Detailed Analysis of LEGO's Business Environment: PESTEL & Porter's

This report provides a comprehensive business analysis of the LEGO company, utilizing the PESTEL and Porter's Five Forces frameworks. The PESTEL analysis examines the political stability of the UK, economic factors such as GDP growth, social aspects including collaboration with UNICEF and preferences among children, technological advancements, environmental considerations related to plastic usage, and legal factors concerning intellectual property and employee protection. The Porter's Five Forces analysis evaluates competitive rivalry, the influence of substitutes, buyers' and suppliers' bargaining power, and the threat of new entrants. The report incorporates references to support the analysis, providing insights into LEGO's strategic position and market dynamics. This analysis considers the factors influencing LEGO's business environment and competitive landscape. The report offers a detailed overview of the forces impacting LEGO's operations and future prospects.

Running Head: LEGO
Lego
Name of the Student
Name of the University
Author Note

2LEGO
PESTEL
Political 1. Political stability of the UK (Gov.uk 2020)
2. Business law enforced by the country has enhanced the
business scenario (Gov.uk 2020)
3. No policy for the protection of the IP (Gov.uk 2020)
4. Protection from the barrier of the country (Gov.uk 2020)
5. Demotivation from the increased level of taxation (Gov.uk
2020)
6. Another crucial political factor is that the Lego bricks had
been used to build portraits of the political leaders (lego.com
2020)
Economical 1. System of economy currently in function is under question
2. Expected growth of the country is questioned by the growth
of the organization in GDP
3. Economically the organization suffered due to the advent of
mobile games(lego.com 2020)
Social 1. Collaboration with UNICEF has guided the organization in
safeguarding the children (Unicef.org 2020)
2. Exclusive preferences among the girl child and boy child
(Jenson 2008)
3. Class distribution is provided enormous importance
4. Reaction towards health standards should be the
consideration
Technological 1. It is important to monitor the level of popularity of the
organization in the terms of the technological advances used
2. The extent of transformation achieved need to be questioned
as well
3. Collaboration with Texas has provided the organization with
superior technology(lego.com 2020)
Environmental 1. Current weather condition might pose suitable threat in front
of the effective transportation of the organization
2. Certain products might be rendered useless with the changes
in the climate
3. Usage of the plastic bricks have acted as an added advantage
for the Lego(lego.com 2020)
Legal 1. The legal factors to protect the intellectual property in order
to prevent them from being stolen and incurring loss for the
company
2. Creation of the health and safety laws in order to protect the
employees from the terrible working conditions under which
they were forced to work (Constantinou 2018).

3LEGO
Porter’s Five Force
Competitive rivalry Rivalry has acted as the strongest hold of the organization as there are
limited competitors of the organization in the market. With a limited
competitors in the market the organization do not need to invest a wider
amount of concentration in catering to the competitors. The existence of
the company for a period of more than 75 years have given it a strong hold.
(lego.com 2020)
Substitutes The organization has received higher level of influence from the
substitutes of the organization that is present in the market. It has allowed
the organization to develop negative force of magnitude (Jenson 2008).
Buyers’ Bargaining
power
This aspect has allowed the organization to develop a fast rate relationship
between their product as well as their customer. This has allowed the
organization to enhance their customer base to a greater extent. Bargaining
power had led to the increase in the business of the organization(lego.com
2020)
Suppliers’ Bargaining
power
By assisting their supplier their significance in the toy industry, the
organization has allowed themselves to have established among the wider
range of the suppliers. However, the organization has made sure that they
maintain a certain code of relationship between their partners (Jenson
2008).
Threat of substitutes Licensing is a serious issue for the video game designs, lack of which can
result in the issues of piracy. In this context, copy rights and patents are
necessary for averting these instances (Gov.uk 2020).

4LEGO
References
Constantinou, L., 2018. LEGO Turnaround.
Gov.uk 2020. Simple, clearer and faster. Available at: https://www.gov.uk/ [Accessed on 23rd
March 2020]
Jenson, J., 2008. Children, new social risks and policy change: a Lego future?. Comparative
Social Research, 25(1), pp.357-382.
lego.com, 2020. Customer Service - LEGO.Com GB. [online] Lego.com. Available at:
<https://www.lego.com/en-gb/service> [Accessed 23 March 2020].
Unicef.org 2020. About us. Available at: https://www.unicef.org/ [Accessed on 23rd Marxh
2020