Lego Study Case

Question 1: What are the companys strategies?
The bricks and the system

Care for education and incorporate within combines unique, inspiring qualities of
LEGO bricks with STEM subject. Develop product series according to the age
categories.
Quality masters of the mold
Only the best is good enough the founders legacy. To achieve that LEGO
had become masters of the mold, a core competency, an important
component in the basic skill set. The bricks as the Legos trademark
product, Lego provide the best quality in the bricks.

Logistic the right product in the right place at the right time
Logistics would demand the co-ordination of operations involving
warehouses in Mexico and USA with manufacturing operations in
Denmark, Hungary, Czech republic, China and USA in order to make the
product arrived on time in the market.
Question 2: Analyze Legos internal performance using TOWS and financial
performance.
Strenghts (S) Weaknesses (W)
Famous brand name Brand perception as
Existing customer blocks toys
base High pricing
Existing distribution Higher
network diversification
Opportunities (O) SO Strategies WO Strategies
New emerging ATTACKING STRATEGY BUILD STNEGTHS for
markets ATTACKING STRATEGY
Cross-selling
opportunities
Alliances- co
branding
New products
Threats (T) ST Strategies WT Strategies
New Entrants DEFENSIVE STRATEGY BUILD STENGTHS for
DEFENSIVE STRATEGY
Digitally advanced
and competitive
products
Changing customer
choices
Strength-Opportunity (SO) Strategy is leveraging the strengths for maximizing the
opportunities. Known as maxi-maxi strategy.

Lego use its strengths as a famous toy producer with a lot of costumer data to expand its
market.
Weakness-Opportunity (WO) Strategy is counter the weaknesses by maximizing
its opportunities. Known as mini-maxi strategy.

Lego counter its weaknesses in a high price and brand perception as toy block only with the
opportunities in new products such as games and films.

Strength-Threat (ST) Strategy is leverage the strengths for minimizing the
threats. Known as maxi mini strategy

Lego use its strengths as famous brand name, existing customer base,
existing distribution network to defend its threats as a new comer.

Weakness-Threat (WT) Strategy is counter its weaknesses with threats.
Known as mini mini strategy.

This strategy is the last option in TOWS strategy.
Financial Performance
Ovesen as the new Financial Director quickly completed the financial
analysis and began to develop financial targets, particularly for line profitability.
Targets of full manufacturing cost ratios (FMCs) and ROS return on sales targets
were set. The company introduced a 13.5% return on sales target for all products
within the LEGO portfolio. Analysis of capital allocation and measurement of
return on capital performance would place the LEGOLAND parks under scrutiny
leading to disposal in 2004.
As we can see that from 2004-2009 Lego profit is increasing while after that its start
to decreasing.
Last year the LEGO Group today released its financial results for 2016, reporting the
highest revenue in the companys 85-year history.
2016 highlights:
Revenue for the full year increased by 6.0 percent in DKK to DKK 37.9 billion
compared with DKK 35.8 billion for 2015.
Revenue for the full year increased 5.5 percent compared with 2015, excluding the
impact of foreign currency exchange.
Operating profit (profit before financial items and tax) for 2016 was DKK 12.4 billion
compared with DKK 12.2 billion for 2015, an increase of 1.7 percent year on year.
Net profit for the full year was DKK 9.4 billion compared with DKK 9.2 billion in
2015.
Cash flow from operating activities for the year was DKK 9.1 billion compared with
DKK 10.6 billion in 2015.
Tax on profit for the year amounts to DKK 3.0 billion, unchanged from 2015.
Significant investments were made in building capacity and capability to deliver the
groups long-term growth ambition.
This result shows that Lego performance start to get better by Revenue growth was driven
by performance of core themes including LEGO City, LEGO NINJAGO, LEGO Friends,
LEGO Technic, and LEGO Creator. During 2016, more than 335 new items were launched,
including LEGO NEXO KNIGHTS, an innovative platform that combines digital and
physical play. Innovation is critical to Lego success and each year around 60 percent of its
portfolio is new products. Lego is constantly challenging ourselves to engage and inspire
children with the most relevant, exciting and fun play experiences. This year Lego have
strengthened our efforts around digital engagement, and found new ways to connect with
children online and through a range of digital platforms.

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What are Lego's strategies according to the TOWS analysis?

What are Lego's strategies according to the TOWS analysis?

How did Lego's financial performance change over time?

How did Lego's financial performance change over time?

Question 1: What are the companys strategies?

The bricks and the system

had become masters of the mold, a core competency, an important

product, Lego provide the best quality in the bricks.

warehouses in Mexico and USA with manufacturing operations in

product arrived on time in the market.

Question 2: Analyze Legos internal performance using TOWS and financial

Strenghts (S) Weaknesses (W)

Famous brand name Brand perception as

Existing customer blocks toys

base High pricing

Existing distribution Higher

New emerging ATTACKING STRATEGY BUILD STNEGTHS for

markets ATTACKING STRATEGY

New Entrants DEFENSIVE STRATEGY BUILD STENGTHS for

Strength-Opportunity (SO) Strategy is leveraging the strengths for maximizing the

opportunities. Known as maxi-maxi strategy.

its opportunities. Known as mini-maxi strategy.

opportunities in new products such as games and films.

threats. Known as maxi mini strategy

existing distribution network to defend its threats as a new comer.

Known as mini mini strategy.

Ovesen as the new Financial Director quickly completed the financial

leading to disposal in 2004.

highest revenue in the companys 85-year history.

compared with DKK 35.8 billion for 2015.

impact of foreign currency exchange.

DKK 10.6 billion in 2015.

groups long-term growth ambition.

children online and through a range of digital platforms.

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