Most of us played the building block game of Lego while growing up, and you would have stumbled on its blocks. Many children wish to have one of the presents of Lego on Christmas, and it offers a similar type of joyful experience to what any other brand offers.
Lego is a Danish (Demark) company dating back to the 19th century. Ole Kirk Christiansen, a Danish carpenter had a great passion for building wooden toys, and it resulted in the form of a well-established business and company “Lego” in 1932. The word “Lego” has rooted in the Danish word “leg godt” and it means to play well. The company introduced the colorful blocks in 1947 and they earned a great reputation.
The company has been running the toy business for more than a century. According to an estimate, the company has produced approximately more than 600 billion parts of Lego. The brand has earned a lot of profit for itself.
According to an estimate, the annual revenue of Lego in 2021 was 7.44 billion Euros, and it has increased from 5.87 billion Euros. As of 2019, the company is operating its business in more than 130 countries, and approximately over 16000 people are working for the company.
Today, we’ll discuss Lego pestle analysis. It is going to focus on external factors impacting the toy brand like political, economic, social, technological, legal, and environmental.
Here’s Lego pestle analysis as follows;
Table of Contents
Political Factors
Core Values
The core beliefs and values of Lego are very simple and clear and they’re contrary to any other world’s leading toy brand. They don’t interfere with the political system of any country. However, the company publishes Lego’s artistic creations of customers on its web platform. Viewers vote for those ideas, and the idea that receives the most votes would become the reality.
Women’s Day controversy
Maia Weinstock, an American journalist published her work and it received the most votes in 2015. It became her feature ode to the international women’s day for all the women Supreme Court justices. However, the platform rejected her work based on the reason that it has taken the side of one political view and the company doesn’t take political sides. It received a lot of criticism that promoting women’s achievements have nothing to do with politics.
Not Supporting Chinese Artist
Ai Weiwei is a bold Chinese artist that has a reputation for speaking against the government openly and his artwork is always on the verge of becoming controversial. When he was going to publish his work in the Melbourne exhibition made of Lego blocks, then the company didn’t support his work. Instead, the brand made effort to convince Weiwei to back out from the exhibition. WeiWei’s fans came out in the street for his support and donated non-Legos bricks.
The whole controversy inspired the company to bring major changes in its policies. The brand did so in 2016 by allowing customers to make bulky purchasing as long as they don’t include the company’s name in their controversial political campaign.
Economical Factors
Growth
According to an estimate, the annual growth rate of Lego is roundabout 12%. The tiny bricks and building blocks have become so popular across the world. You can find Lego bricks and building blocks in the closet of children.
Costly Product
The price range of Lego’s products is different in various countries across the world. For instance, if you buy the Lego product in Ecuador, then it would cost you the price of 672 dollars. It falls under the category of one of the world’s most expensive toys that you can ever buy.
The costly price range attracted the attention of many customers across the world. The company sets its prices based on the required molds for the production of pieces, licensing cost (it’s different in various countries), and the total number of pieces.
Some of the other factors impacting the price of Lego’s products are taxation, exchange rate, customers’ annual income, and the total population of the country. Retailers change the retail prices of the company’s products over which the brand Lego doesn’t have control.
Social Factors
Digital Platform
Many people thought the sale of Lego bricks would decrease significantly due to technological development and digital entertainment channels. The company has made a strong influence over social media platforms. However, the reason behind the success of Lego over social media platforms is because its customers and users post its content by tagging and featuring the company. It further promotes Lego’s brand.
Child Protection
Lego has developed a partnership with UNICEF in order to protect the rights of children worldwide. The other reason is to reduce the exploitation of children and promote the best business practices. The brand can also promote the interest of children in different ways like becoming a kids-focused company.
Huge Responsibility
Lego is a global brand and it brings a lot of responsibility to the company by including various identities without any discrimination of culture, gender, sexuality, and race. The company hires people of various identities and backgrounds in order to promote creativity and inclusivity. However, if you have a diverse range of people, then they would have different ideas to contribute.
Entertainment Industry
Along with the toys market, Lego has had a great influence in the entertainment industry. Many movies were created based on Lego’s characters like Lego Batman and they became box office hits. However, there are various Lego themes and they’re doing well for the company, and the company has successfully transcended to a higher level.
Technological Factors
Research Program
Lego has established a reputation of financing the research and development programs that play a significant role in the child’s learning and development. The innovative research helps them to gain a competitive edge in the market. For instance, the company launched the Lego boost comprising of robotic kits for kids aging up to 7. It improves engineering skills among children so that they could write codes with their hands.
Digital Platform
Pandemic made Lego go online and work on the further development of the digital platform. But the toy’s brand has already been working on it for the past ten years and the company has developed a strong network. However, the company has an application “Lego Life” and it has got more than 9 million users. The digital platform has allowed the company to make a profit during the pandemic and lockdown.
Innovation
Lego’s bricks and building blocks are much more than just toys, and they promote innovation and creativity skills among children. It also offers children a variety of toys like racing engineering vehicles and coding options for robots. The company has got great technology to offer in the form of these toys, and it develops technical skills among children.
Legal Factors
Imitation
When a company is operating its business in different parts of the world, then it increases the possibility of imitation. For instance, ZURU Company launched a product in 2018 and it was similar to the action figures of Lego. The brand has got no other choice but to file a lawsuit against ZURU for copyrights infringement. However, ZURU defended its position by claiming that the expression of their toys is completely different and it doesn’t pose any threat. The judge ruled the case in favor of ZURU’s figures because they were different.
Environmental Factors
WWF Partnership
Lego has developed a partnership with WWF (worldwide fund for nature) in order to save and protect the nature and environment. The company plans to reduce the carbon emission rate by 10%, decreasing the product waste by 10%, and hopes to become a 100% sustainable company by the end of 2030.
Conclusion
After a careful study of Lego pestle analysis; we’ve realized that Lego is the world’s leading toys manufacturing company. The external environmental factors would badly impact the functionality of the company if it doesn’t keep on monitoring them.
