Adopting a Strategic Approach

Founded in 1932 in Denmark

Historically successful, family-led, business

In 1996 they receive the

Distinguished Family Business Award

Organically grew quickly in the global

toy industry

Fun, educational product important for the development of

individual physical, intellectual and social skills and
competences.

Awarded (Toy Fair 2013 and

Distinguished Family Business)

Lego design was invented and

patented
Start of producing Lego Plastic
Bricks

1932 Legos best selling item was wooden toys

1958

Extend the playing opportunities

1958

Even during the economically difficult environment LEGO

continued to be successful
Introduced number of innovative products

USA
South America
Asia

1970 -1980...

Increase

Sales

25%

Net profits

35%

Market share

8.6%

1995 2004
Grew too quickly
Profits became losses
Company recovered at the helm of Kjeld and later
Jorgen Vig Knudstorp
2005: Sales of DKK7 billion
2012: Sales of DKK23 billion

An Insight into Lego

Distinctive
Capabilities

Large production facilities with non-toxic material

Innovative and large product variety with distinctive
design and quality
Wide international distribution channel
Top of mind Brand

Resource Gap

Only expertise in one product Lego block

Limited access to capital market

Issues of
Concern

High competition
Patent expires soon
Changing customer trends

Viable Option

Expectation

Support of financial from the family

Expand to different toys or other business lines

Target emerging markets
Expand brand positioning to include other products
Strengthen ties with distributors through exclusive agreements

M
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PESTEL ANALYSIS

A
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High threat of Substitution

Many substitute products: Video games, Figures, Soft
Toys

High supplier Power

Previous outsourcing activities failed

High threat of new entry

Patents expire soon

High buyer power

Low switching costs: Easy access to alternative products

High competitive rivalry

Many and similar toy companies

USA
Playskool,
Playskool,
Transformers,
Transformers,
My
My Little
Little Pony,
Pony,
Littlest
Littlest Pet
Pet
Shop,
Shop, Tonka,
Tonka, GI
GI
Joe,
Super
Joe, Super
Soaker,
Soaker, Milton
Milton
Bradley,
Bradley, Parker
Parker
Brothers,
Brothers, Tiger,
Tiger,
Wizards
Wizards of
of the
the
Coast
Coast

Segmentation
People

Girls
Pre-school
<5

Pre-teen
6 -12
Girls
feature,
constructio
n, movie

Boys

Teen
13 -18
Video
games,
movies

Adults
> 18
Video
games,
movies

Pre-school
<5
Action
Figures
bricks ,
movies

Pre-teen
6 -12
Constructio
n, Vehicles,
etc bricks ,
movies

Teen
13 -18
Video
games,
movies

Adults
> 18

Product

bricks,
movie

Video
games,
movies

Promotion

Distribution ,
Packaging
Advertising

Price,
Advertising, connection
w/ devices

Distribution
Packaging
Advertising

Price
Advertising
Connection w/ devices

Place

Specialized stores,
hypermarket

Specialized stores,
hypermarket, online store

Specialized stores,
hypermarket

Specialized stores,
hypermarket, online store

Capabilities
TANGIBLE

INTANGIBLE

ORGANIZATIONAL

Valuable

Rare

Inimitable

Organizational
Support

Production
facilities

Medium

High

Medium

High

Non-toxic
materials

High

High

High

High

Product &
variety

High

Medium

Low

High

Distribution
Channel

High

High

Low

High

Brand

High

High

Medium

High

Patent

High

High

High

High

Innovation &
Design

High

Medium

Medium

High

Management
Team

Medium

Medium

Low

High

Supply Chain

Medium

Low

Low

High

Medium

Medium

Low

High

R&D specialist

Competitive
Advantage

Where does LEGO now

Ensure long-term security of the organisation

Diversify revenue streams as patents expire soon

Grow global market share

Dont forget the basics

Obviously Lego, But As You Have Never Seen It Before

Its about more than just plastic blocks

Broaden and strengthen brand appeal to boys
and girls
License the brand to create:
Movies
Multi-Platform Games
Clothing / Accessories
Lego Children Food

Follow the users to new platforms and technologies

Integrate product with Smart Phones, Consoles,
etc.
Add automation and online capabilities
Expand R&D activities

Create After Sales Market

Packs to add features
Customisation of an out of the box product

Grow the brand globally

Focus on high-growth markets
Build marketing bases in key countries

Use Lego Education to build product awareness

Promote heavily to schools
Builds early brand awareness & loyalty

Target a new user segment

Design and build products for Girls

Partner with other iconic brands to

promote product

Use internal equity

Spread the cost by:

Partnering with expert local companies
Build local manufacturing and distribution units
License brand to specialist companies

Release 20% of the share to strengthen the

financial condition

Questions