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Lego Analysis

1095 words - 5 pages

External Analysis
Toy industry is an industry that manufactures and sells toys for children. This industry would be affected due to six factors, which are political, economic, social, technological, legal, and environmental aspects. There are some opportunities and treats exist that each toy company will face.

Because of both stable economic and political sectors, LEGO and other educational toy companies get opportunity to prosper in the local region and global market, with the way for improvement of products. The society accepts the products that LEGO and other educational toy businesses offered. All the toy companies engage in social activities that help to keep balance and a better ...view middle of the document...

(b) VRIO Analysis:
As LEGO had lost the long legal battle with its major competitor MEGA Brands, the protection of its trademark had removed. It means that LEGO's products would be duplicated easily, in addition, the market share might be shared with other competitors in the future. This is a weakness, which will become a competitive disadvantage for LEGO.
However, the profit will be affected by the lost of trademark, LEGO's strong brand image would be one of its strengths. Even though LEGO is not the top largest toy maker, but its strong band name is valuable for the Group, which could attract more consumers and also keep the old ones become more loyalty.
Due to the history of LEGO's development, the unique product design was the main factor that caused the success among the toy industry, which would be valuable, and rare. Meanwhile, because of the failure suitcase, the unique design becomes a temporary competitive advantage. Therefore, even though the design is one strength for LEGO, it will disappear once more competitors enter the market.
Wide range of sale channels with different product categories is LEGO's sustainable distinctive competence. A wide range of toys, video games, and online games, which offers different groups the creativity development products, as well as innovative playing and learning techniques. It makes LEGO's operations valuable and rare. Competitors cannot imitate easily. Therefore, this point is LEGO's sustainable competitive advantage.

(c) Financial Performance and Future Financial Capacity :
According to the information from Exhibit 1, we may get that the LEGO group's revenue increased by 37.3% in 2010 to DDK 16,014 million, which against DKK 11,661 million the year of 2009. The class product lines such as LEGO Star Wars, LEGO City, and LEGO DUPLO created the highest sales in 2010 compare with other product lines. The profit before special items, financial income and expenses and tax amounted to DKK 5,115 million in 2010, which increased rapidly other than year 2009. Furthermore, the operating margin(ROS) was 31.1% in 2001 against 24.9% in 2009. Therefore, the highly satisfactory results are mainly contributed by the massive sales increases and continuous cost control. The...

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