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Lego SWOT & PESTLE Analysis

ID : 52256653| Jan 2019| 20 pages

COMPANY PROFILE -Lego A/S

Business Sector :Toys

Operating Geography :Europe, Denmark, Global

About Lego A/S :

Lego A/S (The Lego Group) is a Danish company, best known for the production of Lego-brand toys which consist of interlocking plastic bricks. Established in 1932, the company is headquartered in Billund, Denmark and has more than 19,000 employees as of 2017. The name Lego comes from “leg godt”, meaning “play well”.Lego sets are basically toys that can be constructed, with interlocking bricks of various sizes, shapes colors, according to the design and pattern provided with the set.The company surpassed Mattel to become the world’s largest toy company and market leader, by revenue in 2015.The company also has set up Lego branded six amusement parks globally, known as Legoland and has supporting movies, competitions and games.Lego’s corporate strategy has helped Lego group holds its position since last year as the second most highly regarded company in the world, amongst the "2018 - Most Reputable Companies", in terms of corporate reputation.

Lego’s mission statement states “Our ultimate purpose is to inspire and develop children to think creatively, reason systematically and release their potential to shape their own future - experiencing the endless human possibility.”Lego’s vision is to “Inspire and develop the builders of tomorrow. Our ultimate purpose is to inspire and develop children to think creatively, reason systematically and release their potential to shape their own future - experiencing the endless human possibility”.The USP or Unique selling proposition of Lego companyis to sell construction toys, with intrinsic detailing of each brick.The toy out of Lego set can be dismantled and re-constructed infinite times, with thousands of permutation and combination options available, this helps their targeted audience (age group of 3-15 years children) develop the ability of being creative and thinking out of the box.

Lego A/S Revenue :


DKK 35.0 billion - FY ending December 31st, 2017 (y-o-y growth, – 8%)
DKK 37.9 billion - FY ending December 31st, 2016

Ownership / Major shareholders :

The LEGO Group is a privately held, family-owned company with headquarters in Billund, Denmark, and main offices in Enfield, USA, London, UK, Shanghai, China, and Singapore. Founded in 1932 by OleKirk Kristiansen, and based on the iconic LEGO brick, it is one of the world's leading manufacturers of play materials.

The LEGO Group is owned by KIRKBI A/S (75 percent) and the LEGO Foundation (25 percent).KIRKBI A/S is the holding and investment company of the Kirk Kristiansen Family. The activities within the KIRKBI Group are divided into strategic and investment activities. The LEGO Foundation is a corporate foundation and is about re-defining play and re-imagining learning.

Competitive Analysis of Lego A/S

SWOT
PESTLE

The SWOT / TOWS analysis for Lego Company gives insights about the internal and external factors, namely, strength, weakness, opportunity and threat of Lego Company. The strategic analysis of Lego’s internal factors shows that strengths like Unique and addictive toy building concept with creative expression for kids, global presence, huge array of diversified products, movie franchise and association with top movies like Harry potter, Star Wars etc. are creating competitive advantages for Lego company over its competitors. However, every top brand has some weak spots, so does Lego company. Lego toys come with a pocket pinch and are affordable only by upper and higher middle-class society. Although the company makes robust investments in research to make their offerings innovative and unique, they are easily duplicated by local players who can offer them at a much cheaper price. The Lego analysis discusses these weaknesses in detail. External analysis of Lego company, has helped detect some factors that act as biggest opportunities to the brand. One such aspect is parental focus in skill enhancement and experiential learning for their children which is driving them to choose Lego sets, which is one of the biggest opportunity for Lego as a toy maker company. Huge craze of video games and digitization of games has become a raving trend, derailing children away from brain development toys; this is a major threat for the Lego Group.

Strengths
Weaknesses
1. Strong brand name and reputation
2. Investments in capacity expansion and digital developments emerging as strong growth drivers
3. Emphasis on quality and safety
4. Strong financials with sustainable growth
1. Negative impact of Lego’s operations on the environment
2. Premium pricing with respect to other players in the market
Opportunities
Threats
1. Expanding global presence in emerging markets such as China and India1. Intense competition from other toys and online gaming segments
2. Threat from counterfeits and cheap imitations
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Detailed SWOT Analysis of Lego A/S

 

Strengths

1. Strong brand name and reputation: Lego is the world’s leading suppliers of creative play and learning materials and enjoys a strong brand name and reputation which is one of its key strengths.Lego sets are sold in more than 140 countries and the company sees children as its role models and continuously strives to create the best for them. The company is regarded on top globally in terms of corporate reputation and for seven consecutive years, the Lego Group is ranked in the Top 10 of the Reputation Institute annual RepTrak 100 survey, with the rank being second in 2017. This is a strong testimony of the company’s commitment to creativity, innovation and ethical business practices.

2. Investments in capacity expansion and digital developments emerging as strong growth drivers: Lego Group has made significant investments in capacity expansion and digital play domain which are turning out as strong growth drivers. The company in FY16 announced expansion plans for manufacturing units at Nyíregyháza, Hungary, and Monterrey, Mexico, in order to meet future demand for Lego products. Further, in November 2016, the new Lego factory in Jiaxing, China, was inaugurated which will help to cater to Asian markets and help the company in its pursuit of its global ambitions. The company is pursuing the digitalization strategy as an enhancement to its core business - physical Lego play and make it more exciting and appealing by creating a hybrid physical-digital experience. A recent initiative in this regard is the LEGO® NEXO KNIGHTS series which combines physical and digital play. These initiatives have helped to lay a strong foundation to bring Lego play to more children around the globe.

3. Emphasis on quality and safety: Lego deeply invests in quality and safety to ensure that the children enjoy a safe high-quality Lego play experience. Lego products adhere to the strictest global safety and quality standards and the company’s focus on quality has ensured that it has zero product recalls since2009.LEGO and LEGO DUPLO elements undergo a series of rigorous physical and chemical tests such as bite test, impact test, drop test, color and substance migration, hazard migration, compression test and hazard classification. Lego also plays a leading role in European (CEN) and International (ISO) Toy Safety Standardisation Committees which promote and regulate toy safety.

4. Strong financials with sustainable growth: Lego Group reported strong results in FY16 with the highest revenue in the company’s 85-year history. FY16’s revenue increased by 6.0% to DKK 37.9 billion compared to DKK 35.8 billion for FY15. The company also registered an increase in net profit to DKK 9.4 billion in FY16 versus DKK 9.2 billion in FY15. The growth in profit was lower than in the recent past due to capacity expansion and organization restructuring initiatives which will equip the company for future growth.

Weakness

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Opportunity

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Threat

This section is available only in the 'Complete Report' on purchase.

Major Competitors :

LEGO play materials are diversified to include movies, video games and more.
In video games, LEGO's major competitors are Disney Infinity
In the Toys-To-Life arena, where Lego offers digital experiences with physical toys it competes with Sky landers

Direct competitors of LEGO in the toy making arena are:
1. Mega Bloks, owned by Mattel
2. Playmobil
3. K'NEX
4. Hasbro Company
5. Oyo Sports toys Company
6. Spin Master
7. Bridge Direct
8. Cobi

Major Brands :

Legoland, LEGO, Lego wear, Lego Serious Play

Key Business Segments / Diversification :

Lego A/S
Toys (Blocks-physical) Toys-to-life Gaming (Video) Clothing Theme Parks

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
Chronicle BooksBooks2018-underwayPublishing partnershipChronicle Books plans to rolls out a series of books in partnership with the LEGO Group starting in 2020. The books, aimed at adult fans of the toys, will include gift books, puzzles and more.
Tencent Holdings Gaming2018Joint Venture / PartnershipTo jointly develop online games and potentially a social network for engaging Chinese children.
PitscoEducation2014AcquisitionTo prioritize securing that growth in education in the US by becoming sole owners of LEGO Education in North America
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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WHY BUY THIS REPORT?
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
The SWOT and PESTEL analysis report of the Lego Group comprises of the following:
  • A brief overview about the Lego company’s history, its headquarters, owners & stakes, revenue jumps and its major competitors
  • A big picture of Lego’s brand portfolio, company information,company profile and its business model
  • A peak into Lego’s USP or unique selling proposition, mission statement and vision statement
  • Detailed evaluation of Lego group by internal and external analysis using the SWOT and PEST tool
  • Comprehensive internal analysis, describing the strengths and weakness of Lego group
  • Strategic intelligence on opportunities for growth based on individual category and country of operation and threats from major competitors and prospects
  • Understanding of global and local market position of Lego company
  • Lego external environment analysis highlighting the impact of political, economical, social, technological, legal and environmental factors on the company.
  • Competitive analysis about its competitors and threats they pose on Lego group
  • A discussion on Lego case study and understanding its business and marketing strategy and drawing out the business case in detail.
  • Exposure to Lego’s key performance indicators, success factors, value proposition and core competency
References used in Lego A/S Analysis Report

1. Lego Annual Report- https://www.lego.com/r/www/r/aboutus/-/media/aboutus/media-assets-library/annual-reports/interim-results-2018/lego-infographics_interim-results-2018_final.pdf?l.r=1363801438

2. Lego Website-https://www.lego.com/en-us/aboutus

3. Lego market Segmentation- https://ccs.instructure.com/courses/1396406/pages/case-study-2-dot-1-legos-market-segmentation-strategy

4. Lego Digital Transformation- http://reports.weforum.org/digital-transformation/lego-group/

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Lego SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.

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Lego SWOT & PESTLE Analysis
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