Lego Case Write-Up

1) How did information systems and the organization design changes implemented by Knudstorp align with the changes in business strategy?

LEGO, today, has become a household name but it hasn't always been that successful. Throughout the years, it has survived and thrived against all odds, repeatedly.

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.

Organizations pursuing this type of business strategy try to develop a competitive advantage based on product innovation. The strategy requires employees to continually develop new products and services to create an organization’s advantage in the market. These companies create and maintain an environment that encourages employees to bring new ideas into the company.

At that time, the performance winners for LEGO were speed (of delivery), and flexibility (wide range of products, volume and delivery adjustments at short notice). Cost, dependability and quality were not as vital. To achieve these objectives, LEGO had made several operational decisions: Speed: • Maintain multiple distribution centres, close to key markets: 5 in Europe, 1 in USA • Maintain high stock levels, of finished product, and components so products could be assembled quickly. Flexibility: • Supply retailers both large and small, from relatively close distribution centres • Frequent, small, orders accepted • Introduce new products to the range, and discontinue old

just building blocks.  Due to the different segments that make up the toy industry, buyer power is

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, from the Danish words “leg godt” or play well, was founded by Danish carpenter Ole Kirk Christiansen in 1932 (Herman, 2012). Known for producing iconic studded plastic bricks that were enjoyed by both children and adults, Lego produced more than 30 Lego-based video games and, through licensing agreements, popular Star Wars and Harry Potter Lego sets (Baichtal & Meno, 2011). Lego also sold a series of Arctic sets including an Arctic Base Camp, Arctic Outpost, Arctic Helicrane, Lego Ice Crawler, and Arctic Snowmobile. Those sets sold for $89.99, $49.99, $39.99, $14.99, and $6.99 respectively. Lego’s 2014 film, The Lego Movie, grossed more

Q.1: How did the information systems and the organization design changes implemented by knudstorp align with the changes in business strategy?

1. How did the information systems and the organization design changes implemented by Knudstorp align with the changes in business strategy?

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?

1. How did the information systems and the organization design changes implemented by Knudstorp align with the changes in business strategy?

Currently, LEGO is one of the world’s leading manufactures of play materials. The company is guided by the motto, “Only the best is good enough,” committing to the development of children and aiming to inspire and develop the builders of tomorrow through creative play and learning. Valuing imagination, creativity, fun, caring, quality, and learning is what drives LEGO Group. By sticking to these values, LEGO holds themselves to the expectations that the people have towards the company and its products.

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

Innovation offers the companies a competitive advantage. Presently and within the future, more than any time in history, the key to competitive advantage is innovation. However innovation will facilitate businesses meet all of their strategic challenges, not simply competition; to illustrate, in confronting accelerating rates of change, globalization, apace advancing technology, a additional numerous workforce, associated a modification from an industrial to a knowledge-based economy. Meeting all of those challenges helps the firm attain competitiveness, and meeting these challenges suitably depends on innovation. Innovation allows a firm to workout its challenges in distinctive ways in which build competitive advantage either through relative differentiation, a relative low-priced position, or few acceptable level of each. Innovation cannot assure success, however success cannot be achieved within the end of the day without it.