Lego Analysis BA3103 Essay

4952 Words20 Pages
FINAL COPY:
Lyndsay Gorson, Cesar Cordero, Larry Weber, Brendan Lyons
November 10, 2014
LEGO Harvard Business Case ­ Group Analysis Paper

LEGO, like most companies in the toy industry are fighting to stay profitable in this

competitive market. LEGO has recently elected a new, non­related Chief Executive Officer in attempts implement a new, stronger business strategy. This paper will help us understand
LEGO’s further in depth by administering these four analytical frameworks, PEST, Porter's,
SWOT, and FFA.
We begin with the PEST analysis because it will help us better understand the current global trends. Figure 1 shows a trend analysis in four
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LEGO’s currently ranks as the number one industry leader as they have extended their market outside of just building blocks. Due to the different segments that make up the toy industry, buyer power is high because they have countless products to choose from. They are not loyal to any one company and the industry is based on trends that are constantly changing to the next big hit. The porters can also be used to better understand the make­up of the building block segment inside the toy industry.

Porter’s Six Forces Analysis of the Building Block Segment

Supplier Power ­ Low
Low switching cost
Cheap molds to mass produce building blocks Threat of Substitution
High
Video Games
Outdoor Games
Electronic Games
Action Figures
Dolls

Threat of Entry
Low
LEGO owns majority market share
Other competitors solidly in place behind

Industry Rivalry – Low
LEGO, Hasbro, Mattel, MEGA
Brands, K’NEX

Buyer Power ­ med
Small market segment
Few options

Complements
None

Different types of building block materials In the building block segment, the supplier power is low because the companies face low switching cost to find a different supplier to make a mold for their product to mass produce. The threat of substitution is high considering this is just

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