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Lego Group

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Submitted By smilingqueen
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Executive Summary Tsinghua 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 2. Problem Statement
• Issue Definition: Being a niche player in a tightening market, How can LEGO group achieve sustainable profits of 13.5% and growth rate of around 7% in the coming years by leveraging its core competency?
• To solve this issue, the company made a three-phased shared vision plan in which we based our strategies on

3. Strategies

3.1 Short-term Strategies: Profitability Focus
3.1.1 Interpreting the Profitability Goal
• To achieve reasonable margin compared to major industry peers, that is operating margin of 13.5%, according to future expectations made in 2006 Annual Report
• To maintain sustainable profitability in the relatively cyclical toy industry 3.1.2 Strategies and Implementations to Meet the Goal
3.1.2.1 Product Strategies: adjust product portfolio and build defensive core products
• Focus on pre-school/infant toy segment in which the demand is driven up by “age compression” and is less affected by come-and-go entertainment fashions
• Continue reinvigoration on LEGO classic toys, which are less affected by toy trends
• Take calculated risk to ride on the trends by developing licensed products and electronic products
3.1.2.2 Competition Strategies: avoid price wars by brand enhancement and cost reduction
• Brand enhancement: stronger brand building is to be achieved through further product innovation and marketing innovation. We proposed two initiatives, which are “closer to consumers” and “...

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