Lego’s Secrets Case Study Solution
Opportunities
- LEGO has an opportunity to expand its market share by expanding into potential geographic locations, i.e. the company could attract the Asian market, such as: China.
- LEGO’s products are considered innovative, and the parents are focusedon buying such toys that help their kids in learning while playing, so LEGO has the opportunity to implement such creative toys for the target market.
Threats
- LEGO faces a threat from the counterfeit products being offered by the other industry players at lower price and lower quality.
Porter’s Five Forces
Bargaining Power of Customers
The bargaining power of customers is high, as the customers are mostly large retailer like Walmart, which can exert pressure on negotiating the prices and also there are a lot of product's-substitutes and the-customers’ switching cost is low.
Bargaining Power of Suppliers
The bargaining power of suppliers is high, as the toys’ key raw material is plastic, which comes from the oil industry and the oil industry holds a high power over the prices, which would ultimately impact the prices of the industry’s products. .
Threat of Substitutes
The threat of substitutes is high, as the competitors are coming with low quality and low priced products for children, which are becoming attractive products for the price conscious consumers.
Threat of New Entrants
The threat of new entrants is low, as the new entrants would have to come with unique products and high capital investment in order to grab the loyal market from the industry’s dominant player like LEGO.
Existing Rivalry
The existing rivalry in industry is low, as there are few players in the industry and LEGO has become a dominant industry player, so existing rivalry not a key concern for the company.
Recommendations
The company should get its products patented, so that it could safe its products from the threat of counterfeits. It would enable the company’s market share to have more value than the market share of its competitors, which would ultimately help the company in keeping its premium quality to be the key focus of customers.
The company should also provide low priced products for the price conscious customers, so that the customers would not get attracted towards the counterfeits or other substitutes-being offered by the competitors. Though it would require further investment and R&D costs, but providing valuable products at low prices would keep the company at a dominant position......................
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