Essay about Lego Case

As early as the 1970s Mattel was manufacturing products in China in order to take advantage of lower costs and enable corporate resources to focus on establishing the brand. By 2007, nearly 65% of Mattel products were produced in China. Mattel used a combination of company-run plants and a network of contract manufacturers. Exhibit C displays a simplified example of Mattel’s supply chain after moving production to China. Global production obviously had major benefits for Mattel, the country factors of China gave it a comparative cost advantage over producing in the U.S., and outsourcing enabled Mattel to remain profitable in an increasingly competitive toy industry. However, outsourcing does have disadvantages, a global supply chain increases the challenges to regulate and enforce quality.

Although Mattel has its challenges, Mattel’s market in Asia has created opportunities for outsourcing as a

To achieve its business strategies the LEGO has taken the help of the IT vendors IBM and SAP for the establishment of their IS making it possible to extend more quickly and add capacity and functionality as it was needed. Supporting massive expansion brings its own challenges, one of which is to ensure that the underlying systems can scale reliably and effectively. The main issues with the supply chain management, end customer feedbacks, product profit accountability, spread its market and the various unit functioning etc. had been addressed completely by the advent and the establishment of the efficient IS for the business.

Founded in 1975, Custom Molds Inc. is the producer and supplier of bespoke molds and plastic connectors to the electronics industry. Building on its reputation, the company expanded in-house operations in the 1980s to include the limited production of plastic parts geared towards R&D based initiatives. During the early 1990s, the company realized that the shifting structure and market environment of the electronics industry was starting to impinge on the company’s manufacturing processes. This created a host of issues.

The Lego Group tried to catch up the market trends during the period, but they ignored that the industry total profit pool decreased by 50% Between 1999 and 2003. It's naturally for players to reduce mass production and focus on core competency. However, the Lego Group invested significantly in expansion not only in brick-based product lines, but also beyond the brick. The expansion was not focusing on its core competency.

By 2004 Lego was in considerable trouble; it had made a loss of approximately £200m; sales fell by 40%. One reason for this was lack of success in moving into new markets, such as computer games and clothing. However, a major cause for the financial woe was due to issues in the supply chain; costs were not being squeezed out, and the increase in specialised LEGO models had led to an explosion in the total number of unique bricks; each requiring expensive moulding, production and inventory. LEGO rightly decided to address this supply chain cost issue, and turned to Flextronics, a company with considerable experience in

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.

Q.2: Which of the generic strategies does Lego appear to be using based on this case? Provide support for your choice.

2. Which of the generic strategies does LEGO appear to be using based on this case? Provide support for your choice.

In 2002 and beginning of 2003 LEGO struggle with low sales and an increase in their inventory levels due to an intensification of their competitors, adapting their process as LEGO did in the beginning

Since the expected demand is 2000, thus, the mean µ is 2000. Through Excel, we get the z value given a 95% probability is 1.96. Thus, we have: z= (x-µ)/ σ=(30000-20000)/

In addition to their commitment to the builders of tomorrow, LEGO Group makes 4 promises. The first promise they make is to their partners. Building partnerships with their customers, suppliers, and intellectual property partners based on mutual value creation is fundamental. The second promise they make to their people, to enable execution of the business strategy and build the long-term health of the company. The

Lego's key strengths may be seen as coming from both its brand recognition and its ability to use innovative

To answer the problem we used a history of LEGO, made a Value Chain, a SW-model and organization structure.

In this case we must analyze what makes most sense for Lego and their manufacturing and technology use purposes. Therefore there has been an analysis on what they have already patented and if this technology process also makes sense to protect under intellectual property.