Lego Pest Analysis

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Introduction: Brief Overview of LEGO 90 Based on FY2014 revenue and profit, LEGO surpassed its rivals Mattel and Hasbro being the world largest toymaker for the first time (Petroff, 2014). LEGO was founded by Ole Kirk Kristiansen, a carpenter with dream of starting producing wooden toys in a small town in Denmark. LEGO is still a family owned business and is now owned by the founder grandson, Kjeld Kirk Kristiansen. The name ‘LEGO’ was formed from two Danish words “leg godt” which means “play well” but was realized later it also means “I put together” in Latin word (Mortensen, 2012). Values Figure 1: Self-create (Source: Lego) PEST Analysis To analyze macro-environment, it is vital to be able to identify factors that may be crucial…show more content…
Figure 4: Self-create Threats of New Entrants (Low) To compete with LEGO, new entrants required hefty investments to manufacture the same products quality. Due to LEGO strong branding identity, new entrants need to develop excellent and innovative strategies, ideas and technologies to create an instant identity. Competitive Rivalry (Low) Although Best-Lock and Mega Brands are lower in price (Clark, 2007) but LEGO strong branding image, customer loyalty and long history allow LEGO to gain competitive advantage over its rivals. In comparison to the existing players in the toys and games industry with expertise helping in decision making and optimising their value chain, new entrants may not reap the economies of scale advantage due to production and resources limitation. Bargaining Power of Buyers (High) Big retailers like Wal-Mart, Toys”R”Us are LEGO primary buyers as they purchase in bulk, provide them with leverage in negotiation. Furthermore, switching costs for retailers is low since it is easy to buy competitors toys. Bargaining Power of Suppliers…show more content…
financial, physical, organizational and technology) and intangible resources (i.e. human resources, reputation, innovation and creativity). LEGO spend much capital and time in optimizing its innovative production process, making the process costly to copy. LEGO strong branding identity represents products and services quality, making it more valuable and costly to imitate. Additionally, LEGO organizational capabilities are also difficult for competitors to copy as they are rare and valuable. Thus, these unique and valuable capabilities gave LEGO a sustainable competitive advantage over its competitors (Vang-Pedersen,

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