Porter's Five Forces In The Toy Industry

Introduction:

In the toy industry today there has been huge developments and enormous changes across the globe, for example an increase in technology has forced the toy industry to improve its interaction with the user as for children are now highly skilled in technology and demand high requirements for their toys.

Strength:

For over 75 years the Lego Company has been in operation in the toy and the gaming industry, this long period of operation highlights that the company has been able to attract and retain a loyal customer base throughout the different generations. However, due to the decrease in customer population Lego has applied a strong strategy where their products have licenses and themes with major companies such as Warner

Thus children are outgrowing toys at a faster rate and becoming adolescents earlier than prior generations (Barney and Hesterly, 2006).

Porters Five Forces:

The competitive nature of any organisation is depended on various factors such as the strategies employed by the organisation. According to Porter’s Five Forces the competitiveness of any organisation can be evaluated based on the company’s external environment (Porter, 2008). The competitiveness of any organisation is determined by the effect of rivalry, threat from new competitors, bargaining power of buyers and suppliers and the effect of substitutes.

Bargaining power of

In the case of Lego an individual buyer does not impact the business or on the growth of the brand. However, an individual business is important to the industry as these buyers determines if the product is successful or not so large toy manufactures must not neglect how vital business to business are to the industry (Daujotas,2013). These individual businesses retain some form of power over toy manufactures i.e. Lego because they decide how to sell their product which puts them in a more favourable position. However, since most toy manufactures have begun distrusting toys online this transaction has now reduced the power of the buyers therefore, toy manufactures like Lego created a position where they are regaining power over the buyers (Daujotas, 2013). Although, toy manufactures have regained more power over its buyers there are still obstacles for the toy manufacture such as the ability to switch manufacturing brands is not as costly for the buyer therefore, buyers will always play an important role in Lego’s expansion (Lego,