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LEGO

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chiara ferlini

on 15 September 2013

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Transcript of LEGO

MGT 405
Porter's Five Forces
New Competitors
Industry Rivalry
Founded in Denmark, in 1934
The founders was Kirk Kristiansen
In 1954 the idea of " LEGO system of play"was created
hard times during the 90'
LEGO is the fourth largest toy manufacturer company in the world
Facts
Mission
Inspire and develop children to think creatively, reason systematically, and release the potential to shape their own future , experiencing the endless human possibility.
Our Team
Markus Deininger

Frederic Drengenberg

Chiara Ferlini

Marco Frizzarin
(cc) photo by medhead on Flickr
Agenda
Introduction of the company
Product lines
Swot Analysis
Porter's five forces model
Competitor analysis
Value Chain analysis
Impact of license agreements
Finance Impact
Our recommendations
Q&A
Product Lines
The LEGO product lines started growing many years ago, it launched many new creative themes such as LEGO Western, LEGO IcePlanet, LEGO Aquazone
It acquired for the first time the licensed rights to famous movies in 1999, such as Star Wars and Duplo
It acquired licensed rights to professional sports, such as LEGO NBA basketball
It started developing Video Games, and in 2010 it develop a virtual online LEGO universe
Nowadays LEGO has 30 product lines
pressure from customers is high
Its customers are retailers such as Wal-mart
Substitute Products
Suppliers
Many competitors in the toy market
Hard competition
LEGO needs to launch new products constantly
Buyers
High because LEGO brick stones are made of plastic
Licenses are a key input
Low market entry barriers
Product easy to copy
Traditional toys
Electronic games
SWOT Analysis
Strengths
Recognizable and credible with parents;
Brand number one for decades;
Good company values;
Adaption to latest trends;
Ability to use innovative technology;
The LEGO club had 2,7 millions members worldwide.
Weaknesses
Changing habits of children;
Fragmenting Brand architecture;
Expensive;
Lack of ability to translate key corporate strengths and innovations into implemented strategies.
Using changes trends in technology;
Developing of new products;
New market places around te world.
Threats
Changing children's toy habits;
Quick changes in the popular trends;
Competition;
Court battle.
License Agreements
Three big toy manufacturer
Largest Toy manufacturer : Mattel
2nd largest toy manufacturer: Hasbro
3rd largest toy manufacturer: Lego
Big change in License agreements
in 2000 Lego bought the license of the Star Wars theme --> first big success

then bought several other license (Spiderman, Indiana jones

acquisition of marvel entertainment by the Walt Disney Company for US$4 billion--> new licensor
License contracts
Disney's role in the toy manufacturer business now
Mattel, Hasbro and Lego all had licensing agreements with Disney.

But Disney had history of licensing toys with Mattel.
Hasbro on the other side has a contract till 2017
Lego and all competitors have all one opportunity in common.

If Disney wants to stay with one toy company, it will give this company a very big boost.

Unfortunately it is on the other side a threat because the others will loose very much market share.
Concerning future possibilities related to licenses
Brief Overview
Financial Situation
License agreements have a big influence on every toy manufacturer company

financial aspects:
large advance of money when buying a license plus a percentage of the net sales

General aspects: type of product, time of the license and in which country the toy can be sold
Opportunities
Financial
1 DKK = 0.18 US$
Revenue: 4 billion $
doing very well
growth sucessfully -> obvious that we are number 1 in Asia & Europe since 2012
financial ratios are very good
Recommendations
How is LEGO's situation:

Lego products are present in all core regions
licensed products i.g. LEGO Star Wars and LEGO Harry Potter are best sellers
LEGO's has a short distribution channel to the most core regions
How can LEGO achive this?

get contracts with movie studios i.g. Disney, Warner Bro.
adapt their video games to mobil devices
transfer their product line to asia
optimize on licensed sets
open a factory in Asia
Value Chain Analysis
Canadian company, founded 1967 as "Ritvik Toys" renamed 2002 in MEGA BLOKS

LEGO has field many lawsuits against them, but most of them where unsuccsessfull
means "i create" in latin

manufacured by Oxford, distributed & marketed by Hasbro

entered the market in 2011

known for their Transformers product line
competitor array
so what should LEGO do?

focus on license agreements
adapt more to electronic trends
shorter distribution channel to Asia
join enmerging markets
LEGO's compeditors
Firm Infrastructure
- family owned
- CEO, CFO and four Vice Presidents responsable for business areas
- English as company language
- Business Operations in several countries
Human Ressource
Management
- deliberate cultural variety in the personell
- focus on young talents
- Code of Conduct
Support Activities
Primary Activities
Technology
Development
- expertise in plastic injection-moulding machines
-adaption to videogame sector
- semi and fullautomated processes
Procurement
- support for operations
- reduced supplier-base
- implementation of E-Procurement system
Inbound Logistics
- own test laboratory
- production of own raw materials
Operations
- countinuously testing new materials
- plants in Denmark, Czech Republic,
Hungary and Mexico
- outcsourcement of manufactoring to coremarkets
Outbound Logistics
- centralisation of distribution
- cooperation with DHL solutions
- supply for EU, Asia and Africa through EDC
Marketing & Sales
- motto “There’s something for everyone!”
- attempt to activate creativity of lcustomers
- infiltration of new makets and subsidiaries implementation
Service
- customer service
Online presence
- provided product guarantee
Q&A
Financial Comparison
Thank you
largest toy manufacturer

subbrand 'Fisher Price' tried to enter the building toy market '83-'88
Full transcript