LEGO Group - Building Strategy
LEGO Group - Building Strategy
LEGO Group - Building Strategy
Internal problems
1990s
4 out of 7 years loss
>7.000 employees
-> production process optimization
LEGO stores
-> reduction of suppliers
computer games
-> reduction of design variety
One of top 10 toy manufactures
-> distribution optimization 4
SWOT – Internal
Broad differentiation & new computer games
Strong brand image & media presence worldwide
Several branches & touching points
Improved company‘s structure
Products fun & valuable
High quality products Complex structure
Improving key figures Patents lose value
Compatible competition's building sets
Reduced product design possibilities
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SWOT – External
Huge market & building sets‘ fast growth
Lego market leader
Usage of new computer technologies
Growing markets worldwide
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SWOT Focus Competition
Hasbro: MEGA Brands:
- 2. largest toy maker - Main rival competitor
- Long-lasting success (building sets)
- Holds licenses - Won court battle
- Kre-O to be launched - LEGO Compatible system
- Net revenue 4 billion US$ - Net earnings 0.13 billion US$
- Investment (property etc.) 0.23 billion US$
- Investment (property etc.) –
- Investment (intangible assets) 1.6 billion US$ 0.1 billion US$
- Net earnings 0.4 billion US$
Strength: Weakness:
- Strong brand - Complex structure
- Valuable, differentiated
products
Opportunities: Threats:
- Market growth - Direct & indirect
- New technologies competition
- License market
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SWOT – Change Over Time
PAST
Main problem: internal weaknesses
- Costly designs
- Inefficient production,
distribution, sales
NOW
Main problem: external threats
- Strong, growing competition
- License market
- Trademark protection loss
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Corporate-level Strategy –
Business Units
Business Unit Important Features
Board Games
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Corporate-level Strategy –
Segmentation & Targeting
Target Market Applied Products Communication
Examples Channels
Children under 5 Duplo Via parents
(Buyer ≠ Consumer)
Children & Teenagers Building sets, Video Magazine, TV
Games advertisement,
Website
Fans (adults) Special products Different Websites,
LEGO shops
Educational market Extra line for schools, Probably Website
Mindstorm
Families Theme Parks, Board Mouth to mouth,
Games media advertisement
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Corporate-level Strategy –
Positioning
Goals:
1. Maintain market dominance in building toy market
2. Financial success
3. Expand and develop product lines
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Business-level Strategy –
Building Sets
LEGO against competition
• High quality and safe products
• High customization and adaptation
• Educational aspects included and forwarded
• Strong media presence
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Recommendations 1
Problem: License monopoly
Strategic implementation:
• Developing own stories
• Promotion via movies, magazines, internet
finding partners (e.g. Google)
• Adaptation of Merchandising
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Recommendations 2
Problem: Competitor‘s building sets are compatible
Strategic implementation:
• Stronger dependency between business units
discounts in Theme Parks
codes in building sets for website offers
segmentation of communities
further supporting community events
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Recommendations 3
Further recommendations to maintain LEGO‘s
leading status
• Acquisitions of smaller toy producers
• Keep prices steady, just careful discounts on
special occasions
• Enhance position in developing markets (Asia)
if needed adapt products
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LEGO NOW
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Thank You For Your Attention!
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Sources
• Case Data
• Internet sources
• http://www.shareholder.com/visitors/DynamicDoc/document.cfm?Do
cumentID=2935&CompanyID=HAS&zid=4d6301e3 (28.10.13)
• http://www.megabrands.com/sites/all/files/media/pdf/corpo/en/repo
rts/Financial_Statements_2010-2009.pdf (28.10.13)
• http://aboutus.lego.com/de-de/lego-group/annual-report (28.10.13)
• http://aboutus.lego.com/de-de/sustainability/our-approach (28.10.13)
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