Case Study Of LEGO
Introduction to Journal
With the ever increasing dynamic and complexity, companies find themselves in a fast pace competition (Cumming and Worley 2009, 801).
LEGO's business diversification into other product categories to take advantage of the available revenues as well as to enhance its value proposition. However, LEGO's business diversification has resulted them to lose focus on what they were good at and eventually losing millions of dollars every day in the year of 2003.
Company background
The LEGO group is a family owned company with long history. It all began in 1932, during the Great Depression, the demand of furniture dwindled so drastically that the master carpenter Ole Kirk Kristiansen turned his hands into making wooden …show more content…
Over the years, LEGO had launched its LEGO System, LEGO Wheel, LEGO DUPLO for preschools, LEGO Technic to challenge older children, LEGO Minifigures for role play, LEGO MINDSTROMS, LEGO Friends for girls and LEGO Movie. (LEGO)
However, in 2003 LEGO Group’s survival was at risk. The son of Ole Kirk injected their own money and appointed McKinsey’s former management consultants, Jorgen Vig Knudstorp to get LEGO back on track. (The Economist)
LEGO’s Value …show more content…
LEGO as a real life example has taught us that we should focus on what we are good at. Profit is the factor that drove LEGO to diversify itself, which resulted in draining their cash. Diversification may not always be a good strategy to increase profit; company can diversify but stick to its core products, for LEGO would be LEGO bricks.
Communication is important. A company needs to communicate with its core customers; retailers, suppliers, children, employees to keep in touch with them to get more insights and understanding to what a company can offer to meet customers need or want.
Another lesson learnt would be to outsource processes that a company is not good at to reduce overall cost. For example; the CEO of LEGO, Mr Knudstorpe outsources its complex manufacturing processes and the less complex manufacturing process work was done in house. Besides that he even reduces the amount of pieces of LEGO bricks.
As mentioned by Mr Knudstorpe “Never refrain from exploring but at the end of exploring, one should come back to the point where you began.” (Brick by Brick
With the ever increasing dynamic and complexity, companies find themselves in a fast pace competition (Cumming and Worley 2009, 801).
LEGO's business diversification into other product categories to take advantage of the available revenues as well as to enhance its value proposition. However, LEGO's business diversification has resulted them to lose focus on what they were good at and eventually losing millions of dollars every day in the year of 2003.
Company background
The LEGO group is a family owned company with long history. It all began in 1932, during the Great Depression, the demand of furniture dwindled so drastically that the master carpenter Ole Kirk Kristiansen turned his hands into making wooden …show more content…
Over the years, LEGO had launched its LEGO System, LEGO Wheel, LEGO DUPLO for preschools, LEGO Technic to challenge older children, LEGO Minifigures for role play, LEGO MINDSTROMS, LEGO Friends for girls and LEGO Movie. (LEGO)
However, in 2003 LEGO Group’s survival was at risk. The son of Ole Kirk injected their own money and appointed McKinsey’s former management consultants, Jorgen Vig Knudstorp to get LEGO back on track. (The Economist)
LEGO’s Value …show more content…
LEGO as a real life example has taught us that we should focus on what we are good at. Profit is the factor that drove LEGO to diversify itself, which resulted in draining their cash. Diversification may not always be a good strategy to increase profit; company can diversify but stick to its core products, for LEGO would be LEGO bricks.
Communication is important. A company needs to communicate with its core customers; retailers, suppliers, children, employees to keep in touch with them to get more insights and understanding to what a company can offer to meet customers need or want.
Another lesson learnt would be to outsource processes that a company is not good at to reduce overall cost. For example; the CEO of LEGO, Mr Knudstorpe outsources its complex manufacturing processes and the less complex manufacturing process work was done in house. Besides that he even reduces the amount of pieces of LEGO bricks.
As mentioned by Mr Knudstorpe “Never refrain from exploring but at the end of exploring, one should come back to the point where you began.” (Brick by Brick