Lego Financial Turnaround

Topics: Lego, Retailing, Strategic management Pages: 3 (1554 words) Published: October 25, 2014

STEPS TO LEGO GROUP FINANCIAL TURNAROUND
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EXECUTIVE SUMMARY
Rivkin, Thomke and Beyersdorfer (2013) suggested in 2004, the market size of the toy industry is worth $61% billion in the wholesales revenue, with a steady growth of 4% per year in the retail market for toys. Thousands of toymakers flourish the market to serve global demand while keeping track of the 3 new trends in the industry which are toys demand rise while product life cycles decline, children has less time to play, and lastly increase demand of technology integration in physical toy or online worlds. Changes in conduct of competitors have change as witnessed by manufacturing in Asia, entering diverse retail channels and engaging in heavy marketing efforts. Therefore, we recommends LEGO Group to first, bring back LEGO DUPLO concepts and offer to unexplored market by establish strategic partnerships. Second, increase investment in R&D of new product designs and innovations. Third, adopt internal supply chain monitoring system and LEGO retailers’ system integrator. As external analysis has suggested increase of retail competition sector in the toy industry and this will have effect on LEGO Group because internal analysis shows that firms have high operational costs and as a result the firm is making no profit. By implementing these recommendations LEGO Group will achieve lower operational cost, establish sustained competitive advantages which will led to higher market shares and customer satisfaction. ANALYSIS

The nature of the toy industry as analyzed by adopting the Porter (2008) Five Forces framework presents the market as crowded and competitive. Low barrier of market entry: Rivkin, Thomke and Beyersdorfer (2013) suggested that the attractiveness of toy industry has crowded the market with thousands of toymakers and the number is growing as we see increase in numerous competitors leading the industry like Mattel and Hasbro. Threat of substitutes:...
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