Raye Danny Abdullah Riki
WINNING IN THE NEW ERA
The New Emerging Challenges
Recommendations
Analysis of Lego
Proposals to immediate actions
Proposals to the long-term expansion
Conclusion
CONTENT
The Acquisition of Marvel Entertainment by The Walt Disney Company
The threats of losing licensing rights
Lost legal battle with MEGA Brands, and lost the LEGO brick trademark
Without protection, LEGO will lost strengths when competes with others in brick sets
Aggressive competitor – Hasbro, who launched a new rival product line – Kre-O
Lego will face the severe competition in brick market
Three Main Threats
Immediate actions to respond to threats• Negotiate with Disney with licensing rights• Beyond Disney: develop new businesses:
• DC• TV Shows• Video Games
• Expand in the emerging markets: China, India, Brazil, Iran
The Long-term expansion• Enlarge customers demographics• Brand collaboration and tap into the new markets• Invest into the all-new products
Recommendations
Assess the strategic position of the business• Assess past performance
• Identify and evaluate current strategy
• Forecast future performance under current strategy
• Decide on the need, nature, and urgency of change
Lego has been achieved with strong profitability
Assess past performance
•Profit margins(Net profit)
• Key expense ratios
• Return on equity
Profitability
C,F&K
Lego have a chance obtain more loans to expand business
C,F&K
Assess past performance
•Profit margins(Net profit)
• Key expense ratios
• Return on equity
Profitability
•Financial Leverage ratio is 1.0 in 2010
• The better leverage is 1.8-2.8
• They can get more loans to expand
Financial Position
• The biggest brick toy company in the world
• In 2010, the fourth-largest toy manufacturer in the world
Market Performance
Assess past performanceThe organization is healthy based on strong problem solving ability
Wood toy
Plastic toy
Brick toy
Assess past performance
The ability to learn faster than your competitors may be the only sustainable competitive advantage
- Peter Senge
The organization is healthy based on high learning ability
Assess past performanceOr
gani
zatio
nal H
ealth
Operating Performance
-
+
+-
desired state
troubledorganization
complacent organization
crisis
Lego achieves to high performance
A Strategic Framework: The Diamond-E Framework
Strategy Environment
Management Preferences
Organization
Resources
Three threats:CompetitorsTrademarkLicenses
HR: Professional designersFinance: Healthy dataSupply chain: efficiency
Change, creative, and innovation
• Focus on the brick toys• Other core actives support the brick toys
Assess past performance
Forecast
It is hard to Maintain the top 1
position in brick toy field
Lose the position of the third-biggest
toy company in the world
Growth rate will decrease sharply
in profit
Assess past performanceLose the advantageous position under current strategy
A Strategic Framework: The Diamond-E Framework
Strategy Environment
Management Preferences
Organization
Resources
Three threat:CompetitorsTrademarkLicenses
HR: Professional designersFinance: Healthy dataSupply chain: efficiency
Change, creative, and innovation
• Get licenses• Innovations in product, licenses, cooperation, manufacture with expanded target consumers.
Make new strategies
Lego will have a big picture under new strategies
Make new strategies
Maintain the top 1 position in brick toy field
Become the biggest toy company in the world
60%-70% growth rate in profit
Forecast
The Licencing Battle• Negotiate with Disney• Leverage:
• Brand Recognition• Fan Base• The World’s Biggest Brick Toys Maker• The World’s Best Brick Toys Maker• Sophisticated Supply Chain Operation
• Beside Disney• DC• TV Shows• Video Games
DC
Game of Thrones
Minecraft
Exploding Markets• Expand to Emerging Market
• China• India• Brazil• Turkey• Malaysia
• Establish Manufacturing Base
• Products and Marketing Strategies Localization
• Control the Distribution Network• Promote the Brand• Control the Quality• Flagship Stores in First-Tier Cities
A LEGO Landmark
Customer• Lego’s mission
...to inspire and develop children to think creatively…
• Target market• Children Adult• Family • Artist
Customer• Enhance customer relationship
• Social network, facebook Instagram
• Hire designers from customers• Customers know what they want
Brand collaboration
• Nestle• Instead of buying license, we can sell our license
Brand collaboration
• Ikea • Customize furniture• Application in the real world
Product
• High tech brick• Electronic device• Intelligent design
First & Fast• Reduce production cost
• The specialized packs cost more to produce than the kits were sold for.
• More alternative for customers• Rise brand awareness• Efficient express
First & Fast
• Express delivery• FedEX• Can it be faster?• What’s in the cargo?
First & Fast• 3D printing
• In 2007, 3d printing machines’ price generally ranging in $2000• In 2010, the price decreased to $1000, some even
around $500• Thousands people have bought 3d printing machines.
First & Fast
• Customers design the model• Customers purchase the pack• FedEX start delivery• Print the bricks in the track• Delivery in 30 mins
• Take virus video• Upload to Youtube, Facebook, etc
T H A N K S