Preview

Lego Case Study

Good Essays
Open Document
Open Document
548 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Lego Case Study
There are about 915 million ways to combine six LEGO® bricks . But how many ways are there to keep a company on the right track? Kjeld Kirk Kristiansen, current owner of the LEGO Group, was faced with this question in 2004. On the surface it did not become known that LEGO was in trouble in those days. The small bricks were welcome all over the world and the British Association of Toy Retailers joined Fortune magazine in naming the company’s classic bricks the toy of the century. But the fifth-largest toymaker in the world showed a completely different financial performance from what it used to be. LEGO had been losing money since 1998 while its sales dropped by about 30 % in 2003 and another 10 % the year after. LEGO Group executives estimated that they lost EUR 250,000 every day .

But what was going wrong with LEGO? Could not its product line, from its snap-together bricks for young children to MINDSTRORMS, a line of do-it-yourself robot kits for older kids, satisfy the customers any more? Was LEGO a victim of the highly developed sector for electronic toys? Were its products no longer competi-tive against low-cost substitutes from the Asian market? Or was LEGO just over-diversified with its great product portfolio and theme parks? All of these questions could be answered with yes but it would not get LEGO’s main problem totally into perspective. The supply chain provides in fact the best opportunity for improve-ments. The family who founded and ran the LEGO Group was sure that they had to change the company’s operations radically to get back on the right track. In March 2004 the former director of strategic development, Jorgen Vig Knudstorp, became part of the management team together with the board and CEO Kristiansen. After analysing the main problems they passed a seven-year-strategy plan .

This case study gives you a deeper insight into the former and current situation of the LEGO Group. It shows how LEGO got back on the right track by focusing on

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Furthermore, the illustration on the appendix 1 demonstrates that Mattel Inc., was in the leading position in market share among the members in the European Union in 2011. Followed by Lego which owns a total market share on 8.32 %, which is approximately 1.76 % lesser then Mattel Inc. Additionally, it was only a very short brief for Mattel Inc., to be in this position, as a recent article from September 2014 highlights Legos which has left their competitor, Mattel Inc. behind. With this in mind the success relies mainly on two reasons. Firstly, Lego achieved this position while inventing and launching “The Lego Movie” in February 2014, which became a huge hit. Secondly, in the same year Mattel Inc. experienced a weak sale on their Iconic…

    • 282 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Lego Case Study

    • 432 Words
    • 2 Pages

    Have you ever tried to “LEGO”? “LEGO” is toy of men and women of all ages in the world. I want to talk about Lego that has been tremendously successful.…

    • 432 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Mt460 Unit 6

    • 733 Words
    • 3 Pages

    Once implementation has been developed, it is now time to move on to executing. During this stage, logistics, warehouses and even shipping of the Lego’s will be finalized and executed to expand into untapped markets. Along with the execution, they must supervise every aspect to ensure that they are providing the products that the demographics who are want or looking…

    • 733 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    In the mid-1990s the Lego Group was composed of 45 companies which disseminated Lego toys in 133 countries around the world, with estimated annual revenues of 2 billion approximately; this company is considered the fifth largest toy company in the world. The fabulous global success of Lego can be accredited to the inventiveness of the Lego System toys and to the cohesive advertising tactic of this organization. This company (Lego brand of toys) was formed in 1932 when Christiansen, a carpenter from Denmark, agrees to spread his business of carpentry by industrializing a woody line of toys who named Lego.…

    • 1391 Words
    • 6 Pages
    Good Essays
  • Satisfactory Essays

    Lego Group

    • 915 Words
    • 4 Pages

     The Company, analysis  History  Today  Tomorrow  Collaborative Innovation  Theory, evolution  Tools  Lego User Innovation Strategy  Lego Board Games  Lego “Design By Me”  Costs and Benefits  Q&A…

    • 915 Words
    • 4 Pages
    Satisfactory Essays
  • Better Essays

    Mattel’s problem of mismanagement can be divided into several issues that need to be considered: legal issues, international supply chain issues, and an increase in technology-based toys. In regards to legal issues, Mattel has been involved in prolonged litigation with Carter Bryant and MGA over a breach of an employment contract and copyright infringement. Due to Mattel’s poor management of its overseas manufacturers, in which unauthorized subcontractors and third-party suppliers were hired and unsafe materials used, several toy products were recalled. Advances in technology and changes in socioeconomic and demographic trends have created marketing, privacy, and product development issues for Mattel.…

    • 3299 Words
    • 14 Pages
    Better Essays
  • Powerful Essays

    Lego Case Study

    • 1248 Words
    • 5 Pages

    Advances in the field of information technology and introduction of new hi-tech form of entertainment such as tablets and gaming consoles had left Lego trailing in the entertainment field. Jorgen Vig Knudstorp was appointed as the CEO to revamp the company’s business process, organization structure and information systems. Knudstorp was quick to act and first made changes in the company’s production process. He encouraged designers to use the unused components in development of new products and design, thus reducing the number of unused components and reduced losses as the cost of production of each unit was very expensive. Lego created a new strategy to broaden the product range and target a new customer segment. Earlier Lego used to develop products which primarily targeted boys; with this new strategy they started developing products keeping a larger segment into perspective. They started developing products based on movie themes. Most drastic changes came in the organization structure at Lego, switching the employee pay structure, providing incentive for innovative product designs. Lego also started developing video games thus targeting a new segment of customers. All these changes in the business aspects of the company led to an increased revenue, increased demand and growth in the number of employees. Development of new product based on the internet, addition of new employee and inability to meet the consumer demands led to need for a new advanced and upgraded system which would fulfill all the above mentioned. Lego developed a new modularized and standardized architecture for their information system, which they could easily expand and add functionality and capacity. The latest IT infrastructure in the organization enabled the employees to become more creative…

    • 1248 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    What are LEGO's values and corporate identity? How did these develop over time (prior to LEGO Media Int'l)?…

    • 707 Words
    • 4 Pages
    Powerful Essays
  • Best Essays

    The Lego Group Case Study

    • 3243 Words
    • 10 Pages

    Lego bricks still hold special meaning to many young adults who have played with the bricks in their teenage years. I, for one, count among those young adults as I was an avid collector of Lego products myself: whenever there were new Lego products released, I used to nag my parents to buy them for me and promised to be a ‘good boy’. Thus it came quite natural to me that I wanted to investigate the Lego group – the symbol of my childhood nostalgia - as a full case study report for my Strategy for Creative Technology Business class. Established in 1932, the Lego group was the world’s leading toy manufacturer that was embodiment of dream and imagination to children. Parents too, inspired by Lego’s brand image as ‘fostering mental development and creativity for kids’, patronized their products in spite of Lego’s relatively high prices. By the turn of the millennium, however, the changes in the toy industry coupled with expiry on their license, Lego faced huge challenged, reflected in their net loss of 308 million Euros in the early 2000s. Nevertheless, Lego’s exemplarily strategic management practices under its CEO, Knudstorp brought the company back to brilliance and as of 2014, Lego thrives once again as the world’s most competitive toy company. As such as is the case, this essay shall examine Lego groups ‘from riches to rags to riches’ story with a special focus on the strategic management process.…

    • 3243 Words
    • 10 Pages
    Best Essays
  • Powerful Essays

    Lego Report

    • 2938 Words
    • 12 Pages

    Lego sets have been around for the past 50 years and have been enjoyed by people from all around the world. Very recently, Lego released a website called “Lego Cuusoo” through which people can create and submit their own ideas for a Lego project. Following the submission of the project onto the website, a voting process occurs; if enough support is gathered, the project moves into the production stage and is then sold through Lego. The revenue is shared with the developer as well. Accordingly, the objective of the MSCI 100 project consisted of entering our own idea of a Lego Project onto the website.…

    • 2938 Words
    • 12 Pages
    Powerful Essays
  • Good Essays

    Lego Case

    • 1291 Words
    • 6 Pages

    Prior to the Flextronics offshore outsourcing project, LEGO had a very tight control of all the elements of the value chain. Their production plants were expansive and specialized which, in theory, would create a higher degree of standardization. Their Swiss factories only produced DUPLO toys and Technic products, their Danish factory solely produced LEGO System products, and the U.S. facility focused on American demands, while only 5 to 10 percent of the LEGO Group’s total production was outsourced to Chinese manufacturers.…

    • 1291 Words
    • 6 Pages
    Good Essays
  • Good Essays

    Mattel Toy Recall

    • 360 Words
    • 2 Pages

    Summary: Mattel, a global leader in toy manufacturing is currently faced with a tough challenge of restoring their consumer confidence following the increased recalls of their toys made in China. At present the most important goal for Mattel is to reassure their customers that kids' safety is their highest priority and they are committed to provide good quality toys that are safe to play with. The main impediment in achieving their goal is not having an integrated supply chain. In order to achieve their goal, Mattel needs to restructure their supply chain and establish a direct relationship with vendors who manufacture the raw materials for their toys and set safety guidelines.…

    • 360 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Every second 2.5 Barbie dolls are sold. This contributes to sales of more than $1.5 billion U.S. annually, making Mattel’s Barbie the most successful doll in history. By the year 2000, Barbie and all accessories had become more than half of Mattel’s toy sales. Despite several other companies promoting Barbie-like dolls, their management showed little fear. All believed that the American public was so engrained with the brand and lifestyle, there was no concern. This is the beginning of top managers underestimating how much the world changing effects their product.…

    • 705 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Lego case study analysis

    • 1354 Words
    • 4 Pages

    By the end of 2003 Lego was already facing crisis owing to dipping profits and declining market pool for toys. Lego had planned to expand into markets beyond building toys and needed huge investment to be made in it. But it found difficult to compete when fad players and other toy manufacturers were giving them stiff competition in a market that already was supposed to be giving lesser returns every year. This was mostly due to factors out of the control of Lego and other toy companies because, firstly, a research suggested that the demand of children who were primary customers of these companies were changing rapidly to fashionable and electronic products. They had lesser attention span and looked for instant gratification, and were lesser inclined to play with toys involving physical activity. Also Lego found it difficult to be competitive when its manufacturing base was in European markets while toy companies were moving to Far East and Middle East where labor was comparatively cheaper.…

    • 1354 Words
    • 4 Pages
    Powerful Essays
  • Satisfactory Essays

    The success of LEGO after 2004 marked an important part of the history of the company. In 2004, the company hired John Knudstorp as the CEO who…

    • 990 Words
    • 4 Pages
    Satisfactory Essays