Question: What are the external factors that contributed to Lego Group's decline? Use Porter's Five Forces (Customer Power, Threat of Substitutes, Threat of New Entry, Supplier Power, and Rivalry) to organize your response to this question.

Expert answer

1. Lego Group's decline was caused by a number of external factors, including the rise of digital entertainment options, the growth of the used LEGO market, and increased competition from other toy manufacturers.

2. Porter's Five Forces analysis can help to identify the relative strength of these different forces and their impact on Lego Group's business.

3. For example, customer power refers to the ability of consumers to switch to alternative products or services. The rise of digital entertainment options has given consumers more choices for how to spend their time, which has likely led to a decline in demand for LEGO products.

4. Similarly, the growth of the used LEGO market has also put downward pressure on demand, as consumers may be more likely to purchase second-hand bricks instead of new ones.

5. Increased competition from other toy manufacturers is another external force that has contributed to Lego Group's decline. Many of these companies have been able to copy LEGO's successful formula and produce similar products at lower prices, which has put pressure on Lego's market share.

6. Overall, these external factors have had a negative impact on Lego Group's business and have contributed to its decline in recent years.

7. However, it is worth noting that Lego Group has been able to successfully adapt to some of these changes in the marketplace. For instance, the company has shifted its focus from selling physical products to offering digital experiences, such as its Lego Life app.

8. Additionally, Lego Group has also expanded its product line to include items for adults, which has helped to offset some of the decline in demand from children.

9. While these efforts have not been enough to completely turnaround Lego Group's fortunes, they do suggest that the company is aware of the challenges it faces and is taking steps to address them.