tsinghua executive summary

8/10/2019 Tsinghua Executive Summary

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Executive SummaryTsinghua Univerity

1. Situation Overview of the LEGO Group

• Market position: Niche player in a global toy market & No.1 in construction toy category

• Core Competencies: Strong brand, high quality products and innovation abilities

• Recent performance: experienced some major losses but is turning better

. !ro"#em Statement

• $ssue %efinition: Being a niche player in a tightening market, o! can "#$% group

achieve sustainable proits o 1'.() and gro!th rate o around *) in the coming years by leveraging its core competency+

•

o solve this issue, the company made a three&phase' share' vision p#an in !hich !e based our strategies on

(. Strate)ies

(.1 Short&term Strate)ies: !rofita"i#ity *ocus

(.1.1 $nterpretin) the !rofita"i#ity Goa#

• o achieve reasonable margin compared to major industry peers, that is operating

margin o 1'.(), according to uture expectations made in -/ 0nnual eport

• o maintain sustainable proitability in the relatively cyclical toy industry

(.1. Strate)ies an' $mp#ementations to Meet the Goa#

(.1..1 !ro'uct Strate)ies2 adjust product portolio and build deensive core products

• 3ocus on pre4school5inant toy segment in !hich the demand is driven up by

6age compression7 and is less aected by come4and4go entertainment ashions

• 8ontinue reinvigoration on "#$% classic toys, !hich are less aected by toy

trends

• ake calculated risk to ride on the trends by developing licensed products and

electronic products

SurvivalSurvival RestoreProfitability

RestoreProfitability

OrganicGrowth

OrganicGrowth

2004 - 2005 2006 - 2008 200 onwar!

GrowthStrategy

in Long-term

Profitability EnhancementStrategy

in Short-term



(.1.. Competition Strate)ies: avoid price !ars by brand enhancement and cost

reduction

• Brand enhancement2 stronger brand building is to be achieved through urther

product innovation and marketing innovation. 9e proposed t!o initiatives,

!hich are 6closer to consumers7 and 6 broader cooperation !ith educators7 to

acilitate this innovation• "o!er manuacturing cost2 besides current outsourcing plan, !ork on inding

potential outsourcing partners in 8hina or Southeast 0sia to support :apan and

emerging 0sian market

• ;mprove operating excellence2 ater the restructuring o corporate level

management, organi<ational changes in markets &products division should be

considered

(. Lon)& term Strate)ies: Growth *ocus

(..1 $'entify Growth Opportunities: =sing the '>' matrix covering t!o dimension

o gro!th, developing ne! products and entering markets consist o ne!

customers ?e.g. ne! geographical market or ne! customer segment@, !e

evaluate the possibilities o dierent gro!th opportunities

Aue to the past unsuccessul experiences o leverage brand into unamiliar product areas,gro!th through developing completely ne! product is not recommended. 8areul analysis

leads to the conclusion that geographical expansion into 8hina and expansion to target

6outh7 group oer gro!th opportunities.

(.. Geo)raphica# Expansion into China

Aue to the increasing importance o emerging markets and the consideration that the salesin emerging markets !ould help smooth the seasonal sales cycle, geographical expansion

into emerging markets is preerred.

9e considered 8hina a avorable market expansion destination. 0s observed, 8hinese

customers have becoming increasingly interested in educational toys that nurture creativityand stimulate thinking. Besides, the emerging aluent and middle4class are !illing to pay

more or early education o their children.

(..( Expansion to +ar)et ,outh Group

"

"

"

√ √Current Market Presence

#ea$

%o!erate

Strong

&'istingPro!uct

Pro!uct with%o!ifications

(o)*letely+ew Pro!uct

Product

Discussed



• -hy ,outh outh are oten loyal "#$% enthusiasts or lovers or creation that

!ould not see electronic products as substitutes to "#$% products

• -hat to Se## igh4tech "#$% toy o intellectual challenge and unique experience

• /ow to Se## By utili<ing our competencies in 8ommunity, #ducation &Airect

?8#A@ division, selling o products through specially designed communities and

leveraging online marketing and distribution channel

0. Summary



;n act, there are numerous toy4makers irms have gone the multimedia route. 0lthough

"ego Covie revenue increased successully by 11) product lines such as "ego echnic and

"ego Star 9ars ?BB8 -1D@. ichtel and CcEinley ?-1-@ comment that parents do not mind

the video games, books and even F series because they !ant to !atch their kids build

tsinghua executive summary

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