This created a low demand and supply relationship with the suppliers in which Lego has the bargaining power of the suppliers as they are able to switch to other suppliers easily. The accumulated knowledge of plastic and production technology allowed them to benefit from the scale of economy as they are able to reduce cost and become more efficient in their supply chain.
These recalls do not only affect companies profit margin but also severely damaged consumer confidence in the brand or industry. New entrants do not have to compete directly with Lego for buyers and could focus on needs of other children.
However this will require vast resources for research and development which might affect the companys growth.
O In the recent years, Lego is trying to enter into non-traditional areas such films and games to gain more market shares. Economic crisis has been an issue for some time as buyers have less spending power; they tend to spend less on unnecessary stuff if possible which could result in a drop of sale for the industry.
Technological Toys come and go quickly in the market. This force the industry to be innovative and develop toys integrated with edge cutting technology.
Lego main target group is children and they get bored fast with toys and may switch to traditional toys such as action figures and toy cars which are available at a relatively low price. This will benefit Lego in terms of the economy of scale where their production per unit will be more efficient and less costly.
With the high growth of the company, LEGO has a few issues and challenges in hand that require to be resolve for the company to enhance their growth potential. Strategic Management Journal.