GROUP 4:

LEGO®
The Lego Group: Building Strategy
Group 4 Members
• Lina Mutinda - 152515
• Njoora Muthoni – 152304
• Pascal Aswani – 152480
• Ivy Tulesi -94102
• Emma Wanjeru – 152478
• Leo Ngatiah - 152884

Your Date Here Your Footer Here 2

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Company Snapshot
• The name ‘LEGO’ is an abbreviation of the two
Danish words “leg godt”, meaning “play well”.
• LEGO first began in 1932, during the first depression
when Danish Carpentar Ole Kirk Kristiansen and his
sons started making wooden toys after the demand
for building houses and furniture declined.
• The company switched from wooden toys to plastic
toys after fire mishaps which happened twice in the
workshop.
• Current CEO: Niels B. Christiansen brought in by Lego
Group to tackle a problem the company couldn't
build its way out of: How to make a physical,
imaginative toy succeed in a world where digital
distractions were everywhere making it the leading
toy company worldwide.

Group 4 Strategic Management 4

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Case: The Lego Group - Building Strategy

1. What criteria should be used in evaluating LEGO’s different product

lines and business operations?
2. What do the changes in the marketplace mean for the future of the
toy industry?
3. Where do future opportunities exist, both for LEGO and for its
competitors in the toy industry?
4. What product lines and business operations should the LEGO
expansion strategy include?
Group 4 Strategic Management 9
 What criteria should be used in evaluating LEGO’s different
product lines and business operations?

An effective corporate strategy for LEGO would

involve fully understanding the relationship
between corporate strategy and value creation.
Corporate Strategy and Value creation involves 3
issues:
• Synergy
• Ownership
• Organization

Group 4 Strategic Management 10

What criteria should be used in evaluating LEGO’s different
product lines and business operations?

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 What do the changes in the marketplace mean for the
future of the toy industry?

Company acquisitions:
Walt Disney’s acquisition of Marvel studio
strengthened its dominance in the global
entertainment industry by providing Disney with
the control of Marvel studio’s vast catalogue of
over 5,000 comic book characters to be used in
future publishing, movie production and
licensing operations.

Group 4 Strategic Management 12

What do the changes in the marketplace mean for the
future of the toy industry?

Court Battles:
As shown in the case study, LEGO will continue
to face competition in the courtroom even in
future as competitors adapt to their innovations.
LEGO lost the case against Mega Brands for the
registration of the eight-stud brick where the
European court of justice ruled on behalf of
Mega that shapes used for technical results do
not qualify for trademarks.
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What do the changes in the marketplace mean for the
future of the toy industry?

New Competitors:
The barriers of entry provide evidence that
existing players will also innovate and produce
new products as well as new entrants
competing for share of market. LEGO will have
to strategically position themselves to ensure
they stay ahead of the pack.

Group 4 Strategic Management 14

What do the changes in the marketplace mean for the
future of the toy industry?

Summary & Recommendations:

In line with the threats mentioned above, the following are some of the areas LEGO
should into to counter the threats:
a. Renegotiate with Walt Disney about license rights and leverage on LEGO’s brand
recognition, brand value and massive fan base to lock enhanced and improved rights
b. Look beyond Disney and get into alliances with other players in the global
entertainment arena
c. Expand into new global markets outside Europe and the USA

Group 4 Strategic Management 15

Where do future opportunities exist, both for LEGO and for
its competitors in the toy industry?

Growth of social media

Rising demand for toys is being fueled by
the increased growth of social media which
impacts how and why we shop.

Group 4 Strategic Management 16

Where do future opportunities exist, both for LEGO and for
its competitors in the toy industry?

COVID-19 impact
ever-growing opportunity for toys that are
not only a form of entertainment but ones
that are educational in nature e.g., the
Rubiks cube, educational boards etc.

Group 4 Strategic Management 17

Where do future opportunities exist, both for LEGO and for
its competitors in the toy industry?

Strategic Partnerships
Key strategic partnerships will be required
to navigate the ever change toy market.
New alliances will have to be identified e.g.,
new entertainment partners (Disney
competitors) and institutions like hospitals
and schools which have play centers.

Group 4 Strategic Management 18

Where do future opportunities exist, both for LEGO and for
its competitors in the toy industry?

Digital transformation and adoption of

blockchain technologies
According to the Global Toy News, NFT’s (Non-
fungible tokens) are disrupting entire industries
and the toy market sector is no different. The
NFT market is projected to grow to USD$ 80
billion in value by 2025. NFT’s provide a way to
monetize digital content which is a potential
area for LEGO and the industry to capitalize on.

Group 4 Strategic Management 19

Where do future opportunities exist, both for LEGO and for
its competitors in the toy industry?

Technological advancements and changing

tastes preferences
There is an explosion of ‘smart gadgets’ that
are interactive and have machine learning
that is incorporated in them. For LEGO they
can create products that allow for
compatibility of their blocks with such
technology which can help make new
product lines like LEGO based robots.

Group 4 Strategic Management 20

 What product lines and business operations should the LEGO expansion
strategy include?

LEGO’s expansion strategy should focus on

product lines and business operations that enable
it to seize the available opportunities as well as
respond to trends in the market.
Enhanced marketing operations
LEGO should broaden its market share by
contracting seller websites like Snapdeal, FlipKart
and Amazon to sell its toys and products. This will
also be critical in the reduction of supply chain
costs.
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What product lines and business operations should the LEGO expansion
strategy include?

● Production of eco-friendly products

The global market is currently skewed towards
eco-friendly products. LEGO relies on ABS plastic
which is non-biodegradable and more toxic
compared to other forms of plastic. LEGO should
therefore consider using biodegradable materials
in the manufacture of their bricks in line with the
UNEA-5 declaration to end plastic pollution.

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What product lines and business operations should the LEGO expansion
strategy include?

• Incorporation of virtual reality

LEGO should expand its gaming services beyond its
current themes to embrace virtual reality which
includes the use of 3D and 9D technology. LEGO’s
themes including space, robots, pirates, trains, Vikings,
castle, dinosaurs, undersea exploration, and wild west
can be included as the themes in their virtual reality.
This will enhance user experience and increase its
appeal to customers both new and existing.
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What product lines and business operations should the LEGO expansion
strategy include?

• Change in leadership structure

LEGO has remained a family managed business since
inception. The Kirk family still maintains the rights to
appoint the company CEO and the board. In most
instances the family appoints a member to the the CEO
and has consistently chosen a successor once a member
retires. Besides, the family is also represented in the
board as well as the LEGO foundation. This poses a
sustainability challenge as well as the silo mentality
challenge which might limit the company’s expansion
potential. 24
Conclusion

LEGO has made tremendous

progress in the toy industry making it
the largest toy company in 2022 with
a market share of 7.6%. However,
the company still has a great
potential if it utilizes its current
opportunities and adapts to the
changes in the toy industry.

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Q/A

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Thank you!