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SWOT Analysis of Lego 2021

The Toy Company

 

In this SWOT analysis of Lego, we will analyze some important factors of Lego that makes it the world’s biggest toy company. This Danish toy company was established in 1932 and notorious for its toy-based on interlocking bricks. Ole Kirk Kristiansen is the founder of Lego who started this company by manufacturing wooden toys. They started making interlocking bricks and this thing proves beneficial for the company. Now, Lego is a multi-billion dollar company. No doubt, Lego is a toy giant in the world. Let’s find out the strengths, weaknesses, opportunities, and threats of Lego.

 

Company Name:  The Lego Group – The Toy Company

Founded by:  Ole Kirk Christiansen

Year established: August 10, 1932, Billund, Denmark

Headquarter: Billund, Denmark

CEO: Niels B. Christiansen (Oct 1, 2017–)

Industry:  Toys

Type: Private Aktieselskab

Parent organization: Kirkbi

Subsidiaries: Janssen PharmaceuticaNeutrogenaMORE

Area Served: Worldwide

Employees (2019): 16,112

Annual Revenue (2019):  euros 5.16 billion

Profit | Net income (2019): euros 1.11 billion

 

 

SWOT Analysis of Lego 2021

Strengths of Lego:

Before diving into the actual strengths of Lego, it is necessary to understand the word ‘’strength’’. Basically, it is an internal strategic quality that enables the company to grow consistently. But, don’t forget that it is different from opportunity. Scroll down to see the major strengths of Lego.

  1. International Reach:

According to Lego, they are selling their products in more than 130 countries. In addition, Lego has 570 well-established and functional stores across the world. This thing makes Lego a powerful toy brand due to its strong global presence.

  1. Innovation:

Lego is very concerned about its offerings and refreshes its 61 % product catalog every year. This kind of innovation in products excites the kids to purchase its products and toys. Due to this innovation, Lego is insanely popular among kids.

  1. Licensing Deals:

Lego has associated with several franchises like Harry Potter, F.R.I.E.N.D.S, Marvel, DC Comics, and Star Wars through licensing deals. In this way, they present their toys in the most attractive way which increases its profit game. This is a major strength of Lego.

  1. Online Presence:

Nearly 35 % of Lego’s sales are generated online. They also have stores in different regions of the world but they have a strong ecommerce presence, too. Moreover, its online sales and traffic are increasing with every passing year.

  1. Community:

Recently, Lego established a platform known as ‘’Lego Ideas’’ where Lego lovers can express and show their creative skills. This program is based on contests and activities. Shoppers can give suggestions about various products. According to experts, it is a masterstroke of Lego because they can earn the engagements and trust of its customers through this platform.

 

SWOT Analysis of Lego 2021

Weaknesses of Lego:

In SWOT analysis, the word ‘’weakness’’ has a specific interpretation. It is another internal strategic property that can slow the working of any company. But, don’t compare it with threats. In order to increase the performance and work, it is essential to tackle your weaknesses. Let’s talk about the weaknesses of Lego.

  1. Price Strategy:

Due to the licensing deals with different companies, Lego imposes these costs on the customers through the price of its products. As a result, the price of Lego’s interlocking bricks is much more costly than any other generic toy. So, there is a chance that the customers of Lego can ditch Lego due to its expensive costs and prefer cheaper brands.

  1. Video Games:

Bandai Namco’s game catalog is nearly 4 times bigger than the video game Lego. In order to compete in the competitive market, it is imperative for Lego to strengthen its offerings especially video games.

  1. Kids TV:

In recent times, Hasbro gained the eOne which is an entertainment network. With this acquisition, Hasbro can advertise its products and offerings through this channel which is specifically for kids. With this move, they can improve their sales and popularity. It is important for Lego to eradicate weaknesses that can influence this process.

  1. Lego Duplicates:

Lego is really weak to take action against counterfeits or duplicate products. They are continuously impacting the market share of Lego. This kind of weakness can further impact the profit and market value of Lego. So, Lego should settle this kind of problem through proper action and management.

  1. Protecting Intellectual Property Rights:

Lego’s offerings are really susceptible to copycats. In addition, these clones or counterfeits products are really cheap and influence the customers of Lego. Lego hasn’t able to fight counterfeits in order to stop the sales of counterfeit products. Moreover, its legal team is also very weak.

 

SWOT Analysis of Lego 2021

Opportunities of Lego:

The major advantages Lego has over its rivals contain its licensing deals, innovation, and international presence. But, there are several things that Lego can exploit to expand its market share and presence. What is more, is that opportunity is an external property in SWOT analysis.

  1. New Geographies:

According to a report, the population of the world increases and it is really crucial for Lego to focus on Asian markets. They have plenty of opportunities in Eastern Asian regions. Due to this kind of geography, Lego needs to cover each and every region in order to boost its market share and profitability.

  1. Virtual Reality:

The company has very few augmented reality games. It is necessary to add product views on these games so that kids can easily interact with the latest developments. It is a fact that this kind of virtual thing creates a major impact on the mind of kids.

  1. Subscription Business Model:

According to experts, Lego should adopt a subscription business model such as Loot Crate. They can send these boxes to their subscribers on monthly basis and in order to increase engagement and relation with users and kids.

  1. Personalization:

Interlocking bricks of Lego already offer creative expression to users and very popular among customers. But, it is crucial to introduce innovation in its offering and products so that they create a powerful impact on the mind of people. This kind of personalization can be helpful for the company.

  1. Learning and Education:

Lego has a wonderful opportunity to launch toys that help the kids in learning and education. They should focus on toys that develop creative skills in kids. These kinds of toys definitely attract the parents and they will love to buy these toys for their kids.

 

SWOT Analysis of Lego 2021

Threats of Lego:

There are several big players in this market like Mattel, Bandai Namco, and Hasbro. To be very honest, Lego is also doing well in this field but its competitors are better in some categories. They can impact the profitability of Lego negatively. Moreover, the presence of copycat products and other external problems can also damage or threaten the reputation of Lego. Let’s discuss some major threats to Lego.

  1. Copycat Items:

The toy market is full of competitors and copycat products. These counterfeit companies are not only producing products but also using the same marketing strategy as Lego in order to boost their sales. These companies are using the name Lego but Lego has not been able to take action against these counterfeits. There is a chance that these companies can threaten the growth and financial stability of Lego.

  1. COVID-19 Limitations:

Lego always tried to make joyful and good-humored toys for kids. They have more than 570 stores across the world. But, due to COVID-19 restrictions, most of the stores of Lego are closed and the engagement of customers is also reduced. This kind of pandemic or emergency can create a negative impact on the profitability of Lego.

  1. Environmental Groups:

Plastic is one of the widely used materials in toys. In order to manufacture plastic, the raw material used is crude oil. Due to strict regulation of climate and other similar things, it is really difficult for Lego to manage these things.

  1. Online Games:

The influence of smartphones and tablets is increasing day by day and kids are moving to mobile games. This kind of transition can threaten the demand for toys and not a good sign for toy companies like Lego.

  1. Competitors:

The competition is very stiff and fierce in the toy market due to the presence of giants. One smart move can turn the table. This thing can also damage the reputation and sales of Lego. It is necessary to introduce innovation in its offerings in order to take lead from competitors.

 

 

SWOT Analysis of Lego 2021

Summary:

With this SWOT analysis of Lego, you can understand the biggest issue of Lego is its vulnerable intellectual property rights. But, its biggest strength is its licensing deals, high quality, and innovation. Despite all the weaknesses, Lego has a bundle of opportunities that it can exploit in order to expand its business. They have severe danger from copycat products because they can damage the market share and sales of Lego.

 

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