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Transcription of this question: 3.LegoSince 1932 the Christiansen family has owned and managed Lego, the toy brick maker fromDenmark. The toy brick was twice voted “Toy Of the 20th Century”. Lego’s success has beenbased on providing a quality product and a strong recognizable global brand. Consistent companyobjectives have not included maximizing profit. Due to these factors, Lego has built up considerablegoodwill and Other intangible assets such as brand loyalty.Legos financial results from 2004 were a shock to their stakeholders. A move into diversifiedmarkets such as clothing, theme parks and watches had resulted in significant losses. A number Ofrumours began to circulate that Mattel, an American toy manufacturer, would try to takeover thestruggling European company. However, by 2009, the company had achieved large profits.Financial information for Le all fi ures in USS millionsNet profit/loss before interest and taxSales revenue2004-332151320093802010[Source: adapted from http:Bcaehe_Iegoeom/downIoads’aboutus/annuaIreport2004UKpdfandhttp:/feache 20 October 2010]Lego spokesperson, Charlotte Simonsen, admitted that the company had made some mistakes bymoving into diversified markets. She also highlighted Other changes in the external environment withsocial trends suggesting that consumer tastes are moving towards computer games. Using technology,Lego has now created a 3D web site where customers can design their own toys and then order thebricks to build it. A computer-generated Lego film could also be released in 2012.Charlotte also believes that Legos successful return to achieving large profits was due to theeconomic downturn (recession) Of 2008—9. She argues that “during difficult economic times,parents return to trusted global brands for durable quality and familiar toys for their children”[Source adapted from rhe New Zealand Herald, 9 August 2009](This question continues on the following page)(Question 3 continued)(a)(b)(c)(d)Define the following terms:(i)(ii)(i)(ii)p,’0fittakeover.Briefly explain two benefits Of brand loyalty to Lego.Calculate the net profit margin for Lego for 2004 and 2009.Analyse two possible reasons why Mattel would have tried to takeover Lego.Given the changes in the external environment, discuss whether Lego haschanged its objectives towards achieving larger profits.[2 marks][2 marks][4 marks][2 marks][6 marks][9 marks]

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