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Alex Brown
Luis Cavero
Amedeo Giacomantonio
Unni Pedersen
Jung-Ho Song
Tetsuma Suzuki
Group 4 – Section B
Strategic Analysis and Recommendations
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Presentation Outline
Company Overview
External Analysis
Internal Analysis
SWOT Analysis
Lego‘s 8-Point Action Plan
Additional Recommendations
Conclusion
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Mission, Vision & Core Values
• Mission: To encourage self-expression in children of all ages through creation, by enabling them to bring their ideas to life
• Value Proposition: Develop and distribute toys which positively develop children’s mental and physical abilities while entertaining them and being fun at the same time
• Core Values: Creativity, Imagination, Learning, Fun and Quality
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Company Time Line
• 1932 - A company producing stepladders, ironing boards, stools and wooden toys, is established in Denmark
• 1934 - The company is called LEGO (Play Well)• 1956 - Plastic toys
• 1968 - LEGOLAND® Billund opens its gates
• 1986 - The DUPLO line
• 1998 - LEGO MINDSTORMS /ROBOTICS
• 1999 - Star Wars
• 2001/03 - LEGO BIONICLE + BIONICLE video game + Movie
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External Analysis
• Mattel: # 1 - strong growth
• Hasbro: # 2 - diverse portfolio
• Bandai: strong in Asia and Europe
• Mega Bloks: substitute bricks
• Highly fragmented
• Key success factors: Innovation, Strong Brands, Creativity
• Distribution moving towards mass retailers
• Trends: Increase in electronic toys and video games
Competitors Industry
• Continued expansion of the Internet
• Growth in broadband technology and wireless technology
• Decreasing costs for sophisticated electronic components
Technology
• Customer is not always the consumer
• Key considerations: Quality, Satisfaction, Timing
Customers • Strong growth in emerging markets
• Improvement in US and European economies
Environmental
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Internal Analysis
Financial Performance Net sales fell by 26% in 2003 - only the 3rd loss since 1939No major investments in 2003
Physical Assets Reduced total assets by 20% by reducing working capital
Technical ResourcesThe Vision Lab, setting up in 2003 (researching trends and innovations)39 Lego Mindstorm centres around the world (working with leading universities and science centres)
CostsCut of 600 positions globally in 2003 Closing Switzerland factory in 2004
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S.W.O.T
Threats• PC / Video Games• Increasing power of distributors• Increased dependency on licensed products• Low cost competitors
Opportunities• Electronic/technology driven toys• Sales to the Education industry• Alliances in the Entertainment industry• Growth in emerging markets
Weaknesses• Limited brand image • Loss of focus on key businesses • Indifferent cultural knowledge • Easy to copy
Strengths• Strong Brand Power• Wide product line • Well developed global distribution channel
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Lego’s Action Plan
Cost Reduction-Reduce development and lead times by as much as 50%
-Terminate non-core ventures
Increasing Value to the Customer-Improve delivery system
-Increase focus on classic product lines
Improving Speed to the Customer-Increase promotional activity
-Establish a simplified global location and operations
infrastructure
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Realign the Organization
TechnicalQuality
ServiceQuality
TimingQuality
ReputationQuality
Price
RelationshipQuality
TechnicalQuality
ServiceQuality
TimingQuality
ReputationQuality
Price
RelationshipQuality
Alignment
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Strategic Recommendations
Leverage Brand and Technical Expertise • Education Sector
Construction ‘Violent’ ConstructionEducational
Focus on core business
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Strategic Recommendations (cont’d)
MARKET ATTRACTIVE-
NESS
COMPETITIVE STRENGTH
Strong Average Weak
High
Medium
Low
INDCHN
EU
USA
Target Developing Countries• Currently less than 10% of sales outside US &
Europe • 376 million children in China (20 times the US
figure)• Culturally Customized Toys
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Strategic Recommendations (cont’d)
Target Parents of Young Children• Re-branding Products (problem)• Reverting to the original Lego brand • Increase marketing aimed at parents of infants and
small children, and stress Lego’s educational benefits
Strategic Alliances (Entertainment Companies)
• Major entertainment franchises: Star Wars and Harry Potter
• Bionicle / Miramax: Mask of Light been translated in 26
different languages
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Questions?