Cb3 Lego Case Study-Raye Danny Abdu Riki

Raye Danny Abdullah Riki

WINNING IN THE NEW ERA

The New Emerging Challenges

Recommendations

Analysis of Lego

Proposals to immediate actions

Proposals to the long-term expansion

Conclusion

CONTENT

The Acquisition of Marvel Entertainment by The Walt Disney Company

The threats of losing licensing rights

Lost legal battle with MEGA Brands, and lost the LEGO brick trademark

Without protection, LEGO will lost strengths when competes with others in brick sets

Aggressive competitor – Hasbro, who launched a new rival product line – Kre-O

Lego will face the severe competition in brick market

Three Main Threats

Immediate actions to respond to threats• Negotiate with Disney with licensing rights• Beyond Disney: develop new businesses:

• DC• TV Shows• Video Games

• Expand in the emerging markets: China, India, Brazil, Iran

The Long-term expansion• Enlarge customers demographics• Brand collaboration and tap into the new markets• Invest into the all-new products

Recommendations

Assess the strategic position of the business• Assess past performance

• Identify and evaluate current strategy

• Forecast future performance under current strategy

• Decide on the need, nature, and urgency of change

Lego has been achieved with strong profitability

Assess past performance

•Profit margins(Net profit)

• Key expense ratios

• Return on equity

Profitability

C,F&K

Lego have a chance obtain more loans to expand business

C,F&K

Assess past performance

•Profit margins(Net profit)

• Key expense ratios

• Return on equity

Profitability

•Financial Leverage ratio is 1.0 in 2010

• The better leverage is 1.8-2.8

• They can get more loans to expand

Financial Position

• The biggest brick toy company in the world

• In 2010, the fourth-largest toy manufacturer in the world

Market Performance

Assess past performanceThe organization is healthy based on strong problem solving ability

Wood toy

Plastic toy

Brick toy

Assess past performance

The ability to learn faster than your competitors may be the only sustainable competitive advantage

- Peter Senge

The organization is healthy based on high learning ability

Assess past performanceOr

gani

zatio

nal H

ealth

Operating Performance

-

+

+-

desired state

troubledorganization

complacent organization

crisis

Lego achieves to high performance

A Strategic Framework: The Diamond-E Framework

Strategy Environment

Management Preferences

Organization

Resources

Three threats:CompetitorsTrademarkLicenses

HR: Professional designersFinance: Healthy dataSupply chain: efficiency

Change, creative, and innovation

• Focus on the brick toys• Other core actives support the brick toys

Assess past performance

Forecast

It is hard to Maintain the top 1

position in brick toy field

Lose the position of the third-biggest

toy company in the world

Growth rate will decrease sharply

in profit

Assess past performanceLose the advantageous position under current strategy

A Strategic Framework: The Diamond-E Framework

Strategy Environment

Management Preferences

Organization

Resources

Three threat:CompetitorsTrademarkLicenses

HR: Professional designersFinance: Healthy dataSupply chain: efficiency

Change, creative, and innovation

• Get licenses• Innovations in product, licenses, cooperation, manufacture with expanded target consumers.

Make new strategies

Lego will have a big picture under new strategies

Make new strategies

Maintain the top 1 position in brick toy field

Become the biggest toy company in the world

60%-70% growth rate in profit

Forecast

The Licencing Battle• Negotiate with Disney• Leverage:

• Brand Recognition• Fan Base• The World’s Biggest Brick Toys Maker• The World’s Best Brick Toys Maker• Sophisticated Supply Chain Operation

• Beside Disney• DC• TV Shows• Video Games

DC

Game of Thrones

Minecraft

Exploding Markets• Expand to Emerging Market

• China• India• Brazil• Turkey• Malaysia

• Establish Manufacturing Base

• Products and Marketing Strategies Localization

• Control the Distribution Network• Promote the Brand• Control the Quality• Flagship Stores in First-Tier Cities

A LEGO Landmark

Customer• Lego’s mission

...to inspire and develop children to think creatively…

• Target market• Children Adult• Family • Artist

Customer• Enhance customer relationship

• Social network, facebook Instagram

• Hire designers from customers• Customers know what they want

Brand collaboration

• Nestle• Instead of buying license, we can sell our license

Brand collaboration

• Ikea • Customize furniture• Application in the real world

Product

• High tech brick• Electronic device• Intelligent design

First & Fast• Reduce production cost

• The specialized packs cost more to produce than the kits were sold for.

• More alternative for customers• Rise brand awareness• Efficient express

First & Fast

• Express delivery• FedEX• Can it be faster?• What’s in the cargo?

First & Fast• 3D printing

• In 2007, 3d printing machines’ price generally ranging in $2000• In 2010, the price decreased to $1000, some even

around $500• Thousands people have bought 3d printing machines.

First & Fast

• Customers design the model• Customers purchase the pack• FedEX start delivery• Print the bricks in the track• Delivery in 30 mins

• Take virus video• Upload to Youtube, Facebook, etc

T H A N K S