Adopting a Strategic Approach

Founded in 1932 in Denmark

Historically successful, family-led, business

In 1996 they receive the Distinguished Family Business Award

Organically grew quickly in the global toy industry

Fun, educational product important for the development of individual physical, intellectual and social skills and competences.

1932Legos best selling item was wooden toysLego design was invented and patented Start of producing Lego Plastic BricksAwarded (Toy Fair 2013 and Distinguished Family Business)

1958

Extend the playing opportunities1958

Even during the economically difficult environment LEGO continued to be successful

Introduced number of innovative products

USASouth America Asia 1970 -1980...

Increase%Sales25%Net profits35%Market share8.6%

1995 2004Grew too quicklyProfits became losses Company recovered at the helm of Kjeld and later Jorgen Vig Knudstorp 2005: Sales of DKK7 billion 2012: Sales of DKK23 billion

An Insight into Lego

Distinctive Capabilities Large production facilities with non-toxic material Innovative and large product variety with distinctive design and quality Wide international distribution channel Top of mind BrandResource Gap Only expertise in one product Lego block Limited access to capital marketIssues of Concern High competition Patent expires soon Changing customer trendsViable Option Expand to different toys or other business lines Target emerging markets Expand brand positioning to include other products Strengthen ties with distributors through exclusive agreements Expectation Support of financial from the family

PESTEL ANALYSISPOLITICAL ECONOMIC TECHNOLOGICAL

High threat of SubstitutionMany substitute products: Video games, Figures, Soft Toys

High supplier PowerPrevious outsourcing activities failed

High threat of new entry Patents expire soon

High buyer powerLow switching costs: Easy access to alternative products

High competitive rivalryMany and similar toy companies

USAPlayskool, Transformers, My Little Pony, Littlest Pet Shop, Tonka, GI Joe, Super Soaker, Milton Bradley, Parker Brothers, Tiger, Wizards of the Coast

SegmentationPeopleGirlsBoysPre-schoolPre-teenTeenAdultsPre-schoolPre-teenTeenAdults< 56 -1213 -18> 18< 56 -1213 -18> 18Productbricks, movieGirls feature, construction, movieVideo games, moviesVideo games, moviesAction Figures bricks , moviesConstruction, Vehicles, etc bricks , moviesVideo games, moviesVideo games, moviesPromotionDistribution , Packaging AdvertisingPrice, Advertising, connection w/ devicesDistribution Packaging AdvertisingPrice Advertising Connection w/ devicesPlaceSpecialized stores, hypermarketSpecialized stores, hypermarket, online storeSpecialized stores, hypermarketSpecialized stores, hypermarket, online store

Capabilities Valuable RareInimitableOrganizational SupportCompetitive AdvantageTANGIBLEProduction facilitiesMediumHighMediumHighNon-toxic materialsHighHighHighHighProduct & varietyHighMediumLowHighDistribution ChannelHighHighLowHighINTANGIBLEBrandHighHighMediumHighPatentHighHighHighHighInnovation & DesignHighMediumMediumHighORGANIZATIONALManagement TeamMediumMediumLowHighSupply ChainMediumLowLowHighR&D specialistMediumMediumLowHigh

Where does LEGO now

Ensure long-term security of the organisation

Diversify revenue streams as patents expire soon

Grow global market share

Dont forget the basics

Its about more than just plastic blocksBroaden and strengthen brand appeal to boys and girlsLicense the brand to create:MoviesMulti-Platform Games Clothing / Accessories Lego Children Food

Obviously Lego, But As You Have Never Seen It Before

Follow the users to new platforms and technologiesIntegrate product with Smart Phones, Consoles, etc.Add automation and online capabilitiesExpand R&D activities

Create After Sales MarketPacks to add features Customisation of an out of the box product

Grow the brand globallyFocus on high-growth markets Build marketing bases in key countries

Use Lego Education to build product awarenessPromote heavily to schoolsBuilds early brand awareness & loyalty

Target a new user segment

Design and build products for Girls

Partner with other iconic brands to promote product

Use internal equity

Spread the cost by:Partnering with expert local companiesBuild local manufacturing and distribution unitsLicense brand to specialist companies

Release 20% of the share to strengthen the financial condition

Questions

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