...The LEGO Group Introduction Founded in 1932, the LEGO Group is a privately held company headquartered in Billund, Denmark. The vision of Lego Group is to “inspire children to explore and challenge their own creative potential”[1] Lego now ranks 4th in the world as a toy manufacturer. The Lego Group employs nearly 9,000 workers and its own product, Lego Brick can be found in over 130 countries. The financial performance of Lego declined drastically through the 1990’s and early 2000’s. In 2004, the company accumulated losses of DKK1.9 billion.[2] Therefore, Lego tried to implement some changes in order to cut the production cost and reverse the poor situation. In the last step of the process of restructuring Lego’s supply chain, the Group tried to close some of its’ own factories in Korea and Switzerland, upgrade the procurement process and outsource 80 percent of the production. Prior to outsourcing to Flextronics, production plants were located in high-cost countries including Denmark and Switzerland. Apart from the famous Brick, the company entered into other industries including computer games, clothing, licensed products and television. The product diversification was very large since they lost confidence in their core product. This catalyzed inefficiencies and confusion for customers. The result was a disastrous net loss and forced the company to find solutions to cut the cost and recapture the market share. In 2009, the Lego Group ended the outsourcing contract with Flextronics...
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...Assignment 1: The Lego Group 1. Explain how the development of strategy at the LEGO Group reflect the key characteristics of strategic management outlined in section 1.2 and in the model in Figure 1.4 First of all, in order to explain the strategic management, the strategy model needs to be taken into account (Figure 1.4). It encompasses three key sections, namely the strategic position, the strategic choices and strategy into action. When talking about the strategic position, four questions have to be asked. Examining the opportunities and threats of the Lego Group's environment led to finding out that the company takes advantage of being a family-owned business which entails clear responsibilities. Furthermore, the Lego Group made use of the constantly growing brand name which gave them the opportunity to enter new markets globally. Additionally, the company undertook immense investments which paid off after a while, as the group tried to keep up the pace technologically and took the chance to offer the most innovative products. However, while experiencing massive competition, the company also had to cope with the rapidly changing environment which ultimately resulted in huge deficits and drawbacks. Threats, such as the oil crisis also contributed to worsening the financial situation of the company. The organisation's strengths can be summed up by mentioning an effective leadership style, acting as a risk taking entity, actively looking for new concepts, continuously...
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... Tsinghua Univerity 1. Situation Overview of the LEGO Group • Market position: Niche player in a global toy market & No.1 in construction toy category • Core Competencies: Strong brand, high quality products and innovation abilities • Recent performance: experienced some major losses but is turning better 2. Problem Statement • Issue Definition: Being a niche player in a tightening market, How can LEGO group achieve sustainable profits of 13.5% and growth rate of around 7% in the coming years by leveraging its core competency? • To solve this issue, the company made a three-phased shared vision plan in which we based our strategies on 3. Strategies 3.1 Short-term Strategies: Profitability Focus 3.1.1 Interpreting the Profitability Goal • To achieve reasonable margin compared to major industry peers, that is operating margin of 13.5%, according to future expectations made in 2006 Annual Report • To maintain sustainable profitability in the relatively cyclical toy industry 3.1.2 Strategies and Implementations to Meet the Goal 3.1.2.1 Product Strategies: adjust product portfolio and build defensive core products • Focus on pre-school/infant toy segment in which the demand is driven up by “age compression” and is less affected by come-and-go entertainment fashions • Continue reinvigoration on LEGO classic toys, which are less affected by toy trends • Take calculated risk to ride on the trends...
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...This article was about LEGO Group and a deal gone wrong with DHL. LEGO Group was founded in 1932 by Ole Kirk Kristiansen in Billund, Denmark. They had around 70 years of exceptional business, before an abrupt stop in 1998. It was not specified why the craze had such an immediate break, but I believe the progression or advancement of technology, computers, and just cell phones alone were the demise of the toy blocks. For the first time in the 70 years; staff reductions were made and LEGO began to lose money. It was time for a new plan, after four years of innovative and creative designing with new products to release in 2002. With high hopes for the Christmas season, it looked to be a positive year. But with the inventory and receivables up, bad news was to come and the LEGO Group braced for another bad year. Sales dropped an astonishing 26% in 2003 and a whopping 20% the following year 2004. Needless to say heads were spinning. The leadership at LEGO Group knew the supply chain needed immediate and extreme improvement. The supply chain needed to be flexible and able to adapt to the seasonal marketplace the toy could sell in. The first method implemented was the just-in-time delivery. This method failed by less than 67% of total sales being partial cartons and only 62% being delivered on time, or “just -in-time”! The company worked out of four main Regional DCs. Two were in France and were operated by third party companies. They mainly served the UK and S. Europe. There...
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...INTL 4400 – Assignment 1 2012-2013 LEGO Group: Building Strategy Professor: Kelly Lecouvie Celeste Chan, Richard Guo Table of Contents Executive Summary 1 Problem statement 2 ANALYSIS 2 External Analysis - Porter’s five FORCES: 2 Internal Analysis – Core Competency 4 Main Issues 4 ALTERNATIVES 5 Recommendation 7 Appendices 8 APPENDIX A – LEGO’s VALUE CHAIN 8 APPENDIX B – Core competencies & LEgo 9 APPENDIX C – FOUNDATION & DIRECTION OF LEGO 10 Problem statement LEGO as a company has withstood many years of changing business environment, and has grown from creating wooden toys to interchangeable blocks, and eventually becoming an international symbol of innovation. It is again facing a changing environment, with its patents expired, its rising number of competitors, and facing losses in court as well as loss of market share to its competitors. ANALYSIS External Analysis - Porter’s five FORCES: Bargaining power of suppliers: LEGO’s suppliers have low bargaining power. After Jorgen Vig Knudstorp took over as the director of strategic development, he was able to cut 80% of LEGO’s suppliers to improve efficiency. The technology needed to create LEGO’s bricks is not specialized, since the company has in house machines to create the blocks. From the above two points, it’s apparent that the bargaining power of suppliers is low, since their services are easily substitutable and disposable. Bargaining power of customers: The bargaining...
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...physical toys. Children are playing computer games at a younger age, eroding the share of their playtime that was once dominated by toys. 1.2.2 Demographics In developed countries, aging population coupled with lowering birth rates are the primary driving forces for industry players going forward. I believe that this should provide implications on the future directions that LEGO should take. 1.2 External Environment – SWOT Analysis 1.3.3 Strengths and Opportunities The LEGO brand itself is entrenched deeply within the building toys industry. This strength is especially valuable to certain sub-industries under the broader toys industry such as infants’ toys and serious gaming. LEGO is also a trusted brand in education and with parents. LEGO can leverage on this strong brand name to perhaps explore opportunities in non-traditional markets such as the silver industry. LEGO, being an established brand that the older generations are familiar with, can expand into these industries. In addition, the trend towards more playtimes spent on computer games opens up the digital market for LEGO as well. The culture of innovation and LEGO’s unique product offering – providing building blocks for players to create and invent is a valuable and complex strength embedded in its organizational culture that can be used to reliably gain a foothold in the digital games market. 1.3.4 Weaknesses and Threats The consolidation of licenses under Disney, coupled with LEGO’s...
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...3 STEPS TO LEGO GROUP FINANCIAL TURNAROUND * Easy, Fast & Quick Results EXECUTIVE SUMMARY Rivkin, Thomke and Beyersdorfer (2013) suggested in 2004, the market size of the toy industry is worth $61% billion in the wholesales revenue, with a steady growth of 4% per year in the retail market for toys. Thousands of toymakers flourish the market to serve global demand while keeping track of the 3 new trends in the industry which are toys demand rise while product life cycles decline, children has less time to play, and lastly increase demand of technology integration in physical toy or online worlds. Changes in conduct of competitors have change as witnessed by manufacturing in Asia, entering diverse retail channels and engaging in heavy marketing efforts. Therefore, we recommends LEGO Group to first, bring back LEGO DUPLO concepts and offer to unexplored market by establish strategic partnerships. Second, increase investment in R&D of new product designs and innovations. Third, adopt internal supply chain monitoring system and LEGO retailers’ system integrator. As external analysis has suggested increase of retail competition sector in the toy industry and this will have effect on LEGO Group because internal analysis shows that firms have high operational costs and as a result the firm is making no profit. By implementing these recommendations LEGO Group will achieve lower operational cost, establish sustained competitive advantages which will led to higher market shares...
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...The countries known collectively as the PIIGS—Portugal, Ireland, Italy, Greece, and Spain—are burdened with increasingly unsustainable levels of public and private debt. Portugal, Ireland, and Greece have seen their borrowing costs soar to record highs in recent weeks, even after their loss of market access led to bailouts financed by the European Union and the International Monetary Fund. Spanish borrowing costs are also rising. Greece is clearly insolvent. Even with a draconian austerity package, totaling 10 percent of gross domestic product, its public debt would rise to 160 percent of GDP. Portugal, where growth has been stagnant for a decade, is experiencing a slow-motion fiscal train wreck that will lead to public-sector insolvency. In Ireland and Spain, transferring the banking system's huge losses to the government's balance sheet—on top of already-escalating public debt—will eventually lead to sovereign insolvency. The official approach, Plan A, has been to pretend that these economies are suffering from a liquidity crunch, not a solvency problem. The hope is that bailout loans, with fiscal austerity and structural reforms, can restore debt sustainability and market access. But this "extend and pretend" or "lend and pray" approach is bound to fail, because most of the options that indebted countries have used in the past to extricate themselves from excessive debt are not feasible. For example, the time-honored solution of printing money and escaping debt via inflation...
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...! ! ! ! ! ! ! ! ! ! ! ! The LEGO Case Study 2014 ! ! ! ! ! ! ! ! ! ! The A CONTENTS ! ! ! 1! ! 2! ! Introduction! ! ! ! ! 3! ! 4! ! 5! ! 6! ! 7! ! 8! ! Difficult start to the decade 2001.! Signs of Recovery 2002.! Hopes dashed - 2003.! LEGOLAND parks.! LEGO Brand Stores.! The Knudstorp Review.! Financial Focus - the ! Oveson addition. ! Back to basics and the limit to adjacencies. ! ! ! ! 9! ! 10 ! Developing the strategy ! why do we exist? ! 11 ! First the action plan - first ! things first. ! ! 12 ! Summary and Conclusions! ! 13 !Appendices ! ! 13.1 Knudstorp on! ! communication ! ! 13.2 References and slides The A 1 Introduction ! In 2014, LEGO® announced record results. In the financial year 2013, revenues had increased by 10% to 25.4 billion danish krona. Profits before tax were 8.2 billion DKK. The company had once again delivered an impressive operating margin of 33% before tax.! ! In US dollars, the company had achieved $4.5 billion of revenues and profits of $1.5 billion. Revenues had increased from just over $1 billion some seven years earlier. LEGO® had replaced Hasbro to become the largest toy company in the world second only to Mattel. ! ! In just eight years, revenues at the Danish toy manufacturer had tripled. The company had turned around a loss of 2.5 billion krona in the financial years 2003 and 2004 to an operating margin the envy of high tech stocks around the world.! ! ! ! ! The...
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...Tyler Lubben Marketing 442 LEGO Case Analysis LEGO experienced many problems throughout many years, but none of which had to do with creativity or innovation. The problem was 100% operational, and how the company manufactured and distributed LEGO around the world. Years of continuous growth added layers of complexity to LEGO’s operations. This ultimately led to Kjeld (The CEO at the time) to step down in 2004. Knudstorp would become the new CEO and would assemble a leadership team of senior executives and managers to start analyzing every part of LEGO’s supply chain operations as a whole. Another main problem was to identify new markets where it can expand its product line and business operation. LEGO group as a whole had many strengths that are worth noting. One of the many strengths that sets them apart from the competition is there overall innovation. The ability for them to continuously make products that continually attract more consumers and increase brand recognition is second to none. Along with their strong innovation skills, the diversification of products that LEGO group has is another reason why they are a world-renowned company. They have diversified its brand into Video Games, TV and movies. The main weakness that I see with the LEGO group is that their product designs are very easy to duplicate and copy. LEGO group needs to think about moving their production operations somewhere where it would be cheaper to produce. The way they are doing it now works...
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...1. Introduction LEGO is a combination of the Danish words “leg” and “godt”, meaning “play well”. As their name and ideal, Lego has been beloved by the children as well as the parents for decades. Not only as plastic toy bricks, but also effective educational tools, the LEGO Company enjoyed continuous growth and broaden the global brand value. The LEGO brand moved to third place in 2002/2003 with only Coca-cola and Kellogg having greater respect among families with children. Even though as the overall toy market faces challenges, LEGO’s revenue and profits are increasing rapidly, especially since 2005. This profitability didn’t change even in the current recession in the global market. The LEGO Group achieved record-breaking profits in 2011 that secured the health of the company. Interestingly, not far from this climb, the LEGO Group had a deep retreat in the late 1990s and the beginning of the 2000s. Major strategic efforts such as theme parks, Clikits craft sets (marketed to girls), Galidor (an action figure) couldn’t respond to management teams’ goal, and brought failure. As a result the LEGO group created bad financial results: their profit margin was -2.5 and Return on equity was -3.5 in 1998. What intrigues me, as one of thousands of enthusiastic users of its products, is a simple curiosity about what kind of sustainable efforts could enable the LEGO to survive from the turbulent recession and gain even better market share. In order to observe the effective management...
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...Proposal - The Lego Group Yesenia Gipson MKT 411 October 5, 2015 Roger Blanton Sustainable Product Proposal - The Lego Group Despite the sustainability efforts the Lego Group has focused on, there is room for improvement. Currently, 75% of impact lies within their material, suppliers, and design. The rest lies within the manufacturing of the products and their consumers. We have identified three areas that can be immediately sustainably improved resulting in minimizing The Lego Group’s carbon footprint and an increase in a positive environmental impact. Implementing the “Pounds for Credit” program. This program is a recycling program that will entice consumers to bring in bags of Lego pieces to receive credit for a new Lego set. Many consumers have straggling pieces of Lego they no longer use or want. Rather than throwing them away, they can receive something back for the pieces and the company can re-sell the pieces or donate them to a children’s charity. Either way, the company wins as they can make money on the re-sale or tax write-off on the donation. In addition to the monetary aspect, the company helps the environment by recycling the pieces instead of ending up in the landfills and many children will enjoy playing and building with Legos. The way the program works is very similar to how the bottling recycling program works. For every 20 pounds of Legos brought in, the consumer will receive $1.00 credit to redeem at any of the following: Lego stores, Legoland...
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...The LEGO Company in Asia 1 2 INTRODUCTION .................................................................................................................. 3 THE LEGO GROUP ............................................................................................................. 6 2.1 PRESENTATION ................................................................................................................ 6 2.2 HISTORY ............................................................................................................................ 7 STRUCTURE OF THE PROJECT ..................................................................................... 11 3.1 INTRODUCTORY PART .................................................................................................. 11 3.2 THEORETICAL PART ...................................................................................................... 12 3.3 EMPIRICAL PART ............................................................................................................ 12 3.4 ANALYTICAL PART ......................................................................................................... 13 METHODOLOGY ............................................................................................................... 14 4.1 CHOICE OF THEORY ...................................................................................................... 14 4.2 EMPIRICAL CHOICES .......................................
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...! ! ! ! ! ! ! ! ! ! ! ! The LEGO Case Study 2014 ! ! ! ! ! ! ! ! ! ! The A CONTENTS ! ! ! 1! ! 2! ! ! 3! ! 4! ! 5! ! 6! ! 7! ! Introduction! ! ! ! Difficult start to the decade 2001.! Signs of Recovery 2002.! Hopes dashed - 2003.! LEGOLAND parks.! LEGO Brand Stores.! The Knudstorp Review.! 8! ! Financial Focus - the ! Oveson addition. ! 9! ! Back to basics and the limit to adjacencies. ! ! ! 10 ! Developing the strategy ! why do we exist? ! ! 11 ! First the action plan - first ! things first. ! ! 12 ! Summary and Conclusions! ! 13 !Appendices ! ! 13.1 Knudstorp on! ! communication ! ! 13.2 References and slides The A 1 Introduction ! In 2014, LEGO® announced record results. In the financial year 2013, revenues had increased by 10% to 25.4 billion danish krona. Profits before tax were 8.2 billion DKK. The company had once again delivered an impressive operating margin of 33% before tax.! ! In US dollars, the company had achieved $4.5 billion of revenues and profits of $1.5 billion. Revenues had increased from just over $1 billion some seven years earlier. LEGO® had replaced Hasbro to become the largest toy company in the world second only to Mattel. ! ! In just eight years, revenues at the Danish toy manufacturer had tripled. The company had turned around a loss of 2.5 billion krona in the financial years 2003 and 2004 to an...
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...Level of rivalry The overall level of rivalry may be seen as relatively intense for the Lego group in the run up until the end of 2004. Whilst Lego occupies a strong position in the market for construction toys with relatively few rivals one must consider that Lego is now competing in boarder market of children's entertainment which in the lead up to 2004 began in include large incumbents from the electronics sector such as Sega and Nintendo. Power of buys The power of the buyer in the case of Lego may be seen as relatively high with low switching costs between alternative toys and even substitute products such as video games and television. Power of suppliers The power of suppliers may be seen as average, Lego's products on the whole may be seen as largely based upon standardised inputs such as plastics and chemicals. There is the consideration that were Lego chooses to move into non-traditional areas such as sets associated with films or games the power of suppliers will increase as a key input becomes that of licences which is a form of intellectual property. Threat of substitutes This may be seen as the largest threat to the Lego group in the run up to the end of 2004. Although it is difficult to define what market a company occupies (Grant 2008, Porter 2004) for the purpose of considering the impact of substitution one must consider Lego to be a provider of children's entertainment. In this case the threat from substitutes are rather high given that consumers...
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