Porter Model Essay

39101 Words157 Pages
Valuation of LEGO Group Copenhagen Business School MSc Finance and Strategic Management June 2013 Author: Morten Vang-Pedersen Supervisor: Peter Staudt Number of pages: 76 Number of characters: 175313 1 Author Statement 2 Executive Summary The purpose of this thesis has been to estimate a fair value of the LEGO Group as of December 31st 2012, with the perspective of an investor or prospective buyer. The valuation is based upon strategic and financial analysis, as these allowed for the necessary forecasts to be estimated. The strategic analysis applied different models in regards to three levels of strategic analysis. The PEST model was applied for the macro environment analysis, Porters for the industry analysis and the VRIO framework for the internal analysis. LEGO’s primary revenue is made in Western Europe and North America, but while LEGO does not experience significant growth on the Western European, it has experienced growth of more than 20% in 2012 alone on the North American market. LEGO’s growth in emerging markets was significant, but as the total sales in the regions were of a lesser degree, the impact was big. In general the analysis portrayed a bright future for LEGO, due to a strong brand, an optimized operating model and plenty of opportunity for growth The financial analysis showed LEGO has had strong sales growth, decreasing costs and thereby increasing profit margins, effectively showcasing the complete turnaround since 2004. LEGO’s ROIC and ROE were found to be much higher than its peers, as both Mattel’s and Hasbro’s financial were dissected. These two chapters’ findings were applied to forecast future performance for LEGO, as both the income statement and the balance sheet were budgeted for the forecast period. The forecasts show continued sales growth, although at a decreasing rate, while costs are expected to increase gradually. The DCF

More about Porter Model Essay

Open Document