Lego – Integrated Business Experience
INTEGRATED BUSINESS EXPERIENCE – 1 Assessment – 1 Case Study Report Rahul Krishnasamy Student Id – 1838804TABLE OF CONTENTSExecutive SummaryIntroductionAnalysis of the Toy IndustryAnalysis of the Lego’s Competitive Position:Applying Knowledge from Cross-functional area of the business:Value Chain ConceptFive Forces ModelRecommendationsExecutive summary: The purpose of this report is to analyze the industry in which the Lego is competing and its competition among the toy industries. This report evaluates the feasibility of the strategic issues by applying knowledge from the cross functional areas of the business by using Michael Porter’s five forces model. It also provides the recommendations in different activities like marketing, outsourcing, supply chain management, etc. for the Lego Group to be competitive in the global market.
Introduction: The LEGO Group was started by Ole Kirk Kristiansen, as a wood workshop to build furniture and houses for farmers in 1916. In 1932, he started to engage in producing children’s toys. In 1947, Lego became the first industry to buy plastic injection molding machine in Denmark and by 1949, the company’s portfolio expanded into 200 wooden and plastic toys, also including binding brick. After a complaint from one of its purchasing agent, the company decided to produce the bricks, by which one can build anything out of it and which challenges and improves a child’s creativity and imagination. The company expanded its customers by introducing DUPLO bricks for children and Lego technic line for teens. By 1980, 70% of the Western European families owned Lego bricks. The Lego industry gained steady profitability and organic growth. But, after 1990 the company started to suffer a lot in the toy market. The company’s total profit declined to 50% in between the year 1993 and 2003. (Lego Annual Report, 2004)Analysis of the Toy Industry: The transition to the digital world from the physical is impacting the toy industries a lot. Now a days, kids are engaging only little time with games and toys. Therefore, the toy industries should work harder to attract the children who are fascinated by the electronic devices and television. (Philp, 2011) The toy industries suffer a great pressure to be sustained in the global market. Thousands of toy industries are there in the market, but only few industries are doing well in the global market. Mattel, is the world’s leading toy manufacturer with a revenue of $5.1 billion in 2004 and it features brands like Barbie, American girl dolls, Fisher price and hot Wheels. Hasbro, is the world’s second largest with a revenue of $3.0 billion includes brands like GI Joe, Transformers, Play Doh, Playskool and Monopoly. (Santoli, 2010).