Lego Case Analysis

Topics: Toy, Lego, The Walt Disney Company Pages: 5 (1440 words) Published: February 27, 2013
The purpose of this paper is to do a case analysis over the Lego brand. We have evaluated the company to find their strengths and weaknesses to find a problem with in the organization. After deciding on the problem several alternatives were introduced. One was decided on by the group and then steps were made to create a plan for implementation as well as goals to reach within an evaluation period. Background

LEGO was founded during the Great Depression in 1932 by Danish carpenter Ole Kirk Kristiansen. Some of the first toys what were made were not LEGOS but were actually yo-yos, wooden blocks, pull along animals, and wooden vehicles. Kristiansen believes that “only the best is good enough”. The company name LEGO was created in 1934 when Kristiansen held a friendly competition among the workshop employees to help name the company. Their prize was a bottle of wine, which Kristiansen won himself. LEGO was the first company in Denmark to ever purchase a plastic molding machine. This machine was used to create fish shaped baby rattles. The first actual LEGOs were not produced until 1949 and were first called Automatic Binding Bricks. The idea behind LEGO was to encourage creative opportunities for children all across the world. This was done by creating a series of 28 building sets, eight vehicle sets, and decorations like trees people, and road signs. “Our idea is to create a toy that prepares the child for life, appeals to the imagination and develops the creative urge and joy of creation that are the driving force in every human being” (Daniel Lipkowitz). Though LEGO has been a successful company for many years now, some problems have arisen. The acquisition of Marvel Entertainment by the Walt Disney Company created major implications for valuable toy license agreements. LEGO had lost a long legal battle with MEGA Brands with a European Union court decision that removed LEGO’s brick trademark. Hasbro was preparing to inter the marketplace with the launch of their new product line called Kre-O. SWOT Analysis (Situation Analysis)

Internal Environment
1. Each and every brick in the Lego family fits together, making the blocks from different sets interchangeable. This adds to brand loyalty by giving the consumer standards. 2. Lego is a family brand, all products work together and the name is used on all products. 3. Lego is family owned and run, creating a strong mission and firm set of beliefs on how products are made Weaknesses

1. Revenues dropped 30% in 2003, and another 10% in 2004 due to behind the scenes manufacturing and distribution internationally. 2. Layers of complexity had been added due to growth and put a strain on the operations. 3. More elaborate sets had been less profitable, as new products had been released. Designers were not giving full consideration to the cost of production. 4. Resources were going to waste, and causing inefficiencies. Threats

1. Several competitors have come out with similar products that have caused LEGO to lose its competitive advantage. 2. Some competitors include K’NEX, Tyco super blocks, MEGA blocks and Hasbro. Legal

1. LEGO lost an 11 year court battle in the European court where the court ruled that LEGO could not trademark the shape of their bricks. Opportunities
1. LEGO has created a niche on the internet as well as having video games and movies all created using the family brand. 2. The LEGO Company has created a tool to create a buzz and get more consumers to the web site by having a designing tool to allow customers to create their own designs and calculating the cost and amount of bricks. 3. Lego has many licensing rights to movies and TV shows, creating specialty products such as the Star Wars, Harry Potter, Batman and DC Superhero Lego sets. It creates a demand for the product. Definition of Problem

With new competition entering the market, LEGO needs to find a...
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