The Lego Group Harvard Case Solution & Analysis

The Lego Group: Building Strategy

What are Lego’s best product line expansion opportunities to help Lego maintain market dominance in the building toy market?

LEGO is one of the industry giants in the toy industry just like the popular brands Nike and Coca Cola in sportswear and beverage industries respectively. Since its inception in 1932, the company has performed amazingly in difficult and threatening situations to achieve success. However, with the passage of time many new competitors are emerging in the toy industry that are now posing serious threats to the growth, profitability and expansion of the LEGO Group. Therefore now the company requires identifying best product line expansion opportunities in order to maintain its market dominance in building toys as well as to reduce the increasing threats from competitors. In order to identify available potential opportunities, it is good to analyze its strengths, grasp of technology and internet tools, its potential competitors and other various factors, which have greatly affected LEGO’s product growth opportunities.

LEGO’s Grasp on Modern Technology and Internet Tools

Since its inception in 1932, the LEGO Group has always welcomed innovation in order to strengthen its market position as well as to improve its product line and product quality. In 1932, right after its inception, the company was known for handmade wooden toys and blocks. Later on, the company replaced its wooden toys with plastic toys and had installed its first plastic injection molding machine in 1947. With the passage of time, the founder of the LEGO Group Kristiansen family sensed the need of modern technology and has always updated its machinery and equipments. With the advent of Internet technology, in 1996, the LEGO Group launched in order to capture the visual gaming segment. In 1997, the company launched its first computer game. Its “LEGO MINDSTORMS” line to give an opportunity to the users to enjoy complex sets with the help of computer and Internet technology.

In 2000, the company had a range of computer and Internet based games including licensed games such as LEGO Star Wars, DUPLO Winnie, and the Pooh product lines. After the astonishing success of LEGO’s Star Wars, the company extended its licensed product lines to exploit opportunities in professional sports line. After the success of many computer games and acquisition of many licensed rights, LEGO exploited opportunities in the video game market by signing a partnership with video game design companies. As a result the company released more than 30 video games within 13 years, including LEGO’s popular licensed games Harry  Potter, Batman,  Indiana  Jones  and  Star Wars as well as a range of games based on LEGO’s benchmark themes and products. The company also built a virtual online LEGO Universe in 2010, which allowed its customers to pay a registration fee online to design and personalize LEGO Mini Figures to be used for online games. LEGO introduced LEGO Digital Designer Software in order to allow its customers to design their own personalized LEGO sets that are manufactured and directly shipped to the customer’s doorstep after the estimation of material costs. With such initiatives, in 2003, the company had more than four million visitors per month from over 200 countries worldwide. In this regard, it can be easily determined that the LEGO Group has an access to advanced technology, which enabled them to meet the requirements of its customers. It is showing that the company has technological competencies with which it can easily exploit available opportunities by simply improving its strategies.

Key Competitors

Competition in the toy industry is very high and the advancement of technology made it more challenging for the toy makers because of the diversification of markets. Many of its competitors tried to imitate its popular bricks line. The key competitors of the LEGO Group include TYCO, MEGA Brands, and Marvel Entertainment. In the current situation the most threatening competitors in the LEGO Group are Mega Brands as they already have won one lawsuit from the LEGO Group. Mattel and Hasbro are also posing great threats to the LEGO Group, Specially Hasbro as it is the world’s second largest toy maker. Moreover, Hasbro has a licensing agreement to produce Marvel’s toy and games till 2017. Hasbro is also planning a new building block line named Kre-O, which will be compatible with LEGO Bricks. Hasbro is the toughest competitor in LEGO Group with lots of plans for launching more new themes and characters which can pose threats to the LEGO Group in expanding its product line.

The Effect of the Loss of Trademark Protection for LEGO Products on its Growth

The LEGO Group has a license that has protected its classic eight stud plastic brick shape as a trademark with the European Union, however......................

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