reliance on local suppliers due
to inadequate transportation infrastructure. Since real estate is scarce in Asia, a large
number of local shops rely on LEGO for just-in-time delivery while maintaining low inventory
levels. LEGO enjoys strong profits on its products, so lowering production costs is not its main
motivation. However, the business may construct molding plants in Asia to increase productivity
and cut lead times. The company's top goal is to react quickly to retailer demands ( Kim Girard,
2013).

2. Intense Competition

Children's play habits have changed dramatically in favor of screens as a result of the growth of
digital entertainment, such as video games, cellphones, and tablets. For Lego, this is truly a
risk in attracting Consumer Preferences and increasing the company's reputation in the
Vietnamese market. For LEGO, which has historically relied on physical play, this shift presents
a dilemma. Even while LEGO has made progress in incorporating digital experiences through
video games, applications, and augmented reality, it is still difficult to stay relevant in a world
that is becoming more and more digital (Hivelr Business Review,2024) This further complicates
the expansion strategy for market share in the Asian market, posing greater challenges and
risks in revenue growth. However, LEGO has established a reputable and well-known brand
that is associated with excellence, innovation, and educational value. LEGO has a major
competitive edge thanks to its strong brand identification. To match LEGO's degree of customer
recognition and loyalty, new competitors must make significant marketing and brand-building
investments.

3. Market Volatility and Consumer Preferences

Traditional toy sales are at risk about an unstable market to expand LEGO's retail system..
According to a Toy Industry Association estimate, toy sales in 2019 totaled $27 billion, a 4%
decline from the year before. Meanwhile, because of the lockdowns and instructions to stay at
home during the coronavirus pandemic, the video gaming sector has seen a rise in sales. With

increased free time, a lot of individuals have been searching for new forms of entertainment at
home. During the epidemic, companies like Activision, Microsoft, Nintendo, and Twitch have
seen incredible success, as evidenced by the significant increases in subscribers to their
gadgets, games, and accessories. In March 2020 alone, video game sales reached $1.6 billion,
a 35 percent rise from the previous year.

III. Supply chain flow of LEGO in VIETNAM

1. Sourcing of Raw Materials

Local and Global Suppliers: LEGO purchases raw materials from both domestic and
international vendors, including plastic resins. This dual sourcing approach guarantees a steady
supply of premium materials while reducing the risks connected with supply chain interruptions.

Quality Control: Before any materials are utilized in production, LEGO makes sure they all
match its high standards through stringent quality control procedures.

2. Manufacturing Operations

Factory Setup: The molding, assembly, and packaging of LEGO products is the main focus of
the new plant in Vietnam. This plant is positioned to minimize lead times and maximize
production efficiency.

Production Process: The manufacturing process involves several steps, including:

 Injection Molding: LEGO bricks are made by injecting melted raw materials into molds.

 Assembly: Assembling parts into whole sets assures that every product satisfies
LEGO's requirements for quality and design.

 Packaging: Completed goods are prepared for distribution and are prepared to be
shipped to stores.

3. Distribution

Warehousing: For the purpose of storing completed goods, LEGO maintains distribution
centers. These facilities are positioned to provide easy access to important Asian markets.

Transportation: A mix of regional and local logistics partners are used to move goods from the
manufacturing plant to distribution hubs. Timely delivery to retailers depends on effective
transportation networks.

4. Retail and Customer Engagement

Retail Partnerships: To guarantee that its products are accessible in important markets, LEGO
works with regional merchants. By frequently using just-in-time inventory techniques, the
company enables retailers to keep inventory levels low while still depending on LEGO to deliver
goods on schedule.

E-Commerce: Additionally, LEGO has increased its online presence in Vietnam, enabling
customers to buy products straight from the company's website. This digital strategy appeals to
tech-savvy customers and improves accessibility.

Conclusion

In this exercise, I have analyzed the internal and external factors influencing globalization,
including assessing the drivers to evaluate the current global situation worldwide. Furthermore, I
have clarified the PESTEL factors and highlighted the opportunities and challenges for LEGO in
approaching the Vietnamese market. Additionally, this exercise also examines the strategies
that LEGO is currently using to enter new global markets, potential risks they may face, and the
effectiveness of their supply chain in long-term development.

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