LEGO have manufacturing plants at strategic locations as mentioned earlier in the report. From there they supply to the regional Wholesalers.LEGO has already established its presence across the globe. It has opened retail outlets in almost all the prime cities of the world for maximizing the sales volume even further. Still, LEGO depends heavily on the Europe market for maximizing their revenue level. However, development of e-commerce activity has allowed LEGO to create some level of parity between the sales volume happening inside and outside of European market.
- LEGO has collaborated with UNICEF to safeguards and protect the rights of children
- It has also focused on minimizing the issues associated with child labour or child abuse
- In 2015, LEGO has provided $8.2 million for child welfare projects, which has allowed the organization to represent itself as responsible corporate citizen (com 2017)
- From the beginning, LEGO has focused on using different advance technologies for maximizing the effectiveness of the operational procedure
- It has collaborated with Texas Instruments for constructing superior technology based robots
- LEGO has used advanced graphics for providing animated series of Ninjago characters
Environmental (ecological) factors
- LEGO has focused on minimizing the amount of carbon emission during the manufacturing process
- It has also focused on using renewable energies for the production procedure so that it does not affect the natural resources of the society
- LEGO has planned to achieve 2.5% production efficiency each year for reducing the impact on environment even further (com 2017)
- It has used FSC-certified and recyclable products for packaging
- LEGO has used legislative acts against different Chinese toy manufacturing companies, as they have copied the products of the organization and selling it on cheaper price
- All the products of LEGO duly maintain patent and copyright laws for avoiding any future challenges
Porters Five Forces:
Rivalry among existing competitors:
LEGO deals within extremely large industry size that estimated net worth is around 30 billion (Hollensen 2015). However, number of organizations dealing in this sector is relatively low. As a result, companies like LEGO, Mattel and Hasbro has able to position itself uniquely in the market.
Threat of new entrants:
Organizations do not have to face too many challenges at the time establishing business in toy manufacturing sector. However, LEGO has already developed strong network across the globe. Therefore, it is very unlikely for a new organization to compete with Lego. Hence, threat of new entrants for LEGO is moderate.
Threat of substitutes:
LEGO has to face high level of threat from different substitute toy products. The organization has already filed case against different Chinese companies for copying their designs (canplastics.com 2017). Moreover, high cost of LEGO products also providing cost advantage to the competitors that can easily induce customers to switch for cheaper alternative options.
Bargaining power of buyers:
Due to high threat of substitutes, buyers possess greater power in influencing the price level of the products (euromonitor.com 2017). Still, LEGO has able to maintain high pricing structure by providing high quality products and services. The strong brand presence of LEGO has also helped to maintain high pricing structure.
Bargaining power of suppliers:
LEGO possess diverse distribution channel along with strong relationship with different distributors. It has helped LEGO to minimize the bargaining power of suppliers to a certain extent. Moreover, effective development of manufacturing and warehousing unit in different parts of the globe has allowed minimizing the power of suppliers even further.
Recommendation and Conclusion:
The above illustration has highlighted the fact that LEGO has able to develop effective marketing and promotional strategies for capturing major share of the market. Moreover, superior quality of products has allowed LEGO to remain unique from any other smaller toy manufacturing organizations. However, many people believe that the high pricing strategy of LEGO has restricted the business level of the organization in a major way. For that reason, LEGO needs to focus on utilizing mixed pricing strategy so that people from different income group can able to purchase the products of the organization. It will provide higher potential market for LEGO, which is likely to enhance the revenue level in a major way.
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