Who doesn’t love playing and enjoying the creativity of Lego toys? This Lego SWOT analysis highlights this beloved toy brand. Similar to Disney, Lego is loved by young children and aged adults. Although they are a loved toy brand there are several competitors of Lego that will also be highlighted that should be considered in your SWOT analysis.
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The Lego Group History
The world’s largest Danish toy manufacturer, Lego, famous for its interlocking brick toys, was formed in 1932. Ole Kirk Kristiansen, the founder of Lego, began his business in a tiny carpenter shop in Denmark. He started his company by making simple wooden toys. The Lego Group is a family-owned business that operates in 50 countries. Lego distributes its toys in more than 130 countries, and 300 million children have used the company’s toys. Lego’s business model is built on concentrating on children’s toy needs and preferences.
Lego SWOT Analysis – At A Glance
|Company Name||Lego (The Lego Group)|
|Founded||August 10, 1932|
Ole Kirk Christiansen
|Annual Revenue||$43.7 Billion (FY 2021)|
According to Lego’s business plan, its main objective is to stimulate children’s imagination and creativity while allowing them to explore their own creatively fun World. Lego provides a wide range of colorful and attractive theme toys. The company operates two theme parks – Legoland and the third is under construction. Because of Lego’s outstanding business strategies and planning, the company stands in a leadership position in the toy industry. Here we are going to do a SWOT analysis of a toy company, Lego. This analysis will help to study the company’s strengths, weaknesses, opportunities, and threats in depth.
A company’s strengths, weaknesses, opportunities, and dangers are undeniably important considerations. As a result, a Lego SWOT analysis is performed to fully comprehend these factors and make sound decisions. SWOT analysis can be extremely beneficial to a company’s performance. The same is true for Lego. If management is interested in making a choice, a SWOT analysis is required. Today’s topic is the Lego SWOT analysis.
Lego SWOT Analysis Overview Template
Strengths are those characteristics, qualities, and features of a company that has a beneficial impact on the company. The strengths comprise the worker’s aptitude, creativity, brand image, customer base, and many other crucial elements. Lego has several advantages as one of the biggest toy manufacturers in the world. We will talk about a handful of these in today’s Lego SWOT analysis. Here is where Lego has a competitive advantage.
Worldwide Presence: Children are instantly attracted to Lego’s huge variety of toys, and its global presence in more than 130 countries with 570 branded stores worldwide makes the company famous among its rivals. Lego toys are famous among children globally.
Branding: A strong brand portfolio plays a critical role in a company’s success. Lego put a lot of effort into branding its portfolio, as Lego’s main goal is to expand its product range. Lego’s strong brand portfolio played an important role in the company’s extraordinary sound performance.
Expert Team Management: Lego’s successful learning and training programs for its employees helped the company in accomplishing the company’s strategic goals. Lego is famous for its highly competent and skilled workforce and management. The company’s expert management helped Lego to gain a competitive edge over its competitors.
Market Strategies: Lego is highly successful in entering new markets and earning success in them. The company’s “Go to Market Strategies” is a bonus to its thriving performance. Lego’s marketing strategies are considered to be the mark in the global toy market.
Safe Toys: As a toy manufacturer, Lego is known for its emphasis on kids’ safety while playing with the company’s toys. Lego is very concerned about its cute targeted audience (kids) safety who use these toys. The company manufactures toys by focusing the parental concerns about the kid’s toys.
No company is perfect in every sector. There always occur such areas where a company deals with problems and needs to make improvements, these are considered weak areas of the company. Similar to strengths, weaknesses are inherent characteristics of a company that must be handled inside. The weaknesses of Lego are discussed in more detail in the next section of the Lego SWOT analysis.
Pricing: Lego’s pricing is expensive compared to its rivals. Lego toys manufacturing cost is much higher than the other toy companies because of the expensive licensing cost. However, Lego passes its licensing cost to its buyers which is not a decent move.
Financial Planning: Lego’s current financial planning is not very productive and satisfactory. The liquid and current asset ratios indicate that the company is not appropriately using cash. Not enough good financial planning leads to future financial instability.
Online Gaming Trend: As we know, trends are changing immensely from traditional to modern or online platforms. Kids are switching towards online gaming which creates intense competition between companies and a loss of market share in the toys market as Lego’s large market share is based on the toys market.
IPR Protection: Lego is failed to stop its competitors from copying products, however, the toys made by other companies are low in quality as compared to Lego. But Lego’s irresponsible gesture of not putting the focus on IPR protection is considered one of its biggest weaknesses.
Lego Competitive Advantage
Just like internal elements impact a company’s success, the external environment has impacts too. The possibilities from the external environment that can positively impact the company are known as opportunities. When speaking of opportunities, Lego does have a lot of them. Today, in the Lego SWOT Analysis, we are going to discuss a few, given below.
Virtual Reality: The future of the world is based on virtual reality technology. Lego has a wide range of toys but with changing world trends towards new technology, the company launched a few augmented reality games. These games involve an online view of toys through Lego’s augmented reality application.
Diversified Segments: Lego is trying its best to diversify into other toys and game segments so that the company can continue to grow in all product segments in the market. However, in recent years company invested a lot in online platforms. So diversifying segments can help the company to drive its sales sky-high.
Learning and Education: Lego’s school competition initiative is considered one of the finest opportunities to develop a sense of strong affinity towards productive and fun games, known as the Lego foundation and Lego education programs. Lego emphasizes learning in the kids through playing. Lego’s initiatives help the company to be in line with its vision to inspire and develop builders of tomorrow.
Economic Uptick: As the world is progressing, consumer spending is also increasing side by side. The higher consumer spending and economic uptick increases in the world allowed Lego to grab and attract new customers which in turn helped the company to increase its market share.
External impacts are not always pleasant and good, some of these factors can be quite difficult to handle. A threat is something external to a firm that hurts that company. Threats are an aspect of a business’s microenvironment. Threats exist for all businesses, including Lego. We shall examine some in the below section of the Lego SWOT Analysis.
COVID-19: The COVID-19 outbreak was still one of the major threats to the business sector. Lego sales were massively effective due to the pandemic and lockdown. The company lost millions of dollars during the lockdown. The Covid – 19 restrictions caused hundreds of retail branded stores of Lego to have low foot traffic.
Preferences: The preferences of children and parents are increasingly switching towards online learning tools as compared to physical toys. The adoption of online games by builders rather than physical toys is also a major threat to Lego’s future sales and success.
Fluctuating Currencies: The issue of fluctuating currencies is faced by the world’s business sector nowadays, which is no doubt a threat to the business of all brands of the world. Fluctuations in currencies are majorly due to political instability in many countries and as we know Lego is operating globally that’s why the threat of fluctuating currencies is mainly faced by the company.
Copying: The rivals of Lego are immensely copying the toys and games designs of the company and the company is facing difficulties in resolving the issue that is also a threat to the future company’s sales.
Competitors of Lego
Some major threats to the toy company are competitors of Lego. Competition rising day by day in every sector of the market due to advanced technology adoption and modern innovations trends in the world. With the rapid progress in technology, customers’ need to adopt innovative technology in their everyday life is incredible. The top competitors of Lego in the market are highly adaptive to innovative technology which is a great threat to the Lego Company’s sales.
Hasbro, Mattel, and Spin Master are a few of the companies that compete with Lego, and conducting a SWOT analysis of these competitors of Lego may be beneficial. Various toys, games, and action figures are produced by Hasbro, while dolls, board games, and other toys are made by Mattel. The leader in cutting-edge toys and games is Spin Master. These businesses should be taken into account in a SWOT analysis because they are all fierce rivals of Lego in the toy industry.
Lego, one of the top toy producers, should make sure that intellectual property rights are protected. One of the main issues that need to be resolved right now is the production of knockoff items. One distinguishing feature is the Lego license agreements. However, it raises the price of manufacturing games and toys. To make its pricing competitive and reasonable, Lego must look into other creative and less expensive licensing options. Lego’s attention to children’s toys and activities and worries about safety should be commended
FAQs for LEGO SWOT Analysis
Why did LEGO almost go out of business?
LEGO faced financial troubles in the late 1990s due to rapid expansion and diversification into non-core businesses. This led to a loss of focus on their core products and a decline in quality. They restructured, refocused on their iconic bricks, and embraced licensing, saving the company.
Why is LEGO retiring so many sets?
LEGO retires sets to maintain product freshness and encourage sales. By retiring sets, they create a sense of urgency among collectors and fans, driving demand for new releases.
How is LEGO so expensive?
LEGO sets are costly due to high-quality materials, intricate designs, licensing fees for collaborations, and meticulous manufacturing standards. Research, development, and testing also contribute to the overall cost.
What is the rarest LEGO?
The rarest LEGO set is the 2007 “C-3PO” Minifigure, made of solid gold. Only ten were produced as promotional items, making them highly valuable and sought after by collectors.