External and Internal Environments

External and Internal Environments

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The Toy Brick

Lego is derived from the Danish words “leg godt” meaning “play well”. This is one of themajor players in the toy industry and the king of the construction toys. Lego is valued at $14.6 billion, based on the average enterprise value-to-earnings before interest, tax, depreciation and amortization, enterprise value-to-sales and price-to- earnings multiples of competitors Mattel andHasbro Inc.[Met13]. This year marks the 80thbirthday of the Lego brand and continues to grow as a staple toy in many homes.Important SegmentsThe general environment is made of the factors in societies that affect and influence an industry and all the companies that are in that industry. Lego would absolutely be mindful of the demographic segment, segment that includes one of the most important elements in the toy industry, age structure. Toys are geared to many different ages and knowing the structure of how toys and the customers act is important. Lego might be at an advantage when dealing with this segment because after around age 6 the basic Lego block system can be enjoyed by even adults. Many adults that have grown up playing with Legos are often drawn to them even in adulthood. Ethnic mix and income distribution is also important elements in this segment. Mostly as far as where in the country they want to place their product and what stores to choose to sell to. Lego has partnered with Target to sell exclusive sets which shows some confidence in the Target stores. They have done the same with Toys “R” Us. Technological segment is an important segment for the toy industry. Technology is such an important area to be mindful for any product. It could be in the product or how the product is made, but either way that firm must be on the current technical wave or they will be left behind. Lego has been able to keep up with current technology in its production of its blocks and has
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3External and Internal Environmentsbeen able to manufacture 45.7 bricks in 2013. Lego has also been successful keeping with the simplicity of the plastic brick but also adding a product line that is swarming with technology with its Lego Mindstorms line. Lego Mindstorms is a line of kits that contains software as well as hardware to build customizable and programmable robots.