Before conducting an in-depth analysis of the toy industry, we will deliver a brief presentation of Lego, which is the core of the subject.
Lego is a Danish company, which was founded in 1934, by Ole Kirk Christiansen. The core activity of Lego is the conception and manufacture of educational toys and the main focus is on the 'Lego Brick'.
The name is derived from the Danish term 'Leg Godt 'which means 'lay Well'. In the beginning, almost everything depended on the invention and protection of the LEGO Brick. It's the 'LEGO play system' which would be the basis of the company.
Today, LEGO is a major actor on the toy industry, and is a world-known brand (A LEGOLAND park was even created in Denmark), and is reputed to be an LEGO is an educative game which stimulates imagination and logic. Carrying a guarantee of very high quality, LEGO games are often handed down from generation to generation. This explains why LEGO is evolving on the toy industry.
We will now present an overview of the global toy industry, from the perspective of the Macro Environment on one hand and Micro Environment on the other hand, with a description of the segmentation in this market, the Porter's 5 forces model, the industry structure and attractiveness, and finally, the Key Success Factors.
At the outset, a brief global overview of the market is mandatory. In 2008, the world toy market had a value of 78 Billion $, which represented a small decrease compared to 2007. However, after the crisis, the industry was able to take off again, and in 2009, the value increased to 80 billion €, and is expected to keep growing in 2010.
[...] Today, Lego offers a very wide range of products around the brick, such as the educative toy with Lego Play System, or Lego Multimedia. This diversity became possible thanks to the huge investments made in a few years ago, on order to remain in step with the market. Brand Recognition Who does not know Lego? Almost anyone recognizes it, because it is a global brand which has been a part of almost every childhood on the planet. Thanks to its product quality, and to its advantage of being the first mover in the field of building games, Lego built a presence in the toy industry, increasing its brand recognition among children, as well as among adults. [...]
[...] Lego progressively diversified and gradually forgot its core activities. In light of the current situation in the top industry, the refocus on the Lego brick should allow Lego to maximize this product and so be back in a more profitable situation. This strategy would fit with the recent sale of LEGOLAND in 2005, in order to get back to basics. Extension of Lego's stores: For now, the Lego stores are especially concentrated in North America, almost entirely to the United States, with 47 stores, and 1 in Canada. [...]
[...] Industry Attractiveness The Industry Attractiveness determination is based on the VGMR analysis (Value, Growth, Margin, and Risk) and provides a detailed overview of the attractiveness of the industry's main segments. Segment Value Growth Margin Risk Babies + + + Young Children Pre-Teens Teens + Adults Babies: The toys for babies are currently about of the whole toy market, according to Xerfi. The volume is so quite important, even if it's not the most valuable segment, and it is slightly growing because of the increase of the birth rate in Europe over the last few years. [...]
[...] Here a recap table of the internationalization of Lego the last fifty years. Europe America Asia Africa Oceania Finland, Via a license Private LEGO Pty. Hungary, from Lego AS. In Limited. An South Limited. Netherlands, Brothers changed sales agent. (Pty.) N.S.W Portugal and to the Samsonite Limited. (Sidney). A through sales Lego subsidia of the independent Lego Systems, Private Lego A/S Group via a agent, which Inc. Brookfield, Limited. A license of Lego. subsidiary of of Lego A/S Office Australia Lego A/S closed was a Japan due to subsidiary Germany, Lego Systems, Sales via an d Courtaulds Iceland, Inc. [...]
[...] Socio Cultural -Increase of birth rate in Europe -Increase in expenditure for toys and games per child -Kids are growing up faster, and moving from the toy industry to the multimedia industry -Global trends of consumer behavior -Digital revolution Nostalgia of adults Technological -High threat of Video and Multimedia Games -Mass production -Internet Micro Environment The Clients How is the toy industry segmented? With respect to the market, the best way to segment the toy industry is according to the criteria of age criteria. [...]
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