The landscape of the current toy market with the proliferation of electronics toys and games is constantly changing. Children are now growing up in an entertainment economy saturated with play systems which are outcome driven . However, Lego, a traditional toy maker has stick to its core values of creativity, imagination, learning, fun and quality in it products. The threat of substitutes as a result of the many varying products means that children have more options to choose from in the growing toy market . In this paper, we will examine what are Lego's most valuable resources and capabilities at the turn of the century?
Lego's long standing history, stability of core values and their ability to bridge past and present offers both a psychological and professional advantage against new entrants to the toy market. Although tangible resources such as free cash flow from profits are valuable to the company, intangible resources such as Lego's brand name and technology innovation are even more important in terms of their contribution to value added and as a basis for competitive advantage .
Customers are willing to pay a premium for Lego's products over unbranded ones because the brand name can give comfort to buyers unsure of their decision by reducing their perceived risk and also because of its perceived quality. Lego can also use the advantage of brand equity advantages to give it leverage when introducing new products as brand name can give comfort to buyers unsure of their decision by reducing their perceived risk and offer a strong defence against new products and new competitors because of higher rates of product trial and repeat purchasing due to buyers' awareness of Lego's brand.
Constant product innovation from Lego's four development centre as a priority within...