How Did The Information Systems And The Organization Design Changes Implemented By Knudstorp Align With The Changes?

Alex Coldfield, the VP of SCM, Westminster with team of high level managers has decided to improvise their supply chain capabilities to face these issues in a prominent way. They are analysing their customer composition and customer service requirements and align it more towards cost reduction. Alex also plans to implement three strategies to align the network redesign.

1. From early 1990s to 2004, the Lego Group, a long successful toymaker with a world-renowned brand, fell into the edge of bankruptcy. Compared with the highest revenue in 1999, the revenue in 2014 decreased by 35.6% while the net profit was negative, seven times less than that in 1999, the lowest in the past ten years. Its net profit margin and ROE were also the lowest. The gross margin and inventory turnover were all lower than its competitors. The strategic moves in the two main periods “growth period that wasn’t” (1993-1998) and the “fix that wasn’t” (1999-2004) lead to its poor performance.

Lego Corp was established in 1932 by founder Ole Kirk Kristiansen. With just 10 employees, they start crafting wooden construction toys. The most famous of these were the wooden duck. As the popularity of plastic toys rose in the mid-1950s, the company did away with wooden toys and started focusing on manufacturing plastic automatic binding blocks. As early as the beginning of the company, their motto was “Only the best is good enough.” High quality and safe products have been the focal point of LEGO Group for decades. Over the years LEGO Group has kept its word on that motto and has supplied millions of families with creative toys that last.

The Dyna Corporation, also known as Dynacorp, is a major global information systems and communications company. It had reached its peak in 1980s, known for its technological innovation.Its high quality products were well in demand in the market. The popularity had made them be the leader in the industry. However, with the rapid development of science and technology, Dynacorp gradually lost its leader position among the competitors in 1990s due to the slow growth rate. There are several challenges that they are facing,high costs, too slow to get new products to the market and not enough of value created for customers. In order to address to reasons behind the challenges, a series of investigations were carried out among not only the employees but also the company competitors. After the thorough inquiries,the serious shortcomings of the organisation structure have been identified.

There are many barriers to new organizations in the toy industry, making the threat of new entrants low. Lego and other big toy companies like Mattel benefit from economies of scale. An economy of scale is achieved by lower costs through large volume production (Textbook glossary). Economies of scale can occur in many departments within the organization including production, marketing, research and development, and finance. Some manufacturing of Lego products was shifted to Central Europe and Mexico in order to benefit from lower wages and to shorten product supply chains (p. 13 of case). The management of Lego additionally holds expertise on production, distribution and customer needs; which are absent in a new organization. To enter the toy sector a potential entrant needs to calculate the start of production at a level that will give a competitive position and production costs lower than the market.

Lego President and CEO Jørgen Vig Knudstorp was surprised when Greenpeace activists, in an attempt to stop Arctic drilling, mounted a campaign criticizing his popular toy company for its cobranding relationship with Shell Oil. At first, Knudstorp and his executive team at Lego headquarters in Billund Denmark didn’t quite understand Greenpeace’s criticism. Was the criticism justified? Why didn’t Greenpeace tackle Shell directly? Would Greenpeace’s campaign be taken seriously or would it simply fade away? As Greenpeace beefed up its efforts through social media, Lego’s top management was left wondering how to respond to Greenpeace or whether they should respond at all. And more importantly, executives didn’t know whether Lego should continue its business relationship with Shell.

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.

5. Evaluate the steps that were taken in the ERP activities. Which were done well and which could be improved?

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

Ever since LEGO started experiencing double digit annual sales growth, (by launching new toy games, branded theme parks, entering the video game sector, introducing mobile applications, introducing toys for girls, etc.) they realized they needed a model that was standardized, modular and scalable. Hence, allowing them to expand to new markets in a less amount of time. They already had a decently established market in USA and UK; they were looking for an expansion in other countries as well. This model had to tackle major issues like scalability challenges, employee

Knudstorp's slow-it-down approach of careful cash management, focusing on core products, and reducing product complexity certainly contributed to that success. Re-engaging with customers was also taken to another level. One of the insights Jorgen had when he became CEO was that he needed to reconnect with the community of loyal LEGO fans which according to him was one of the most powerful assets the company had. It was one of the big reasons for the comeback.(Most effective)

1. What was the organization design that was in place at McKinsey and what did they want to change? Did the change in design complement their strategy? What were the key barriers to implementing change?

LEGO® helps children move from curiosity to discovery as they gain a better understanding of the culture of innovation. Failure becomes demystified as a liability and repositioned as an asset for collecting data for the purpose of scaling their ideas.

Lego is one of the most recognizable companies across the world. The Lego Group was founded in 1932 by Ole Kirk Kristiansen and has since been passed down from generation to generation, currently owned by Kjeld Kirk Kristiansen. The Lego Group has headquarters in Billund, Denmark and main offices in USA, UK, China, and Singapore. The Lego name originated from the abbreviation of two Danish words “leg godt” meaning “play well”. The present-day Lego brick was launched in 1958 with the interlocking principle which allowed for an infinite amount of building possibilities. Because of the Lego Groups mass size there also comes a very precise corporate structure. The Lego company is operated in a five-member Management Board. The Management Board consists of the Chief Executive Officer(CEO), Chief Marketing Officer(CMO), Chief Financial Officer(CFO), Chief Commercial Officer(CCO), and the Chief Operations Officer(COO)/Chief HR Officer(CHRO). From there it is further broken down into a 21-member Corporate Management and a board of directors. This corporate structure allows for individual departments to work successfully within the larger corporation. With the Lego Groups mission to “inspire and develop the builders of tomorrow” they have become one of the world’s largest manufactures of toys, valuing imagination, creativity, fun, learning, caring, and quality.

Lego has many diversified products, but the base of all of them are the plastic Bricks, which actually makes the company successful as the result of the possibility of rebuilt the