The general environment can be analysed as below:
Economic element: There had been pessimism in the global economy with the rise in costs of labour. There has been a sharp decline in profits of LEGO.
Socio cultural element: The multiculturalism brings in improvement and inventiveness. With LEGO, around 100 designers operate in 10 nations and get the innovative support. There has been diversified designing team. There is a great relation among the LEGO and welfare acts of kids.
Worldwide element: the LEGO goods are made by chemical and plastic items, the prices of these are impacted by the global oil. The market for BRIC is expected to improve in upcoming times and LEGO attempts to invest within the markets.
Technological elements: LEGO went online in the year 1999, which helps in acquiring more and more clients. There has been development of brain games on the computers and internet. People provide feedbacks for LEGO games via the internet and blogs.
Step 3 – Analysis of the Industry Environment
By utilising Five Forces structure, the competitive Forces in the market would be stated and the derivations of the productivity in industry can be seen (Helfat, 2012). This structure will assist in foreseeing and managing the competition in future, and also considering the factors which affect the business due to external environment
Threat of Entry: given that latest toys are incessantly coming in the market with big brands such as Wal-Mart and Target etc., consequently the threat of entry is bigger. However, LEGO being extremely well-known global brand it is dangerous for new entrants to replicate it in short-range.
Bargaining Power of Suppliers: The key suppliers of LEGO are the Chinese delegates and there are enormous numbers of these Chinese suppliers which provide to diverse other businesses as well. Consequently the reliance level of LEGO is little. Besides LEGO has mainstream of its manufacturing as internal, supply requirements are not extremely discriminated and possible suppliers are simply accessible therefore the switching expenditure for suppliers is little too.
Bargaining Power of purchasers: given that the goods sold by LEGO are exclusive and cannot be replaced by the retailers with like goods and thus the purchasers cannot rearward integrate the manufacturing of LEGO toys. because of differentiated goods LEGO benefits from great market situation among the Academic help purchasers thus the bargaining power of buyers is moderate since LEGO has high-quality link with the retailers too.
Threat of Substitutes: given that children have begun using additional time with digital goods, however still LEGO has been resisting the fashion and its sales are increasing. LEGO has integrated know-how in a few of its goods, so though the threat of substitutes is more for the business however for LEGO it is relatively smaller.
Competitive Rivalry: The foremost contestants for Lego are Hasbro, Takara Mattel, yet the two key opponents of LEGO have been Mattel plus Hasbro. LEGO is quite superior to them however in upcoming they may be able to grasp its share in operating revenues and thrash it so inner opposition is soaring for LEGO.