...SCM371 Lego Case Synopsis 1) This case explains how difficult it was for the LEGO Group from 2004 to 2009. The corporation has been accumulating net losses prior to 2004, a fall in sales in 2003, and has made economic losses from 1998 to 2004 which was leading LEGO Group to bankruptcy. The crisis that LEGO Group faced has taught them the importance of successfully managing a global supply chain. 2) The primary issue that LEGO found after examining the organization is that their use of supply chain was ineffective and not flexible. 3) Jorgen Vig Knudstorp (CEO) – stated that LEGO needs to drop their “arrogance,” listen to customers and consumers, and work closely with retailers. Duedahl (Vice President) – Viewpoint was aggressive outsourcing to low-cost countries which will cut costs. Thomas Neilson (Manufacuring Vice President) – Become lazy with documentation when working with many loyal colleagues because everyone has years of experience and knows what to do. Michael Vaag (Supply Chain Manager) – “production in another company requires ten times more documentation than in the company that it is moved from.” 4) Since the outsourcing facilities where ineffective, it was decided to source back production. Moving forward, LEGO introduced many processes that were learned during the collaboration with Flextronics. The company introduced S&OP to monitor different production facilities roles and responsibilities. The company also changed their...
Words: 345 - Pages: 2
...Assignment 1: Individual case analysis report Mahmud Safari (21295746) 1 Individual Case Analysis Report LEGO (A): The Crisis Mahmud Safari 21295746 Assignment 1: Individual case analysis report Mahmud Safari (21295746) 2 Table Of Contents 1.0Introduction 2.0 Analysis of General Environment 2.1 Economic 2.2 Socio-‐Cultural 2.3 Global 2.4 Technological 2.5 Political/Legal 2.6 Demographic 3.0 Analysis of the Industry...
Words: 4389 - Pages: 18
...and regained its fame over the time. When Lego was a startup company it was in profits, it Gradually failed to turnout its customers, by implementing his strategic plan, credibly he manufactured almost 90% of products with same components and built the products to attract the customers. It was Successful and it gradually gave a rise in using of the Lego toys all over again. Designers were made to reuse the components in the new products. In this way he cut-shorted the number of products from 13,000 to 7,000. This reduction saved a significant amount to the company. He followed an expression which says “managing at eye level,” meaning his ability to talk to people on the factory floors, to engineers, marketers at home. He emphasized the importance of performance. Knudstorp followed a principle that everyone need to build a mind-set where non-performance is not accepted because there is no place to hide if performance is poor. Lego has introduced computer games with building blocks characters with playing heroes and villains. He introduced theme based building of games. The core theme of Knustorp’s plan is “nourishing a child”. 2. Which of the generic strategies does Lego appear to be using based on this case? Provide support for your choice. Lego was formulated with mainly three business strategies organizational, business and information systems strategy. The Line of Lego mainly aimed at girls. The fact behind this...
Words: 1070 - Pages: 5
...LEGO is one of top toy-making companies established in Denmark. Its core and iconic product is the LEGO brick with its own unique design, interlocking tubes, which can expand building possibilities. In 2004, LEGO started to outsource 80 percent of its production to Flextronics, a large Singaporean manufacturing service provider, but after three years, LEGO had to end this cooperation. Therefore, we are going to do a deeper analysis of this case and have a better understanding of outsourcing. LEGO had two main expectations from the collaboration with Flextronics. The first one was that LEGO intended to run a cost-saving business model by licensing out 80 percent of production to Flextronics. Before outsourcing to Flextronics, LEGO conducted its production mainly in Denmark, the United States, Switzerland and so forth, which are high-cost countries. In order to reduce production cost efficiently and response the global trend that nearly 95 percent toy production went to Asian countries quickly, LEGO chose Flextronics as its partner to accomplish the goal. From 2004 to 2006, some of production capacity in Denmark and Switzerland were moved to Flextronics’ plants in Hungary, LEGO handed over the operational control authority of Kladno site in the Czech Republic to Flextronics, and Flextronics opened a new plant in Mexico; instead, LEGO shut down the factory in the United States. Another expectation that LEGO wanted from the relationship of Flextronics was that the LEGO group would...
Words: 1331 - Pages: 6
...! ! ! ! ! ! ! ! ! ! ! ! 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...
Words: 6708 - Pages: 27
...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...
Words: 502 - Pages: 3
...Alisa Olson MGT405 Section 7 Sunduramurthy 29 November 2012 Case Write Up: LEGO Group LEGO Group has been a successful company in the toy industry since they started in 1949. As of 2010, LEGO remained a privately held company by the Kirk Kristiansen family. Annual sales reached an all-time high equaling over $3.7 billion. The company’s strongest lines were LEGO Star Wars, LEGO City, and LEGO DUPLO. Even though the company has maintained a competitive advantage, they face some seriously threatening issues. Some of the current issues they face are maintaining patents, company acquisitions, court battles, and new competition. In 1984, TYCO introduced Super Blocks, which were almost identical to the plastic brick design that LEGO has. TYCO had advertisements that stated “if you can’t tell the difference, why pay the difference”. LEGO launched a four year lawsuit against them, but by 1988 the patent for LEGO’s building block design expired, so they lost the lawsuit. All the effort against TYCO was wasted. LEGO should have renewed their patent to prevent incidents such as this one from happening. Once this patent expired, the barriers of competition were lowered significantly in the building toy market. In 2009, Disney acquired the comic book company Marvel Entertainment for $4 billion. This provided Disney with control over Marvel’s vast catalogue of over 5,000 comic book characters to be used in future publishing, movie production, and licensing operations. This was...
Words: 541 - Pages: 3
...! ! ! ! ! ! ! ! ! ! ! ! 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...
Words: 6708 - Pages: 27
...* What were LEGO’s fundamental problems? Consider both external and internal factors. Fad toys rising, product life cycles declining; less unscheduled time to play, demand shift towards technology, give up traditional toys for videogame & online activities 2 “the impact of new product introductions was muted by rapid imitation and limited protection of intellectual property” 2 “retailers focused on profit per square foot and consequently considered margin, turn, and product space requirements” 2 “Kjeld felt that the company’s sustained growth required new bricks” 3 Before had a trip on the market and unmet demand so graduatlly added new products and could control sales growth 3 Birth rates in core markets declined, household spending on toyus declined, retail channels consolidated, mass discounters featured toys more aggressively, less unstructured play, shorter attention spans, want instant gratification 4 Potential seemed to be everywhere; felt had huge untapped potential; tailred products to different untapped markets ilke southern Europe 4 Branched out to family leisure park, videogame software, children’s ware, watches, robotic bricks “There seemed to be potential everywhere” “our brand must have huge untapped potential” 4 Ploughman: moved managers around, “’Fitness Program’ included measures to steamline production, reduce organizational layers, and increase responsibility and customer focus, all to build a simpler, more responsive, global business system”...
Words: 1846 - Pages: 8
...The LEGO Group Strategy 1.Strategy development According to Johnson et al (2011), in order for a strategy to be successfully measured, the organization should apply three horizon framework. It could be argued that the crisis of LEGO Group in 2003 was a result of a lack of realistic action plan. The objectives set by the Company were too ambitious considering the highly competitive environment. Also, major changes in the management structure have caused disagreement which resulted in many employees leaving the company. Significant revenue loss from 2003 and 2004 has forced LEGO Group to re-think its strategy and start from the beginning. Using the three horizon framework, it could be explained that the core business was defended by selling the LEGOLAND parks and focusing on LEGO brick concept (a ‘core’ product). Building emerging businesses could be recognized as developing a new digital strategy – launching online multiplayer game as well as entering mobile app industry. Regarding the viable options where nothing can be predicted, I think LEGO Group is doing well by inviting consumers to participate in product development as that way the risk related to new concepts is minimized. 2. External environment. There were numerous aspects of external environment that affected Company’s strategy. The oil crisis from 70’s and 80’s had a serious impact on the world economy therefore organisations had to implement new strategies in order to continue the growth. Lego then introduced...
Words: 1445 - Pages: 6
...Chapter 1 LEGO Case Write-Up My key takeaways are 1) Company should combine business strategy, organization strategy and information strategy together in order to make a good innovation. 2) Keep uniqueness and develop new product to attract new segments is very important in a hypercompetitive environment. 3) A strong information management system can be very helpful. 1. How did the information systems and the organization design changes implemented by Knudstorp align with the changes in business strategy? After Knudstorp changed Lego’s business strategy changed, Lego changes its organization structure. They encourage product innovation and sales by offering incentives. They decrease coast by move manufacturing factories to cheaper places. In order to attract more consumers, they develop new series for new segments and extend virtual world and movie business. They also engaged the communities who had already set up thousands of Web sites and blogs. Which also related to IT technology improvement. The information systems of Lego changes too. They develop new technology to support the product design and development, also the virtual and video games. They use the technology to insist the real-time feedback from customers. They created a modularized and standardized architecture for their information systems, making it possible to expand more quickly and add capacity and functionality, as it was needed. They implemented an integrated enterprise system as well. These systems helps...
Words: 635 - Pages: 3
...describe strategic risk management at the LEGO Group, which is based on an initiative started in late 2006 and led by Hans Læssøe, senior director of strategic risk management at LEGO System A/S. It’s also part of the continuing work of the Strategic Risk Management Lab at DePaul University, which is identifying and developing leading practices in integrating risk management with strategy development and strategy execution. The LEGO Group Strategy To understand strategic risk management at the LEGO Group, you need to understand the company’s strategy. This is consistent with the first step in developing strategic risk management in an organization: to understand the business strategy and the related risks as described in the Strategic Risk Assessment process (see Mark L. Frigo and Richard J. Anderson, “Strategic Risk Assessment,” Strategic Finance, December 2009). The LEGO Group’s mission is “Inspire and develop the builders of tomorrow.” Its vision is “Inventing the future of play.” To help accomplish them, the company uses a growth strategy and an innovation strategy. Growth Strategy: The LEGO Group has chosen a strategy that’s based on a number of growth drivers. One is to increase the market share in the United States.Many Americans may think they buy a lot of LEGO products, but they buy only about a third of what Germans buy, for example. Thus there are potential growth opportunities in the U.S. market. The LEGO Group also wants to increase market share ...
Words: 574 - Pages: 3
...Lego is one of the multinational organizations that is operating its business in more than 130 countries. It is the 6th largest producer of children toys in the world. With the increase of competition and changing technology Lego had huge losses in 2004, the company suffered a situation of bankruptcy. Then as an organizational change to put the organization back on track Jorgen Vig Knudstorp has been appointed as the CEO of Lego. The main challenges for Knudstorp is to provide a good service to its unhappy customers and to keep the production team on track. But its innovative strategy has changed the face of the organization, which made it one of the top producer of toys. The company implemented and organization change in its structure and culture to achieve its goals. Some of its organizational changes include making new innovative products and making changes to existing products to meet the needs of the customers. Lego has also focused on the strengthening customer relationship and maintain a close contact with its customers which can help in knowing their needs better. A perfect example of this is Lego.com in which customers of all ages can experience the values and ideas of Lego through activities and games. Focusing on the requirements of the customers has made Lego a service driven organization and helped in gaining a competitive advantage in the market. It has targeted all channels to market to reach its customers like selling its products directly to the customers without...
Words: 1257 - Pages: 6
...Case Assignment #6 – LEGO Group Henry Surya Jaya #57424103 Question 1: How much know-how should LEGO share with its tool suppliers? How practical is it in reality to prevent knowledge spillovers? From the case, we learned that LEGO place an important value on ensuring the quality of its manufacturing process. Tool suppliers were selected by the LEGO on the basis of their patent position on the methods and reputation, and these suppliers undoubtedly played an important role in helping LEGO achieve better quality assurance. At the end of the day, these suppliers were the ones responsible to make all the tools necessary to build the LEGO products, hence information sharing between LEGO and their tool suppliers should be sufficient enough as not to limit the suppliers’ ability to make great tools. Unless LEGO could make tools on their own, it is almost impossible to prevent knowledge spillovers. Instead of worrying about potential steal of knowledge, LEGO could work to strengthen their relationship with their tool suppliers, which could ultimately lead to building trust. Preventing knowledge spillovers is hardly practical. Employees who left a company carried knowledge in their heads with them, so they posed a spillover risk, especially in the emerging market where loyalty to a firm was low and multiple companies set up manufacturing plants within small geographical regions. Even if it were possible, the cost would be really high. In this case, it might involved setting...
Words: 661 - Pages: 3
...EASEgTUtsY The LEGOGroup: workingwith strategy Anders BitLe Jensen beena successf L fanily led, innavative highgrowthcornpany thegllb.t fhe LEGj 6raup has histaricaUy and in periodaÍpaaf performance strategic toyindustry'Thenit experienced a and The uncertainty, conpanyimpfawd its situatianin 2008and aqainin 2a09 DeveLoping Canpanyrequireson7oing the eÍÍarts WhichinvoLve naal ; ; I i t i ln its annual repo.t lor 2009 the LEGO Group announccd sales of 11.661 million DK(' (= 11397m = S21l4m = € 1 566m) and operating prolits o| ]002 million DKK (=|]6om= s549m = € 4 0]m] (ligues 1 .Úd 2)' This was incleae o|22 per.ent in sales(oveY2008) a im!Íessive even more impre$ive inoease of over 50 pe. cenl and an id ptulits.Even though 2008 had beena soo.l yee frr lhe IDCO Group with sales 19 per cent up. the performance in 2009 was even better.What made this padicularly encourasingwas thal the globaltoy markel was stagnant lookedas itthe LEGO Group in 2010 o. cven decLiDitrg.It could bc ba.k on a healthy groM{hback aftera turbulent T | ' e c r e a t i o n é n d i n i e í n é t i r B a l€ x p a n s i o n . f i h e F I I i LEs0síoup I LlGo wás lbunded jn l9]2 in the village of Bi]lrrnd' Denmark. by Ole Kirk Christialrsen and remained a lamily run lirm lbr mosl olits history. The .ompany manufactu.cd ícpladdere.ironing boards'stoolsmd wooden to],s'The woodcnioys quickly becamethe bestseljng item.In 1914 the company chDged its name to IEGO a conjunction o| the l)ánish...
Words: 3746 - Pages: 15
