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Khoe, Sean Hanjaya Prasetya

BMI - 10315038

Question 1: What are the companys strategies?

There are ten action plans that Lego Company consider it as their strategy to raise the company.
Those ten actions are

1. Focusing on retailer customers instead of end-customers


2. Cutting costs from unsuccessful ventures or product like a Legoland theme parks.
3. Locating its factories close to the core markets which can easier to respond the demand
from the market.
4. Relaunch DUPLO
5. Slow the LEGO stores program
6. Better segmentation, DUPLO, LEGO and FRIENDS for the young females
7. Understand the end user - focus groups, mind storming, and listen to the AFOLS!
8. Introduce financial targets - Line profitability, Consumer Product Profitability 13.5%, the
ROS benchmark. FMC - targets for full manufacturing cost.
9. Jettison the computer sales business.
10. Rationalize the product offer - cut 30% of the product offer.

Question 2: Analyze Legos internal performance using TOWS and financial performance.

TOWS Analysis

Internal Strength (S): Internal Weakness (W):


Has a famous and strong Brand perception as
brand name across the world blocks toys
in over 55 countries High pricing
Existing customer base Higher diversification
Existing distribution network
External Opportunities (O): (Build Strengths for
New emerging markets Attacking Strategy) Counter
(Attacking Strategy ) Leveraging
Cross-selling opportunities its weaknesses by exploiting
its strengths for maximizing its
Alliances- co branding its opportunities. To blur the
opportunities.
New products weaknesses like high pricing
Since Lego has good brand,
and higher diversification,
customer base and distribution
Lego can cover it with the
network with combined to the
opportunities they have. The
opportunities of new products and
strategies are by expanding
markets we can easily attack the
the markets and adding the
competitors by using market
cross selling opportunities and
penetration and product
add more new products in the
diversification
market place.

External Threat (T): (Defensive Strategy) Leverage its


New Entrants strengths for minimizing the
Digitally advanced and threats. To avoid the threats such (Build Strengths For
competitive products as competitors and changing of Defensive Strategy) Counter
Changing customer customer choice, the strategies its weaknesses with Threats.
choices could be done by adjust and adapt The strategy is by prevent and
the product with the trend and avoid threat and weakness
technology nowadays. The other happened by strengthen the
strategy is by doing product opportunities and strength at
development and unrelated the same time.
diversification to widen and fulfil
the customers choice.

TOWS analysis is an effective tool which helps in combining the internal strengths with the
external threats as well as opportunities on one hand, while combining internal weaknesses with
external opportunities and threats to develop a successful strategy.

Financial Performance

To assess financial performance of a company, we need to look on its financial reports by preparing
the balance sheet in the first place. Balance sheets is all the financial information that usually given
to shareholders. There are many parts that consisted on balance sheets. The first one is Current
Assets and Liabilities. The information described annually from 2003-2014 respectively as below:
Current Assets
Current Assets
Inventories 2,182 1,824 1,705 1,541 1,327 1,056 870 946 881 709 712 831
Trade Receivables 5,891 4,870 4,950 3,845 3,321 2,128 1,822 1,796 1,824 1,856 1,630 1,744
Corporation Tax Receivables 34 68 97 84
Other Receivables 733 946 630 603 618 604 439 681 253 136 256 344
PrePayments 99 74 226 462 0 0 0 0 136 109 205 178
Current Tax Receivables 48 65 22 244 12 111 130 71
Fixed Assets for Sale 303 301 403 0
Securities 1,445 641
Receivables from Related Parties 2,598 2,310 3,442 1,950 1,956 0 600
Cash at Bank 482 1,024 468 557 802 1,630 1,129 1,001 2,009 1,968 312 116

Total Current 12,033 11,113 11,443 9,202 8,036 5,529 4,990 4,495 6,885 5,788 3,615 3,297

Current Liabilities
Current Liabilities
Borrowings 162 88 608 7 6 5 4 77
Trade Payables 2,530 2,201 2,112 1,611 1,518 1,336 1,036 778
Current Tax Liabilities 154 85 96 97 297 94 83 121
Provisions 228 110 64 103 3 100 138 174
Other Short TerM Debt 4,235 3,249 3,180 3,053 2,609 1,901 1,547 1,480

Total Current Liabilities 7,309 5,733 6,060 4,871 4,433 3,436 2,808 2,630 0 0 0 0

After knowing the current assets and liabilities we can find the current ratio each year by divide
the current assets with the current liabilities. Current Ratio is commonly used to assess the ability
of a company to meet its short-term obligations. An acceptable current ratio varies across
industries, but should not be so low that it suggests impending insolvency, or so high that it
indicates an unnecessary build-up in cash, receivables or inventory. The information of current
ratio of Lego company from 2003-2014 described as below:

2003 = 1.65
2004 = 1.94
2005 = 1.89
2006 = 1.89
2007 = 1.81
2008 = 1.61
2009 = 1.78
2010 = 1.71
2011 =-
2012 =-
2013 =-
2014 =-

From the current ratio data given, we can conclude that the trend shows a decline from 2003 to
2010, and from 2011 until 2014, the current ratio is undefined because the current liabilities of the
company is zero. This data shows that this company have got not to low and also not to high current
ratio, which means is a potential and great company in financial perspective.

After having the current ratio, we need to find Non-Current Assets and Liabilities of the company.

Non-Current Assets
Assets
Development Projects 85 71 37 12 78 116 90 30
Software 126 131 104 102 26 33 13 0
Licences, patents 60 58 68 76 81 83 2 4
Intangible Assets 271 260 209 190 185 232 105 34 0 0 0 0

Land Buildings 3,299 1,777 1,688 1,140 863 699 549 543 764 900 1172 3717
Plant & Machinery 2,494 2,114 1,615 1,239 983 766 500 431 358 187 299 731
Fixtures and Fittings 1,072 846 746 502 384 246 139 126 97 82 91 1374
Fixed Assets under construction 1,591 1,553 517 514 338 219 78 54 38 30 32 281
Property Plant and equipment 8,456 6,290 4,566 3,395 2,568 1,930 1,266 1,154 1,257 1,199 1,594 6,103

Deferred Tax Assets 494 140 131 114 180 94 132 281 388 430 448 588
Investments in Associates 3 3 3 3 3 3 3 3 492 272 0 61
Prepayments 162 146
659 289 134 117 183 97 135 284 880 702 448 649

Total Non Current Assets 9,386 6,839 4,909 3,702 2,936 2,259 1,506 1,472 2,137 1,901 2,042 6,752
Non-Current Liabilities
Non Current Liabilities
Subordinated Loan Capital 500 1,100 800 800
Borrowings 196 205 210 818 826 832 839 237
Deferred Tax Liabilities 209 126 21 50 21 82 98 128 0 21
Pension Obligations 82 57 54 55 52 56 50 63
Provisions 95 88 71 72 75 20 63 93
Other Long Term Debt 96 68 72 63 92 71 72 79
Debt to related parties 600 600
Total Non Current Liabilities 1,278 1,144 428 1,058 1,066 1,061 1,622 1,700 800 821 0 0

We also need to make the financial position to find the book value by subtract total liabilities from
assets which equals to shareholder equity. So, shareholder equity, essentially is the book value of
the company. We can know the equity from the balance sheet given

Total Equity Interests 12,831 11,075 9,864 6,975 5,473 3,291 2,066 1,679 4,512 3,307 2,639 4,220

And finally, we find the market-to-book multiple by comparing the company's market value to its
book value, investors can in part determine whether a stock is under- or over-priced.