Lego 's Strategic Objectives For The Years

2767 WordsDec 3, 201412 Pages
Introduction LEGO’s strategic objectives for the years to come are restoring growth and profitability in the retail toy industry. To find the most suitable recommendation, Delgado Consulting analyzed LEGO’s issues through an External Environment Analysis, an Internal Analysis, a key issues and problems analysis, available strategic options analysis, and recommendations. LEGO has difficulties matching its creative team with the business goals therefore LEGO cannot be profitable. With an evolution of LEGO’s customers, LEGO must also rethink its supply chain management and finally refocus on its core values. LEGO’s lack of control over its innovative team would be the first problem to tackle. External Environment PORTER’S 5 FORCES: The…show more content…
The industry is composed of firms that export their production in Asia in order to benefit from low wages, reduce their operating costs, and generate economies of scales. Companies in the industry have been established for decades, which enabled them to build strong brand equity and make high economies of learning. This knowledge and expertise enables companies to lower its costs and optimize its value chain, which increased its economies of scale. A new entrant will face cost disadvantages mainly because of the production cost and the difficult access to distribution channels. Also, manufacturers acquire franchises and licenses to better correspond to the trend and what children want and therefore attract the fan base of each license. However, each country represents a different market with different preferences so a new competitor may start to build a business by targeting a specific country in order to penetrate the industry. Bargaining Power of Suppliers – Low: In this industry, toys are principally made of plastic. Plastic producers have a low power because they provide essentially standardized plastic material that is transformed by manufacturers. Manufacturers have a low switching cost because they mainly depend on the price and the quality of the plastic. However, suppliers have the
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