Five forces toy industry
Threats to the toy industry
At the height of its popularity, Scrabulous attracted a half million players a day. We will continue. In addition, there are low switching costs in the toy industry. This is why this force has been influenced by switching costs Thompson It is meant to be a sample and all ideas are my assumptions. By building economies of scale so that it can lower the fixed cost per unit. Are there any strategic groups? Substitutes are everything that rivals with Lego about children playtime, such as other traditional toys or computer games. This helps Lego to ensure that it does not waste its budgets. Recently, the U. Bargaining power of buyers The bargaining power of buyers has highly influenced Lego and other relevant educational toy companies. Another major factor for the toy industry is that children at different ages have shifted preferences.
These demands can have explosive affects, with the toy company Hasbro feeling the full effects. Without the appeal of some aspect of the product, such as educational, creative, entertainment or some other factor the toy will not sell.
Finally, there are extremely high entrants of new entrants in this toy industry. Bargaining power of buyers The bargaining power of buyers has highly influenced Lego and other relevant educational toy companies.
Threat of substitute product The threat of substitutes are growing with the continuous growth in demand, with children at a very young age having access to high technological gadgets and platforms This has driven toy companies to incorporate more technology within their products, as toy companies are now in direct competition not only with other toy products but also with traditionally non toy products such as, Tablets, computers, smart phones and even Mp3,s offering gaming within their technological platforms.
As Lego operates in a market niche using a segmentation strategy, there is barely direct competitors, which is a relieving factor. The company argues that the large part of making decisions in regard to the prices of their products relies on the suggestions of the clients.
Five force analysis toy industry
Substitutes are everything that rivals with Lego about children playtime, such as other traditional toys or computer games. Power of the Suppliers The materials used within the production of 1UpToys products, for example plastics, paper, cardboard, computer chips and cables, are available from a wide range of suppliers , but are susceptible to market related pricing, e. Loose safety standards in Chinese factories caused the massive toy recall of which over 10 million toys that contained unsafe levels of lead and small magnets which, if swallowed, could cause serious injury or death. Managers at Mattel, Inc. Also, Lego has several promotions that make their customers to have second thoughts to purchase products from other companies. This may not be a problem throughout the E. A major entry barrier in the toy industry is customer loyalty. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing players. Value disciplines For lego it is hard to directly reach the children. Bargaining power of buyers The bargaining power of buyers has highly influenced Lego and other relevant educational toy companies. Suppliers pressure high : Lego brick stones are made of plastic.
What firms are the major competitors in this industry and what are their annual sales, market share and growth profile? This may not be a problem throughout the E.
The toy industry is oligopolistic in nature with very few companies in China. As the economic condition in the traditional toy market is harsh due to a variety of substitutes, the likelihood of new entrants is low.
based on 21 review