Lego Essay

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BscB 6. Semester Department of Economics The First of May, 2013 Authors: Peter Fedders Examination Number: 301668 Rasmus Villadsen Examination Number: 301667 Advisor: Baran Siyahhan Characters: 135853 Bachelor Thesis LEGO GROUP ------------------------------------------A STRATEGIC AND VALUATION ANALYSIS Aarhus University Business and Social Sciences Spring 2013 1. Abstract: The purpose of this thesis is to quantify and estimate the value of Danish toy manufacturer LEGO. Thus the external and internal environment in conjunction with recent years financial statements, will assess the hypothetical value associated with the projections and assets related to said company. LEGO operates in a market, which has seen interesting developments within the past decade. During this period LEGO managed to recover from the severe difficulties they faced at the beginning of the second millennium. With impressive recent growth rates, exceeding 25 % in 2012, the thesis set about valuation whether this could be sustained. To arrive at a concrete firm value, future revenue steams was estimated and evaluated based on strategic performance along with historical financial ratios. Within the strategic analysis several leavers was identified, providing LEGO with competitive advantages. Among others these advantages included the successful use of licenses from well-known franchises and skillful handling of their operating processes. In addition areas of opportunity such as blue ocean markets and widening of the product portfolio was argued to help sustain growth, whilst threats from entrants to the market and price competition constituted future uncertainties. Given the inflow of additional competitors on the construction toy market, and as the current market structure changes from a dominant firm and oligopolistic competition structure, to a more balanced competitive market,

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