Toys

Porters 5 Forces Analysis of LEGO in Singapore

Threat of new entrant ( pressure low ) : Low entry barriers. Industry requires economies of scale . Strong brand name are importants. Strong distribution network are required.

_Low entry barriers : Singapore has very few trade barriers , the Government is slowly allowing more freedom for market forces in the economy. In general, Singapore maintains one of the most liberal trading regimes in the world.

_Industry requires economies of scale : Economies of scale help producers to lower their cost by producing the next unit of output at lower costs. When new competitors enter the market, they will have a higher cost of production, because they have smaller economies of scale. 

_Strong brand name are importants : If strong brands are critical to compete, then new competitors will have to improve their brand value in order to effectively compete. Strong brands positively affect LEGO.

_Strong distribution network are required : Weak distribution networks mean goods are more expensive to move around and some goods don’t get to the end customer. The expense of building a strong distribution network positively affects LEGO. Strong Distribution Network Required will have a long-term positive impact on the this entity, which adds to its value.

Threat of substitutes ( pressure hight ) : substitutes are low quality . High switching cost . Substantial product differentation.

_ Substitutes are low quality : Toys were made in China had toxic of phthalate which reduce the growth of boy’s gential. So the Singapore’s agencies were check and found and they decided to recall all toys contain toxic . Low risk situation for singapore toy market and it is a great chance for Lego branch in Singapore to get more profit .

_ High switching cost : The cost of plastic in Singapore is higher than Malaysia and ThaiLand . So the number of substitues are limited => Limited number of substitutes means...