THE LEGO GROUP : BUILDING STRATEGY

GROUP 5

ANKITA SINHA

KARUNESH PANDEY

S.R. ARCHANA

CASE SUMMARY

• COMPANY WAS STARTED IN 1934

• FAMILY RUN BUSINESS UNTIL 1979

• STARTED ITS OPERATIONS PRODUCING WOODEN TOYS

• 1947 -BOUGHT PLASTIC INJECTION MOLDING MACHINE AND STARTED PRODUCING PLASTIC TOYS

• 1958 – PATENTED THE LEGO BRICK DESIGNS

• “IDEA TO CREATE A TOY THAT PREPARES CHILD FOR LIFE”

• LEGO ESTABLISHED AS “BUILDING A TOY OF CHOICE”

1960 •Expanded sales –Europe,US, Canada, Japan& Australia •Expanded to 200 different shapes of brick design•Introduced new brick DUPLO – eight times the original lego brick

1970 •2500 employees – new innovative series for girls – doll houses,furniture, ships•LEGO TECH Series – mechanical moving parts,• town featuring city characters, astronauts & Spacecrafts

1980 •50th year – 1982- expanded to educational line for Schools and DUPLO Baby Series•Introduced light and sound series , addition to their tech series ( motors controlled by computer)

1990 •Top 10 largest toy manufactures – 7000 Employees -Exclusive lego stores •Lego manic slogans through TV ads launched their own website in 1996 Lego computer games•Acquired license to movies and children themes

2000 •Licensed rights to Harry potter , Spiderman batman etc•Special sets to adults – expand traditional video games

LEGO OPERATIONS

The LEGO Group

Non Licensed

Building Sets

Licensed Building

Sets

Video GamesBoard

Games

Theme Parks

Stores & Merchandi

se

Online Website

Q 1.)ANALYSE LEGO’S VARIOUS BUSINESS LINES WITH RESPECT TO

COMPETITIVE ADVANTAGE THESE ENJOY

Wodden Toys Business

•Initial operations•1960 stopped selling wooden toys

Plastic Toys

•Lego System to plays•DUPLO•Doll Houses, Furniture•Ships •LEGO City •Lego Castel•Lego Space•Lego TECH Series•Lego Pirates•LEGO WESTERN•LEGO Adventures

LEGO THEME PARK

•LEGOLAND•Opened in home country - Denmark

Video games & Computer Games

•LEGO MIND STORMS•License to movies and children themes•LEGO STAR WARS•Harry potter•Spiderman •LEGO Universe – online video games

COMPETITIVE ADVANTAGES• PATENTED LEGO BRICK DESIGN

• LEGO’S LARGE PRODUCT LINE

• TECHNOLOGICAL INNOVATION

• RIGHT UNDERSTANDING OF THE TARGET AUDIENCE

• LEGO PROVIDED NON VIOLENT VIDEO GAMES

• LICENSE TO CHILDREN THEMES & MOVIES

• STRONG BRAND IMAGE

Q2.)IMPACT OF CHANGES IN THE MARKET PLACE ON FUTURE BUSINESS

OPPORTUNITIES WITHIN THE TOY INDUSTRY

acquisition of marvel entertainment by walt disney

--created major license agreements implications

--marvel had a wide catalogue of overe 5000 comic book characters that were hugely successful in films

--placed large amount of entertainment licensing under the control of one organization

eu decision to remove lego brick trademark

new competition from hasbro launching a similar rival product line kre-o

--featuring popular transformers

--huge size and brand power of hasbro

big box toy discounters trampled mom-and-pops and lowered prices dramatically

birth rates declined, children had less time to play and not much interest in toys that didn't offer instant gratification

rise of online games

3.EVALUATION OF VARIOUS EXPANSION OPPORTUNITIES

INCREASE THE MARKET SHARE IN THE UNITED STATES

--MANY AMERICANS MAY THINK THEY BUY A LOT OF LEGO PRODUCTS,BUT THEY BUY ONLY ABOUT A THIRD OF WHAT GERMANS BUY, FOR EXAMPLE

• INCREASE MARKET SHARE IN EASTERN EUROPE, WHERE THE TOY MARKET IS GROWING VERY RAPIDLY

• INVEST IN EMERGING MARKETS

• EXPAND DIRECT-TO-CONSUMER ACTIVITIES (SALES THROUGH LEGO-OWNED RETAIL STORES),ONLINE SALES, AND ONLINE ACTIVITIES (SUCH AS ONLINE GAMES FOR CHILDREN)

• CREATING INNOVATIVE NEW PRODUCTS FROM CONCEPTS DEVELOPED UNDER THE TITLE “OBVIOUSLY LEGO, NEVER SEEN BEFORE.”

• E.G. LEGO GAMES SYSTEM, WHICH IS FAMILY BOARD GAMES (A NEW WAY OF PLAYING WITH LEGO BRICKS)

• EXPAND LEGO EDUCATION, ITS DIVISION THAT WORKS WITH SCHOOLS AND KINDERGARTENS

• DEVELOP ITS DIGITAL BUSINESS

 4. WHAT SHOULD LEGO DO EXPAND ITS PRODUCT LINES AND BUSINESS OPPORTUNITIES?

• GETTING LICENSES OF THE POPULAR COMIC CHARACTERS IN THE EMERGING MARKETS SUCH AS INDIA, CHINA ETC.

• PARTNERING WITH UPCOMING SCIENCE FICTION MOVIES AND LAUNCHING THE TOYS WITH THE RELEASE OF THE MOVIE TO TAKE ADVANTAGE OF THE BUZZ

5. STRATEGY FOR MAINTAINING LEGO'S  MARKET DOMINANCE.

• USING IT FOR IMPROVING THE OPERATIONS

• CUSTOMIZATION OF THE TOYS ACCORDING TO LOCAL TASTE

• PARTNERING WITH DISNEY(MARVEL)

• MORE FOCUS ON THE COMPUTER GAMES

THANK YOU