The Lego Group is a toy manufacturing Danish company. The flagship product, Lego, comprises of a variety of interlocking plastic bricks. They’re along with Minifigures and many other connecting parts. You can build robots, buildings, and vehicles by assembling those small plastic bricks.
The brand, Lego, was founded in 1932 and has been producing interconnected brick toys since 1949. The company has manufactured and sold approximately 600 billion Lego parts as of 2015.
Lego is a family business. The brand uses the network of retailers, toy stores, and the company’s independent stores to sell its product, Lego. The assembling bricks are of different colors, designs, and sizes to attract the attention of kids.
Today, we’ll study the swot analysis of Lego. Here we’ll be focusing on the internal strengths/weaknesses and external opportunities/threats of the toy manufacturing company.
Here’s the swot analysis of Lego as follows;
Table of Contents
Following are the major strengths of Lego.
As we know that Lego comprises interconnected plastic bricks. Kids can use them in a variety of combinations. According to an estimate, you can use a set of 6-8 stud lego to make 915 million combinations.
Lego isn’t just a game and a toy. According to a research study, children who play with Lego and build different combinations have got a better gross motor and intellectual skills. It helps them to express themselves creatively.
According to an estimate, Lego is operating its business in more than 130 countries across the world. The company has got over 570 Lego branded stores where it sells its products.
The trend of online shopping and e-commerce has increased in recent years. Lego has also got its online e-commerce platform along with its network of retail stores. The company sells 1 in 3 Lego toys at its online store. The online retail of the company has increased by 27% in 2020 compared to the growth rate of 2019.
The brand has also established a platform by the name of “Lego Idea.” The goal of this platform is to promote creative Lego building ideas and maintain excitement. The platform also organizes different types of contests to keep up the interest level.
The Lego building fans send their innovative ideas to the platforms. The judges check their creative skills and declare a winner. The whole process increases the customers’ engagement and their loyalty to the brand.
Links with Movie Franchises
Lego has successfully established links with some of the blockbuster movie franchises. Like Harry Potter, Star Wars, F.R.I.E.N.D.S, Marvel, and Lord of Rings. It helps the company to attract the fans of these movies.
Variety of Themes
Lego offers different types of themes to its customers’ audience so that the children would have a better playing experience. It also refreshes and brings back the memories of adults.
Following are the noticable weaknesses of Lego.
The deals with successful movie franchises cost a lot of money to the money to the brand. The brand transfers the franchising cost to the customers by increasing the retail per product price. It makes the interconnected bricks of Lego very costly. The price-conscious customers replace the toys of Lego with some other cheaper brand’s product.
Lego offers brick building games for different categories of age groups by adding unique ideas into them at different levels. The focus of the brand is not to repeat the ideas because it helps the company to maintain the interest level of customers. It’s good for the customers, but it adds a lot of research and development costs.
Hasbro has recently bought a children’s TV network by the name of eOne. The company would promote and push its products by using the TV network and channel. Hasbro is a famous competitor of Lego. The entertainment platform would help the competitor’s company to increase its sales.
The trend of playing video games is growing very aggressively among children and teenagers. The gaming portfolio of Bandai Namco’s is approximately four times larger than the catalog of Lego’s games. The company must add something interesting to its games to strengthen its video games. It would help the company to remain competitive in the market.
Clones of Lego
The fake clones of Lego are disturbing the share value of the company. The brand couldn’t stop the fake clones. Even since the patent and copyrights of Lego expired in 1980, many competitor companies jumped into the interconnected bricks manufacturing industry. They have also started offering the same products and Lego couldn’t file a lawsuit against them.
Below are the opportunities for Lego.
The focus of parents is to develop the intellectual and creative skills of their children. Lego performs the same function. Therefore, the company should convince the parents through advertisements that it serves two functions.
Derive towards Learning
The brand has also taken two major steps; Lego Foundation and Lego Education. The purpose of these steps is to promote education and learning through playing games. It follows the mission of the company and that’s to develop the nation for tomorrow.
The interconnected bricks building toy has got great potential in the creative field. Warhammer and other franchises have established a strong foundation in the personalization business. Lego should add a personalized touch to its product if the company could take some ideas from other brands.
Lego should follow the subscription-based business model. It means that the company should deliver monthly boxes to subscribers with new building ideas. It would help the company to interact with its target audience.
The video games of Lego aren’t following the concept of virtual reality games. They don’t engage their users. The current video game of Lego wants kids to interact with the toys by using the augmented reality application of Lego.
Based on Lego’s annual report statistics, 90% of the children comprising of 2 billion would be residing outside of North America and Europe by the end of 2030. The majority of these children of approximately 3 quarter would belong to East Asia. Now, Lego should base its future strategy on the developing markets.
Following are the biggest threats to Lego.
Some manufacturers don’t just copy the idea of Lego. They go one step ahead by using the logo of Lego. They sell products and deceive customers claiming that they’re Lego which they aren’t. The poor quality products jeopardize the market and growth of the main brand.
The toy market is competitive and the competitors have the market share of the head to head and toe to toe. Even a small margin would help them to win the market. Therefore, Lego should always outsmart its competitive market with innovative products and ideas.
The video games on smartphones are more intriguing than conventional games. The children are more tending towards them. In other words, smart games are threatening the market for traditional games.
Plastic is the main ingredient of Lego’s bricks. It means that the company relies on petroleum products. It contradicts the basic ideology of the green peace movement.
Pandemic of Covid-19
The pandemic of covid-19 has shutdown 570 stores of Lego. They are the major source of the company’s sales. The company couldn’t achieve its main goal of learning through games in 2020.