The reason on why the options were chosen are as followed Option 1 Focus on

The reason on why the options were chosen are as

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in these low cost location. The reason on why the options were chosen are as followed: Option 1: Focus on current market like North America and Western Europe Based on the chart from case study (Exhibit 8), the current market which is North American and Western Europe together were able to account for about 72% of all Lego sales in the years. Since the both market able to generate such a big portion of sales, the company should focus and provide strategic plan accordingly to improve and maintain the current market. Even though the growth rate in current market was not high as the Asia market’s growth rate, it is believed that there was still have space to grow such as product development. There is one reason that the group should only focus on current market because the expansion might include a lot of uncertainty such as political and economic of certain countries, and the cost to invest in these countries like factory and labour. All of these could cause the group invest in risk. Option 2: Expand to mega-market such as China and India China and India both are rank the first and second in the population ranking of the whole world, they also are one of the low-cost countries in the Asia. If Lego expand to the both country by building factory in site, Lego would able to achieve low-cost productions. Moreover, there were a lot of space for Lego to grow in the both countries. Based on the analysis by Lego Group in the case study, China and India have about 10% or even more of potential growth rate which is higher than other Asia countries. The successful expansion in the both countries would able to help Lego to generate more revenue and gain more market share 9
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Based on the criteria that are identified each of the criteria will have different weighting. For example, the criteria of “Growth Potential” has been weighted with 4 points, showing that the LEGO considers it by far the most important criterion, compared to 1 or 2 points for the others. Whereas “Culture” has been weighted with 1 points, showing that the LEGO considers it as the least most important criterion, compared to 4 and 3 points for others. Each of the criterion has different rating scale to be used for the problem where “Cost” rating scale of high cost = 1, moderate = 2 and low cost = 3. “Culture” rating scale of conservative = 1 and open culture = 2. “Standard Requirement” rating scale of Stringent = 1 and flexible = 2. Lastly, “Growth potential” rating scale of low = 1, moderate = 2 and high = 3. The criteria of cost for options 1: Focus on America & Western Europe Market, has a score of neutral (2), as adding more manufacturing plant in this country would still cost LEGO Group to withdraw money. While, for options 2: Expand into Mega-Market i.e China & India, it has a score of low cost (3), as by building own manufacturing plant in the low cost location like Asia would help to reduce production cost and import duty cost for LEGO Group. Moreover, the criteria of Culture for options 1: Focus on America & Western Europe
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