LEGO SWOT Analysis

Strengths

  • Branding – according to Brand Finance, a company that compiles specific attributes of the world’s most popular brands and ranks them accordingly, 2015 marked the year that LEGO surpassed Ferrari as the “world’s most powerful brand”. This success can be attributed to the massive success of the LEGO Movie, which was released in 2014. (www.brandfinance.com, 2015).
  • Diversified- in addition to its massively successful brick sets, LEGO also sells children’s video games, movies, TV shows, merchandise, and runs 15 LEGOLAND theme parks across the world (tripomatic.com, 2016)
  • Global- Lego has a strong global presence, with LEGO facilities in locations all over the world. Some of these locations include America, Italy, Poland, Taiwan, Singapore, Japan, and France to name a few (lego.com, 2016)
  • Cross generational- due to the fact that Lego has been a popular toy brand for many years, Lego is popular among many generations. In a LEGO announcement, the company stated, “In a tech-saturated world, parents approve of the back-to-basics creativity it encourages and have a lingering nostalgia for the brand long after their own childhoods,”(Elajalde-Ruiz, 2015).

Weaknesses

  • Price- Lego offers quality products; because of this prices can be high in comparison to competitors in the same market. For example, “A basic tub of 500 pieces of Mega Bloks costs $26.99 on the official website. A tub of 480 “Bricks and More” LEGO bricks costs $29.99 on com.” (www.diffen.com, 2016). Although the price difference is only slightly different here, in underdeveloped markets, LEGO could face difficulties with competition acquiring some of their potential customers.
  • Lack of options- Although LEGO is well diversified in the types of products it provides, it is still limited to the bricks that made them famous. For example, in response to a inquiry asking what was the worst selling product they sold, LEGO responded, “A few years back, we strayed too far from our core product line when we entered into an action figure line called Galidor. With no traditional Lego construction elements, it proved to be unfamiliar to Lego fans who expect a certain kind of play experience from the Lego brand.” (Diaz, 2008)
  • Patent expiration- LEGO’s core patent for their bricks expired in 1988. This means that competitors such as Mega Bloks can produce products that are near identical, increasing the level of competition in the industry (Trautman, 2013). 

Opportunities

  • Licensing Agreements- with an already impressive list of licenses to its name, such as Star Wars, Minecraft, Lord of the Rings, and Harry Potter, LEGO can use its branding to acquire even more popular licenses to bring in children with multiple different interests.
  • Cinema- The LEGO Movie that released in 2014 proved to be a huge success, with it grossing $470 million worldwide (blog.cayenneapps.com, 2016). Because of the popularity of the film, LEGO can look to make sequels and other films to appeal to the tastes of it large customer base.
  • Expansion- with manufacturing facility expansion projects set in Mexico, Hungary, and Denmark, LEGO will look to provide more of its iconic toys to children across the world. In addition LEGO is currently trying to transition to more environmentally friendly production methods, which is beneficial to PR efforts and brand image (lego.com, 2016).

Threats

  • Competition- with competitors such as Mega Bloks looking to undercut LEGO’s successes, especially in a less expensive manner, LEGO may have trouble keeping customers with lower incomes.
  • Video Games- now that children are more technologically savvy, other forms of entertainment will be hard to compete with. For example the wildly successful video game Minecraft provides a similar block building experience in a virtual realm. A blog on cayenneapps.com breaks down how competition could be stiff, “A large LEGO Classic Creativity Box costs about $65, and allows children to build a medium-sized multicolor house. Using the same $65 we can buy 3 licenses to Minecraft … which allows players to build entire cities.” (blog.cayenneapps.com, 2016).
  • Going green- even though being environmentally friendly is morally the right choice, and is good for public relations, often times the switch from one form of production to the other can be costly.

 

References

 About Us. (n.d.). Retrieved April 10, 2016, from http://www.lego.com/en-us/aboutus/news-room/2015/october/factory-expansion

Brand Finance – Lego Overtakes Ferrari as the World’s Most Powerful Brand. (n.d.). Retrieved April 10, 2016, from http://brandfinance.com/news/press-releases/lego-overtakes-ferrari-as-the-worlds-most-powerful-brand/

Diaz, J. (n.d.). Everything You Always Wanted to Know About Lego. from http://lego.gizmodo.com/5019797/everything-you-always-wanted-to-know-about-lego

Elajalde-Ruiz, A. (n.d.). Lego unseats Ferrari as world’s most powerful brand. Retrieved from http://www.chicagotribune.com/business/ct-lego-powerful-brand-0218-biz-20150217-story.html

LEGO Group – SWOT Analysis. (2015). Retrieved from http://blog.cayenneapps.com/2015/05/27/lego-group-swot-analysis/

Lego vs Mega Bloks. (n.d.). Retrieved from http://www.diffen.com/difference/Lego_vs_Mega_Bloks

Legoland Locations | Tripomatic. (n.d.). Retrieved  from http://www.tripomatic.com/trip/Legoland-Locations/

Trautman, T. (2013). The Year of the Lego – The New Yorker. Retrieved from http://www.newyorker.com/business/currency/the-year-of-the-lego

 

 

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One thought on “LEGO SWOT Analysis

  1. This is really good! The only issue I have is that not all points have justifications. Some have the why this point is a strength, weakness, etc… but others do not. Good references.

    Like

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