Pest Analysis Of Lego

PEST Analysis

Political Factors

Lego group is affected by the increasing support of gender neutrality in Western Countries. After launching their new product, LEGO friends, which is aimed at girls ' age 0-14, the company was castigated for gender bias in their advertisements. Petitions have been signed to make LEGO stop their purportedly gender biased advertising and include both genders in the marketing of their products; this would cause detrimental effects if the marketing mix were to be changed. (The Huffington Post 2012). In future, new laws may even be implemented to in regards to gender neutrality and it might affect Lego 's core markets.

In recent months the Danish government has proposed that corporate tax should be reduced by 1%

A future risk for LEGO is the growth in novel markets such as three dimensional printing, which use the same materials as LEGO in the printing process (The Economist, 2012). One might therefore worry that someday people would be able to download the patterns for the bricks required in each product and simply produce them at home.

Michael Porter Five Forces

Bargaining power of supplier

Suppliers generally have a low bargaining power over Lego as the company has diversified over 11 000 over different suppliers all over the world. The major part of their suppliers is in low risk countries but the second largest group of suppliers is in high risk countries. (Progress report 2012)

Buying power of consumers, Strength: Moderate

Consumer 's buying power is determined whether the individual buyer has economic influence on the firm within the industry. A single person is not able to force a company down in price or inflict damageable impact on the company. However, on a large scale basis, Lego will still be affected to a certain extend as the firm still has to co-operate with retailers who are responsible for distribution to the end users, placing these retailers in a favorable

These tools are so powerful that it even created a legion of loyal fans for "Lego only" products; these fans would never consider mixing their LEGO bricks with Lego substitutes (Community Team Blog). This allows Lego to charge a premium price resulting in a differentiation advantage. Despite being threatened by 3D printing and a shrinking customer base, Lego 's core competencies have shown to withstand the test of time as competitors are unable to replicate them due to its complexity; Lego 's profits continued to grow despite the flood of substitute products by competitors over the years