1. Burhan Saiyed
Hung Phan
Hongyu Hua
Siddharth Venkatramana
Presented by Team Diversity
2. Recommendations
Overall strategy:
Product differentiation and alternative market
Product development through innovation
Expand global market share
Enhance social interaction
3. Agenda
LEGO strategic position
Product innovation
Global positioning
Technology to build the future
Conclusion
6. LEGO strategic position
Strong Revenue Growth with 5-year CAGR of 15.5%.
Costs are controlled well as Net Profit grew 23.6% for 5 years.
Value 18,000
(mn of DKK)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
2006 2007 2008 2009 2010
Revenue Operating Profit Net Profit
8. LEGO strategic position
Restructuring efforts have led to better margins and company
growth is in control
0.50
Millions DKK
per employee 0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
-
2006 2007 2008 2009 2010
Net Profit Per Employee
10. Despite lower total revenue compared to Mattel & Hasbro,
LEGO boosted a higher operating cash flow thanks to efficiency
Millions of USD Revenue Operating cash flow
7,000
6,266
6,000
5,000
4,285
4,000
3,500
3,000
2,000
1,000 690 665
376 396
3
0
Lego MEGA Mattel Hasbro
11. LEGO strategic position
• Robust internal operation
• Strong position compared to
competitors
Where should LEGO go next?
12. LEGO strategic position
Top 10 Country represent 2/3 of the global toys revenue. United
States represent the largest market share for a single country.
30%
26.30%
25%
20%
15%
10% 7.50% 6.70%
5.40%
5%
0%
13. Overall Strategy
Product differentiation
Global Expansion Asia & Australia
15. Product Innovation
Build LEGO’s own brand
TOP Product lines
Super HerosTM
Lord of the RingsTM
Hero FactoryTM
Pirates of the CaribbeanTM
Star WarsTM
HOBBITTM
NINJIAGO
CHIMA
CITY
60%
FRIENDS
Licens
16. Product Innovation
LEGO ≠ Movie toys manufacture
Success from LEGO generic brands
Develop More generic brands
Cartoon Serials
Comic books
Online games
17. Product Innovation
Build LEGO’s own brand
Experiential features
2012 Toy Trend (Researched by Toy Industry
Association)
Generation App
Many Ways to Play!
Save ‘n’ Splurge
18. Product Innovation
ATOM Express Toys
ATOMS is a system of plug-n-play sensors, motors
and logic blocks.
Magic Wand
iOS control
Source: http://www.kickstarter.com/projects/atoms/atoms-express-toys
19. Product Innovation
Build LEGO’s own brand
Experiential features
Toy to live
21. Product Innovation
Integrate LEGO characters into other platforms
LEGO bricks = Access to play a video game
22. Global Positioning
Innovation
Product
LEGO strategic position
23. Global Positioning
Global toy industry market
value
Global toy market growth by regions
Market saturation
Amount spent per child
No of children
24. Expected market value of $100 billion by 2015
Global toy industry market value
2011 $84.07
2010 $83.91
Year 2009 $79.55
2008 $77.22
2007 $78.08 Recessio
n
$76.00 $78.00 $80.00 $82.00 $84.00 $86.00
USD Billions
http://www.statista.com/topics/1108/toy-industry/
26. Toy spending per child
500 486
450
400
365
350
317 312 307
300 284
247
USD 250 2009
2010
200 401
361
150 296 308
288 280
244
100
59
50
23
51
20 6 6
0
Australia UK Canada Japan France USA Germany Brazil China India
http://www.statista.com/topics/1108/toy-industry/
27. Sno No of Kids Country Spending/ki
(millions) d
1. 352.8 India $6
2. 238.3 China $23
3. 62.4 USA $284
4. 53.3 Brazil $59
5. 16.9 Japan $312
6. 12.0 France $307
7. 11.00 Germany $247
8. 10.8 UK $365
9. 5.4 Canada $317
10. 4.0 Australia $486
http://www.statista.com/topics/1108/toy-industry/
28. Global Positioning
Invest and expand in
Canada, Australia, Brazil
Explore opportunities
in India, China &
Japan
Culturalization of
games
29. Technology to build the future
Global Positioning
Product Innovation
LEGO strategic position
30. Technology to Build the Future
Aid to Global Presence
Building Alternative Sources of Revenues
Nurturing A Community rather than a
Corporate Brand
32. Not just a brand… a Community
Source: www.rebrick.lego.com
33.
34. Do’s and Don’ts
DO:
Unrestricted access
Content Verification and Recognition
Hold competitions for the NEXT BIG THING!
DON’T:
Controlcontent
Market your products
Idea factory for …
35. LEGO MUSEUM
Currently has prime location at Rockefeller
Center
Extension of Idea:
LEGO Museum of Modern
Creations!!
Draw talented individuals
hold yearly competitions in
downtown Manhattan to garner media press and
foreigner interest
36. VIDEO GAMES ARE HERE TO
STAY
SKYLANDERS MANIA!!
Recorded $1 Billion revenue as of Feb’11 2013
Target Age: 3-8 year olds
Toy To Life Category Founders
Source: VentureBeat “Skylanders crosses the $1 Billion revenue mark with
over 100 Million toys sold. Jeffery Grubb.
37.
38. LEGO VIDEO GAME
PROPERTIES
Indiana Jones
Batman
Marvel Avengers
Lord of the Rings
Star Wars
Own Brands
ALL TOGETHER!!!
41. 60
50 48.1
40
30
20 18.1 17.7 17.5
13.3
10 9
8.3
6.3
5.3
0
USA Japan Greater Italy France UK Germany South Korea Mid East
China
Hinweis der Redaktion
LEGO, as the world’s top toy manufacturer, has evolved through years of development. It has released thousands of product lines since it is founded. This list shows those product lines that sells the best in 2010 and 2011. Although we want to know exactly how much revenue each product provided, unfortunately LEGO did not release the information in public. Our the question is : How many of them are LEGO’s generic brands? And how many of them are licensed? In fact, the answer is like this. So, obviously, 6 out of 10 products lines are licensed. As we know from the case that it is very likely that LEGO will lose control over license agreements, we strongly urge that LEGO should develop their own brand
LEGO receives great brand reputation among consumers due to its creativity in design. They have demonstrated strong product design power over the past 50 years. Although we realized from the list that most popular product lines are licensed, but in 2011, the one who generates the highest revenue for LEGO is this line: Ninjiago, which is totally designed by LEGO. So we have reason to believe that LEGO has the ability to overcome the licensing difficulty by leveraging its designing power. More generic brands could be published and advertised in many other forms, such as Cartoon serials, Comic books and online games to attract consumers, at the same time these approaches will also bring recurring revenue to LEGO.
The second point I want to raise is experiential features. Our customer’s demand for product development is endless, especially in this digital world. But what do they want? According to the research by TIA. Toy industry association. We found several important trends as following:Generation App We are living in a world of Apple, especially the kids. But we have to realize that technology is not replacing the physical toy. Technology is used to enhance traditional play patterns. Traditional toys should be developed with the ability to interact with popular tech devices like smartphones and iPads that are already in so many homes Many Ways to Play! New Toys should engage kids on multiple levels. Toys should grow with a child and they can play differently depending on their age. Toys that combine multiple play patterns toserve many different needs. Toys have depth and allow kids to play differently each day, depending on their moods or interests. These aren’t “watch me” toys – they are truly dynamic. Save ‘n’ SplurgeToy industry data released by The NPD Group in early 2012 showed that consumers are increasingly making “purchasing trade-offs”.As a result, a top trend for 2012 is thatconsumers have demonstrated that they are willing to loosen their purse strings a bit and spend more on products that pack a high play value punch or have a certain “WOW” factor. Affordability was still a consideration as a sub-trend, and this sub-trend will persist in 2012 as parents and other shoppers have really come to expect big play value at affordable prices.
Magic Wand. This kit allows you to build an ATOMS magic wand that can turn on your nightlight, move a toy, or close a door with a shake of the wand. This set also includes an exploding brick - pretty cool when you want to blow up your LEGO house just as your sister leans in for a closer look. iOS Control Set: The 18-room, 4-car garage Italian villa you just built with your LEGOs would be a lot cooler if those garage doors would open, cars could drive out, and the third floor would shake when Henry the Ghost haunts it. This kit allows you to control your ATOMS modules with an iPhone, iPad, or iPod touch that has Bluetooth 4.0.
The LEGO Group achieved double-digit sales growth rates on nearly all markets in 2011. One exception is Japan, which was hit hard by the natural disaster at the beginning of the year, but nevertheless showed growth. In the rest of Asia, which is still a relatively small market for the LEGO Group, sales growth in 2011 by far exceeded expectations. The English-speaking countries are, however, still the most significant growth drivers and have all exceeded the expectations for the year. Direct sales to consumers, accounting for some 10% of the LEGO Group’s total sales, also saw considerable growth in 2011. Finally, increased management focus meant that the LEGO Group’s sale of products to the educational sector nearly doubled in 2011; however, from a relatively small base. Thanks to the growth generated during the year, the LEGO Group’s global market share at the end of 2011 amounts to approximately 7.1%.