Transcript Slide 1
Strategic Analysis and Recommendations
Group 4 – Section B Alex Brown Luis Cavero Amedeo Giacomantonio Unni Pedersen Jung-Ho Song Tetsuma Suzuki
Presentation Outline
Company Overview External Analysis Internal Analysis SWOT Analysis Lego‘s 8-Point Action Plan Additional Recommendations Conclusion
Mission, Vision & Core Values
• Mission: To encourage self-expression in children of all ages through creation, by enabling them to bring their ideas to life • Value Proposition: Develop and distribute toys which positively develop children’s mental and physical abilities while entertaining them and being fun at the same time • Core Values: Creativity, Imagination, Learning, Fun and Quality
Company Time Line
• 1932 - A company producing stepladders, ironing boards, stools
and wooden toys, is established in Denmark
• 1934 - The company is called LEGO (Play Well) • 1956 - Plastic toys • 1968 - LEGOLAND® Billund opens its gates • 1986 - The DUPLO line • 1998 - LEGO MINDSTORMS /ROBOTICS • 1999 - Star Wars • 2001/03 - LEGO BIONICLE + BIONICLE video game + Movie
External Analysis
Competitors Industry • Mattel: # 1 - strong growth • Hasbro: # 2 - diverse portfolio • Bandai: strong in Asia and Europe • Mega Bloks: substitute bricks • Customer is not always the consumer Customers • Key considerations: Quality, Satisfaction, Timing Technology • Continued expansion of the Internet • Growth in broadband technology and wireless technology • Decreasing costs for sophisticated electronic components • Highly fragmented • Key success factors: Innovation, Strong Brands, Creativity • Distribution moving towards mass retailers • Trends: Increase in electronic toys and video games Environmental • Strong growth in emerging markets • Improvement in US and European economies
Internal Analysis
Financial Performance
Net sales fell by 26% in 2003 - only the 3 rd No major investments in 2003 loss since 1939
Physical Assets
Reduced total assets by 20% by reducing working capital
Technical Resources
The Vision Lab, setting up in 2003 (researching trends and innovations) 39 Lego Mindstorm centres around the world (working with leading universities and science centres)
Costs
Cut of 600 positions globally in 2003 Closing Switzerland factory in 2004
S.W.O.T
Strengths
• Strong Brand Power • Wide product line • Well developed global distribution channel
Opportunities
• Electronic/technology driven toys • Sales to the Education industry • Alliances in the Entertainment industry • Growth in emerging markets
Weaknesses
• Limited brand image • Loss of focus on key businesses • Indifferent cultural knowledge • Easy to copy
Threats
• PC / Video Games • Increasing power of distributors • Increased dependency on licensed products • Low cost competitors
Lego’s Action Plan
Cost Reduction
-Reduce development and lead times by as much as 50% -Terminate non-core ventures
Increasing Value to the Customer
-Improve delivery system -Increase focus on classic product lines
Improving Speed to the Customer
-Increase promotional activity -Establish a simplified global location and operations infrastructure
Technical Quality Service Quality Timing Quality Reputation Quality Relationship Quality Price
Realign the Organization
Alignment Technical Quality Service Quality Timing Quality Reputation Quality Relationship Quality Price
Strategic Recommendations
Leverage Brand and Technical Expertise • Education Sector Focus on core business
Construction ‘Violent’ Construction Educational
Strategic Recommendations (cont’d)
Target Developing Countries • Currently less than 10% of sales outside US & Europe • 376 million children in China (20 times the US figure) • Culturally Customized Toys
High MARKET ATTRACTIVE NESS Medium COMPETITIVE STRENGTH Strong Average Weak CHN IND USA EU Low
Strategic Recommendations (cont’d)
Target Parents of Young Children • Re-branding Products (problem) • • Reverting to the original Lego brand Increase marketing aimed at parents of infants and small children, and stress Lego’s educational benefits Strategic Alliances (Entertainment Companies) • Major entertainment franchises: Star Wars and Harry Potter • Bionicle / Miramax: Mask of Light been translated in 26 different languages