Lego’s Competitive Environment

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Table of Contents

Rivalry assessment
Barriers to new entry
Substitutes
Power/dependence relationship with buyers
Power/dependence relationship with suppliers
Industry key success factors
Driving forces
Works Cited

Rivalry assessment

When it comes to defining the key rivals of the company, one must admit that LEGO has a range of impressively powerful adversaries to fight in the toy market.

Among the key ones, Mattel with its famous Barbie brand and the availability to produce toys based on Marvel and Disney characters and Hasbro with its powerful marketing strategy and a range of recognizable brands, deserve to be mentioned (Rivkin, Thomke and Reversdorfer 4).

Barriers to new entry

After an admittedly long period of crisis and the following revival, LEGO is ready to introduce new products into the market. Despite its comparatively long hiatus, the organization seems to have enough potential to regain its position as one of the top toy companies in the global market.

Unfortunately, LEGO may face some major obstacles in the course of introducing its product, the cost for the molds being the key one (Rivkin, Thomke and Reversdorfer 5).

Substitutes

Unfortunately, entering the global market presupposes acquiring a number of clones, which are going to be less successful yet manage to snatch a chunk of the innovative organization’s success and fame. The niche, which LEGO used to take in the toy market, is no longer empty – the organization has to share its market place with its numertous clones, including CoCo, BestLock, and many others (Rivkin, Thomke and Reversdorfer 6).

Power/dependence relationship with buyers

Among the key specifics of toys as a specimen of merchandise, the inconstancy of their success among their target audience must take the first place.

Toys are linked to fads directly; as soon as a specific fad goes away, the interest of the target audience towards a certain line of toys vanishes without a trace (Rivkin, Thomke and Reversdorfer 1).Therefore, LEGO is highly dependent on its customers, their demands and wishes, as well as the swings in their affection towards certain characters (Rivkin, Thomke and Reversdorfer 1).

Power/dependence relationship with suppliers

The degree, to which LEGO is dependent on its suppliers, is also quite impressive. The changes in the organization’s supply chain made in 2003 have clearly improved LEGO’s production process, making it structured and organized. However, with the necessity to capture new markets, LEGO may need to reconsider its logistics in order to cut the costs for transportation.

Industry key success factors

Seeing that LEGO is highly dependent on the swings in children’s attitude towards the company’s products, it will be reasonable to assume that the organization’s ability to incorporate both traditional and modern media as a tool for promoting its product to kids is the best solution possible and the greatest opportunity for the organization to increase its net profit.

For instance, the recent The LEGO movie craze could be used as a tool for promoting the toys to children.

Driving forces

With all the negative factors threatening LEGO, the company still has a chance to regain its position in the global market. Among the key driving forces, which will inevitably make the company triumph, the qualities such as LEGO’s unlimited playing potential, as well as the fact that it is designed for both boys and girls, with no major age restrictions, must be mentioned.

Encouraging creativity and development of the child’s motor functions, logical thinking and creativity, LEGO will remain a popular toy; what the company needs now is an impressive and efficient promotion campaign.

Works Cited

Rivkin, Jan W., Stefan H. Thomke and Daniela Reversdorfer. LEGO (A): The Crisis. Boston, MA: Harvard Business School. 2013. Print.

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