External Analysis
Porter’s Five Forces Analysis
I. Rivalry - The competitive rivalry is high, and the major competitors are Hasbro and Mattel. Furthermore, LEGO also has to compete against companies that sell similar products with a relatively low cost. LEGO’s pricing strategy makes the product have almost no price advantage in countries such as China and India, which gives too much space for its competitors’ products.
II. Threat of New Entrants – The threat of new entrants in the toy industry is high, not only because major competitors such as Mattel want to take LEGO’s market share, but also due to the development of modern technology and its effects on the toy industry. These developments are shifting the industry from physical toys to digital toys.
III. …show more content…
Threat of Substitutes – The threat of substitutes is high in the toy industry because of the development of digital products. However, as LEGO keeps implementing modern technology into its current product and creates LEGO games on different platforms, the threat of substitutes for LEGO is low to moderate. More children spend less time playing with physical toys and more time playing PC games and mobile app games. LEGO has been able to increase its market share by offering new products. Furthermore, similar products with lower prices are a potential threat to LEGO.
IV. Power of Buyers – The power of buyers is moderate. The individual buyer has no control over price. However, buyers can still choose what to consumer because there are plenty of substitutes in the market.
V. Power of Suppliers – LEGO is free to choose manufacturers, which makes the power of suppliers low. However, after LEGO begins to purchase intellectual property and build partnerships with other companies, such as Marvel and DC for the Batman LEGO product line, the power of suppliers becomes moderate.
Internal Analysis
SWOT
Porter’s Five Forces Analysis
I. Rivalry - The competitive rivalry is high, and the major competitors are Hasbro and Mattel. Furthermore, LEGO also has to compete against companies that sell similar products with a relatively low cost. LEGO’s pricing strategy makes the product have almost no price advantage in countries such as China and India, which gives too much space for its competitors’ products.
II. Threat of New Entrants – The threat of new entrants in the toy industry is high, not only because major competitors such as Mattel want to take LEGO’s market share, but also due to the development of modern technology and its effects on the toy industry. These developments are shifting the industry from physical toys to digital toys.
III. …show more content…
Threat of Substitutes – The threat of substitutes is high in the toy industry because of the development of digital products. However, as LEGO keeps implementing modern technology into its current product and creates LEGO games on different platforms, the threat of substitutes for LEGO is low to moderate. More children spend less time playing with physical toys and more time playing PC games and mobile app games. LEGO has been able to increase its market share by offering new products. Furthermore, similar products with lower prices are a potential threat to LEGO.
IV. Power of Buyers – The power of buyers is moderate. The individual buyer has no control over price. However, buyers can still choose what to consumer because there are plenty of substitutes in the market.
V. Power of Suppliers – LEGO is free to choose manufacturers, which makes the power of suppliers low. However, after LEGO begins to purchase intellectual property and build partnerships with other companies, such as Marvel and DC for the Batman LEGO product line, the power of suppliers becomes moderate.
Internal Analysis
SWOT