Csfull-Lego

Introduction

LEGO Group has been successfully become one of the family-led, innovated and high- growth company in the global toy industry. Nowadays, LEGO Group had become the fifth-largest toymaker in the world. In 2013, its sales amounted to 25.4 million, which had increased by 10 % compare to the previous years. It can be seen that how LEGO Group’s management adopt their strategies in struggling to fight their difficult time during the spring of 2004.

It can been seen that them one of the ways is when Jorgen Vig Knudstorp came in as the CEO position in 2004, the company was struggling to give consumers what they wanted and effectively manage costs. Besides that, they also empathize to re-focus on the LEGO brand to simulating imagination, creativity and learning to what most of the children and parent expect from us.

It is therefore can see that LEGO’s revenues had been achieved $4.5 billion of revenues and profits of $1.5 billion while LEGO also had replaced Hasbro to become the largest toy company in the world where Mattel become second largest of their toy company.

External Analysis

OPPORTUNITIES

Opportunity can be achieved when LEGO has the capabilities and technology to meet the market demand of electronic toys. LEGO is able to invent high-tech products which made them become the leading company in market.

By having a strong brand, it is much easier for LEGO to go into partnership with retailers and distribution partners. LEGO is able to enter into partnership relationship with fast-growing global retailers, such as, Toys R Us, Walmart and so on. When these retailers keep growing and expending their market share, it helps LEGO to supply to wider geographical areas and gain more profit. By entering into more markets can helps LEGO to monopoly the market as competitors will avoid to competing with them.

Every second half of the year, around Christmas, will be the peak sales season for toy industry. LEGO have to make sure that they have the capabilities to produce the quantity demanded for the market to avoid any losses. In order to do this, LEGO has to forecast the sale and plan for the production process.

Although the main product for the company is LEGO bricks, they must also keep updating it in order to keep the market share and competes with their competitors which product wide range of toy products. LEGO implemented a good strategy to keep fresh for their customers is that they launched LEGO bricks based on themes like new movies, one of the examples is the latest movie, ‘Jurassic World’. Other than that, LEGO realized that interest of customers deciding the sales, so they are releasing products based on the interest of customers like LEGO Architecture.

Over decades, LEGO has higher demand from boys than girls. When LEGO Friends released in 2012, it had resulted high sales in female market. LEGO has indicated the opportunity in female market and they will release more products for female in the future.

THREATS

The main product of LEGO is LEGO bricks. The changing habits of children are threatening the traditional toys market. So LEGO must always up-to-date and forecasting the future market trends in order to keep survives and meets the opportunity to satisfy the demand.

In process of improving and changing, the company has to make sure that their customers are able to adapt and accept their changes. For example, LEGO changed their product material from wooden to plastic and the public do not accept it at first because they prefer wood toys. However, LEGO has supplemented it with figures and technical features, the plastic material also has stronger gripping which allows customer to build larger structures. The public started to accept plastic materials after some time.

The production and distribution is challenging for highly seasonal industry like toy industry. The peak sales period for toy industry is in the second half of the year, it will be around Christmas. This factor could be a threat if the company could not predict the demand and produce optimal amount for the market. Most the of toy manufacturers spend their first half year to accumulate the stocks for peak sales season, if the manufacturer failed to produce the amount, they may lost the opportunities to gain more profits. Other than the production, distribution channel is also crucial for manufacturer to distribute their finished good to retailers on time.

LEGO is highly focused on the bricks market area and it may become a threat in the long run when competing with others. There are frequent changes in playing habits and competitors are providing wide product line which may threaten LEGO. So LEGO has to keep them always up-to-date to the market and if required, offer more new products other than LEGO bricks to keep surviving.

The competitors had noticed the success of LEGO group and implemented some actions. Mattel and Mega Brands are becoming partnership and they have created a ‘playing universe’ for girls and combination of Hot Wheels and bricks from Mega Brands for boys. Hasbro has also launched Kre-O which allows customers to build Transformers universe. Their bricks are compatible with LEGO bricks. Other than that, the growing of video games market is also a threat for LEGO’s future.