Lego Structure

Structure is dependent on strategy. If an organisation has vertical integration then they operate a functional structure, which gives efficiency through economies of scale. If an organisation uses a diversification structure then there is a business unit structure which gives customer responsiveness. However, many firms have a hybrid structure; this type of structure balances efficiency and customer responsiveness. A company also can choose to outsource through a contract with another company for them to perform an activity along their value chain. Many companies choose to outsource work which is not vital to their core in order to take advantage of cheap labour, there is a trade-off between cost and quality. LEGO has a functional structure as it is split into sectors such as markets & products, global supply chain & community, education & direct. Under each of these functions are executives for each product and regional area, which proves for an effective centralised communication structure. Since its creation LEGO has been privately owned by the Kirk Kristiansen family. The Corporate management of LEGO consists of the CEO, CFO & 4 executive Vice Presidents who each have their own business area.
Previously, to develop stronger leaders with skills to take groups into new areas managers were moved around rapidly. After 6-12 months in one position, managers were rotated or replaced by someone who could do better. The reasoning for this was general leadership experience was considered more valuable than specialised direct experience with LEGO toys. Also during this period (1999 – 2004) senior management consolidated 25 country-level sales companies into 5 regional entities.
In late 2003, LEGO was facing a dire situation and changes were required. Ploughman (CEO) and 4/14 person management team were asked to leave the company by the Kristiansen family. 5/7 senior manufacturing executives were fired due to differing views on what direction LEGO