LEGO Draft
The Lego Group was founded in 1932 and has gone through hard times during the 1990s and 2000s, however they are going on a growth trajectory following a turnaround in 2005. With the high growth of the company, LEGO has a few issues and challenges in hand that require to be resolve for the company to enhance their growth potential.
Q1. Porter 5 Forces
Level of rivalry
The overall level of rivalry may be seen as relatively high.
Lego occupies a firm position in the market for construction toys, there are only a few rivals competing in the same market. With Lego accumulated knowledge on plastic and production technologies, they are able to stand out among other competitors with the focus on product quality and innovation of their product. (O)
In the recent years Lego is diversifying and competing in boarder market of children's entertainment to increase their growth in other regions, existing competitors such as SEGA and NINTENDO who are already in the market will have the first mover advantage against them. (T)
With the success of Lego innovative brick concept, Mattel and Mega formed a partnership to infiltrate the market to compete against Lego, with the innovating idea of integrating bricks with traditional toys for both boys and girls. Companies in the traditional toy market are trying to integrate their products with Lego bricks to make their toys seem more attractive to the children. This will allow the companies to step into the same market as Lego, exploiting Lego brick to enhance their sales. (T)
Bargaining Power of Buyers
The bargaining power of the buyer in the case of Lego is seen as relatively high.
This is due to the low switching costs between alternative toys and substitute products such as video games and television. Buyers are able to switch to alternative toys without paying a fee and with the technological advancement; video games are easily accessible to them. (T)
As an individual buyer, they are unable to cause significant influence on
Q1. Porter 5 Forces
Level of rivalry
The overall level of rivalry may be seen as relatively high.
Lego occupies a firm position in the market for construction toys, there are only a few rivals competing in the same market. With Lego accumulated knowledge on plastic and production technologies, they are able to stand out among other competitors with the focus on product quality and innovation of their product. (O)
In the recent years Lego is diversifying and competing in boarder market of children's entertainment to increase their growth in other regions, existing competitors such as SEGA and NINTENDO who are already in the market will have the first mover advantage against them. (T)
With the success of Lego innovative brick concept, Mattel and Mega formed a partnership to infiltrate the market to compete against Lego, with the innovating idea of integrating bricks with traditional toys for both boys and girls. Companies in the traditional toy market are trying to integrate their products with Lego bricks to make their toys seem more attractive to the children. This will allow the companies to step into the same market as Lego, exploiting Lego brick to enhance their sales. (T)
Bargaining Power of Buyers
The bargaining power of the buyer in the case of Lego is seen as relatively high.
This is due to the low switching costs between alternative toys and substitute products such as video games and television. Buyers are able to switch to alternative toys without paying a fee and with the technological advancement; video games are easily accessible to them. (T)
As an individual buyer, they are unable to cause significant influence on