Lego Case Analysis 
The Lego Group Case: The Crisis
Prior to finalizing a strategic recommendation for Knudstorp and the Lego Group, I needed to gain perspective on the industry and internal factors that have historically interfered with Lego’s business model, and thus lead them to the point of bankruptcy. In Exhibit A, I used the Porter’s five forces model to help identify and label the threats, demands, trends and opportunities of the toy industry.
While Lego faced many different types of challenges, market trends and market pressures over its long history, the company implemented two strategic plans over the 1990’s that they believed would help address some of the changing trends and reposition the brand within the industry.
First, within the Growth Period That Wasn’t (1993-1998), Lego decided to extend its brand into by launching a variety of new products (watches, theme parks, kids clothing, etc.) that they believed would allow them to build a stronger connection with the customer and therefor, a stronger brand within the large toy industry. While in theory this action seemed that it could address some of the original product flaws (which was that Lego was a very one-dimensional product producer/products took too long to build), the brand extensions were too far away from their core business and thus moved away from their original customer base. Lego had no competitive advantage in designing or producing these new products, and given their philosophy to produce everything “in house” rather than outsourcing, it would take time and money to bring these products to market. While the new product launches made sense to management, there was confusion within the market place as to why Lego moved away from its core business – the large issue being that management trusted their own knowledge of the brand rather than listening to their consumers. While growth was the focus, the company tried to grow outside its traditional markets which lead to complexity of the brand, complexity of the
Prior to finalizing a strategic recommendation for Knudstorp and the Lego Group, I needed to gain perspective on the industry and internal factors that have historically interfered with Lego’s business model, and thus lead them to the point of bankruptcy. In Exhibit A, I used the Porter’s five forces model to help identify and label the threats, demands, trends and opportunities of the toy industry.
While Lego faced many different types of challenges, market trends and market pressures over its long history, the company implemented two strategic plans over the 1990’s that they believed would help address some of the changing trends and reposition the brand within the industry.
First, within the Growth Period That Wasn’t (1993-1998), Lego decided to extend its brand into by launching a variety of new products (watches, theme parks, kids clothing, etc.) that they believed would allow them to build a stronger connection with the customer and therefor, a stronger brand within the large toy industry. While in theory this action seemed that it could address some of the original product flaws (which was that Lego was a very one-dimensional product producer/products took too long to build), the brand extensions were too far away from their core business and thus moved away from their original customer base. Lego had no competitive advantage in designing or producing these new products, and given their philosophy to produce everything “in house” rather than outsourcing, it would take time and money to bring these products to market. While the new product launches made sense to management, there was confusion within the market place as to why Lego moved away from its core business – the large issue being that management trusted their own knowledge of the brand rather than listening to their consumers. While growth was the focus, the company tried to grow outside its traditional markets which lead to complexity of the brand, complexity of the