As a fellow LEGO builder and collector, I can confidently tell that you have built or seen at least one lego brick. As you read this post, there are already 7 lego sets that have been made in a second, and 36K bricks every minute.
There is not a single country in this world where lego bricks have not reached. With its immense popularity and reach worldwide, Lego continuously strengthens its position in the market. But, with the upcoming recession and high competition, Lego has been facing some new issues, which we will get to know in this Lego SWOT analysis.
Lego: Company Overview
| Company | The Lego Group |
| Industry | Toys |
| Founded | 10 August, 1932 |
| Founder | Ole Kirk Christiansen |
| CEO | Niels B. Christiansen |
| Headquarter | Billund, Denmark |
| No. of Employees | 24,484+ |
| Annual Revenue | $43.7 billion (FY 2021) |
| Website | lego.com |
A guy named Ole Kirk Kristiansen from Denmark started making wooden toy bricks in 1932, and after 17 years, in 1949, he invented interlocking bricks design. That was the point that led to this moment after more than 80 years with thousands of bricks catering to millions of people.
Around $3.5 B of revenue in 2022, and titled “Toy of the Century,” Lego has around 25K employees in 130+ countries. With a vast network of retail stores from its inception, Lego has reached millions of houses, bringing a smile to children to adults.
Here, we will discuss the company’s internal and external factors in detail.
Product & Services of Lego
Backpacks & Lunch Boxes | Books | Keychains | Plush Toys | Throw Blankets | Puzzles & Board Games | Role Play & Costumes
Lego Competitors
K’Nex | KRE-O | Magna-Tiles | Battat Bristle | Fun Little Toys | IQ Builder STEM | LeapFrog Leapbuilders
Did You Know?
If you gather 40 billion LEGO bricks and pile them up into one another, the total height would be the distance from the earth to the moon.
Strengths – Lego SWOT Analysis
Global Recognition: Lego is one of the most recognized brands worldwide, with a presence in more than 130 countries. Besides, almost 900 official Lego stores and uncountable numbers of unofficial stores made it one of the most renowned and highly available products in the market.
New Products: One of the primary reasons to stay updated and trendy with the market is their ability to bring new products on almost every occasion, season, and month. As a result, there is always news about new products, such as LEGO Botanical Collection 2023 and other collections this year.
Strategic Partnership: The company has one of the best strategic partnerships with many famous and pop-culture-related franchises, such as Star Wars, where they bring new toys almost every month. Besides, multiple movies, series like F.R.I.N.D.S, Marvel, LotRs, games, and partnerships with many companies made them one of the most visible brands.
E-Commerce Wing: Lego’s presence throughout the internet is impressive, and because of that, Lego’s one-third of all purchase comes from online and their e-commerce site. And, in 2022, the sales increased by 17% online. The primary reason was its presence and smooth purchasing experience.
LEGO Community: A solid and loyal customer base pays in many ways for any company, and Lego’s community worldwide is well-known and established. The community helped the company to establish a strong foothold in many regions, showcase the builder’s creativity and skill and develop new ideas for the company.
Eco-Friendly Practices: As more and more environmental issues arise, companies are moving toward more eco-friendly practices. As a part of the initiative, Lego announced its plan to use 100% renewable materials by 2025 throughout all its products. Besides, the packaging and all are already in work to make the process free of any eco-harmful practices.
Weaknesses – Lego SWOT Analysis
High Price: Lego is considered a premium and expensive product line in the toy industry. Even though their single products are a bit economical, the set and early days products can be higher. As a result, we can see that even the classic helmets are so expensive that most fans complain about the price increase.
Counterfeits: As a plastic-based product, it’s easy to copy these toys, and as a result, there is a massive market for counterfeits. The biggest counterfeit product maker in China, most products are manufactured and shipped by many sellers without authorization. As a result, Lego is losing tons of money for these.
Unsuccessful Games: Video games have been one of the most excellent tools to attract new customers to the brand. In this case, Lego has tried several times to capture this market, but competitors like Bandai Namco have a more diverse and long product line. And because of that, Lego has failed to stay up in this market.
Low-Funded R&D: Even with Lego’s tons of investment in the other sectors, their R&D is still heavily underfunded as they rely more on the consumer base. As a result, customers have not seen many new product lines in recent years. Besides, the research cost for different target groups is expensive.
Opportunities – Lego SWOT Analysis
Market Expansion: Lego bricks are very popular worldwide. But, compared to that, Lego doesn’t have that many official stores or vendors in many countries with opportunities to grab. As a result, the market expansion to these regions, especially in the Asian and European markets, is the perfect place to start expanding.
Subscription Model: Many brick builders and customers prefer to be surprised, and the way to do that is to introduce a new mode of delivery. Lego can introduce a new subscription fee model, which is suggested by many fans across the world, and the purpose of the model is that the company will send some kind of Loot Crate or early bricks to these customers to explore.
Personalized Sets: The customized set market with personalized touch has been a huge market and growing. Even Lego already has its “Build Your Own Minifigure,” and it’s been popular since its introduction in the market. Lego can introduce a dynamic Lego set where people can build their own customized universe or set with unique stories.
Introduce VR: Virtual reality is no longer out of general people’s hands, and most tech and video games companies and even social media services are introducing their metaverse. With this vast customer base, Lego has the perfect opportunity to introduce to let people create their world, such as Oculus, and interact with other people worldwide.
CSR Program: A CSR program for companies can bring new customers and boost positive word of mouth. With the Lego Education program and Lego foundation, these organizations have many initiatives for children to learn through lego bricks and promote education in rural regions.
Threats – Lego SWOT Analysis
High Competition: The toy industry is growing, and it’s estimated to become $135B in 5 years from now. With this kind of growth, other competitors, such as Mattel, Hasbro, etc., are also trying to capture the market. Besides, the company is also competing in movie, game, and other industries.
Environmental Concerns: As plastic pollution has become a real threat to the world, and industries are making almost twice as much plastic as before, countries worldwide have taken the initiative from reducing to almost no plastic pollution. As a result, it’s a threat to the companies whose primary products are made of plastic, such as Lego.
Imitating Products: As mentioned, there have been tons of other imitating and copycat products because of how popular Lego is. Many companies and third-party manufacturers are trying to capture the market by selling the products to third-world countries where Lego doesn’t have an official or strong presence.
Recession: No matter which industry it is, recession hits almost every industry, and these see a down graph; even in the 2008 recession, the toy industry got hit by the recession storm. And, as the economist predicts that there will be an economic recession this year and in the upcoming year, it’s likely that the toy industry will get hit again.
[Bonus Infographic] SWOT Analysis of Disney
Recommendations for Lego
Even giant companies like LEGO face issues that they need to overcome in the upcoming days to survive in the market. Here are some recommendations;
- Lego’s priority should be to build more community in countries where they don’t have official stores or communities.
- Building a presence will eventually help the company fight counterfeit products and other third-party manufacturers with imitating products.
- Having a loyal customer base and continuing the CSR programs will keep the positive word of mouth, even during bad times such as economic recessions.
- Partnering with government education programs to bring constant customers, help bring cash flow, and do more CSR.
- The subscription model and personalized set will bring more customers and increase the overall engagement rate.
Frequently Asked Questions (FAQs)
What Country Buys The Most LEGO?
Germany buys the most LEGO.
Is There An Age Limit For LEGO?
No, there is no age limit for LEGO. The company makes LEGO for all age groups.
Final Words on Lego SWOT Analysis
The analysis for LEGO has come to an end. As we get to know the internal and external factors that affect the company environment and everything, we know how rich lego’s history is.
With billions of customer base, strategic partnerships, a strong community presence, and new products almost every month, Lego continues to build its presence worldwide and community. On the other hand, with time and in the upcoming years, Lego is facing new and new issues and trying to tackle counterfeits and overcome their weakness to stay in their position stronger in the market.
References
- Wikipedia contributors. (n.d.). The Lego Group. Wikipedia.
- 2021 annual results – About Us. (2022, March 8). LEGO.
- Raymond, A. (2023, January 10). New Lego kits for ’23 include fine art, new botanicals and a celebration of Disney’s 100th anniversary. Deseret News.
- Altland, R. (2023, January 23). Here’s a first look at LEGO’s upcoming Commander Cody and Captain Rex helmets. 9to5Toys.
- Whitten, S. (2022, September 28). Lego sales jump 17% in first half of 2022, boosted by Star Wars and Harry Potter sets. CNBC.
- Community. (n.d.). LEGO IDEAS.
- Environment – Sustainability. (n.d.). LEGO.
- Wharfe, C. (2023, January 26). The earliest LEGO Star Wars helmets are now incredibly expensive. Brick Fanatics.
- Vanek Smith, S. (2020, September 8). The Great Lego Scam. NPR.
- Wilson, E. (n.d.). Suffolk schools invited to join LEGO Education campaign. East Anglian Daily Times.
- Global Toys Market Report and Forecast 2023-2028. (n.d.). Expert Market Research.
- Plastic pollution is growing relentlessly as waste management and recycling fall short, says OECD. (n.d.). OECD.
- Andrejczak, M. (2009, January 15). Not recession-proof: Toys take hit in 2008. MarketWatch.
