Schumpeter: Unpacking Lego

IT IS getting harder to go anywhere without stepping on a piece of Lego-related hype. “The Lego Movie” is number two at the American box office, after three weeks at number one. Model kits related to the film are piled high in the shops. They will add to the already gigantic heap of Lego bits: 86 for every person on the planet. The toymaker has enjoyed ten years of spectacular growth, almost quadrupling its revenue. In 2012 it overtook Hasbro to become the world’s second-largest toymaker. The number one, Mattel, is now seeking to buy the Canadian maker of Mega Bloks toy bricks, to fend off the challenge from Lego.This is remarkable for many reasons. Lego’s home town, Billund in rural Denmark, is so small that the company had to provide it with a hotel—an elegant one, unsurprisingly. The toy business is one of the world’s trickiest: perennially faddish (remember Beanie Babies?) and, at the moment, convulsed by technological innovation. Children are growing up ever faster, and abandoning the physical world for the virtual. To cap it all, the company almost collapsed in 2003-04, having drifted for years, diversifying into too many areas, producing too many products…

Link to article: www.economist.com/news/business/21598637-how-danish-firm-became-worlds-hottest-toy-company-unpacking-lego?fsrc=rss|bus

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