The company LEGO (Appendix 1), was far from the reality when in the year 2000 the famous Bricks were named as ‘the toy of the century’ by Fortune Magazine. the numbers were reflecting a different reality when in 2003 and 2004 the losses were of more than $400m on annual sales of over $1b (Lego case of study 2014).
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.
After careful review of the LEGO Group website and the merchandise sold in stores, it is apparent that the LEGO Group offers a plethora of products for children to enjoy. To sum up a few, there are such products as the popular LEGO City which introduces children to their everyday environment from building Airport terminals and Fire Emergency stations. LEGO Creator lets you build three different items such as a cat, rabbit and a puppy, using all the same LEGO’s in a variety of ways. Of course LEGO goes on to expands its horizons with such collections as “Chima” which revolves around “Chi” a natural resource of the land that is the energy source and the power behind the eight animal tribes in the Lego
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
Management involves various theories and concepts in place for evaluating efficiency, or lack of. The Lego Building exercise was a true application of certain concepts and theories learned throughout the semester. Unlike previous exercises in class, there has been a very competitive environment and a high reward involved. Also, the delegated leader’s ability to effectively manage the team heavily influenced the success, or failure, of each team. In my team, there was an evident measure of control, quality management, equity, planning, and team context. Through each theory and concept, I was able to reflect on how each member and leadership action played a role in my team’s failure to earn the extra credit reward.
The toy market has become increasingly slow (Ferrell & Hartline, 2011). First, the sector was hit by the economic recession, and then came the realization that children are simply growing up faster (Ferrell & Hartline, 2011). They are leaving toys earlier for new technologies (Ferrell & Hartline, 2011). Children today are also busier (Ferrell & Hartline, 2011). They are involved in more extracurricular activities, and simply do not have as much time for toys (Ferrell & Hartline, 2011).
While the lack of product management and rapid unneeded growth amongst its core Lego lineup was continuously digging Lego into even more debt, it soon encountered its biggest external issue in the form of technology. The technology was also one of the main problems. Lego had a problem with the kid’s technology market. LEGO was concerning about how they would take their essence of “development, imagination and creativity” and insert it into their toys.
LEGO has been in the toy industry since the Great Depression when Danish carpenter Ole Kirk Kristiansen and his sons began making wooden toys (Bigus, 2011). Showing ingenuitive spirit, after the end of World War II, LEGO became the first company in Denmark to purchase a plastic injection molding machine, this was an expensive moving hinging on the risk that plastic toys were the toy of the future (Bigus, 2011). Soon after the purchase, LEGO expanded its business to include the first plastic LEGO bricks (Bigus, 2011). Godtfred Kirk Christiansen, one of Kristensen 's sons observed during the toy fair of 1954 a new way to market LEGO as a system of play so that the toys could be used separately or together to build large projects
The case for LEGO’s change in strategy was due to the decline in profit and growth. The company was not up to date with the consumer and market trends. They did not have prepare for future scenarios or have a contingency plan, thus they were very unprepared for the changes in the toy
This was needed to avoid the problem of toy phenomena, “Beanie Babies” and “Tickle Me Elmo” of getting replaced by newer toys in the toy industry. They developed the LEGO System, which entailed them to only produce the LEGO bricks or something related to it. Because of this structured system, there would be no need to manufacture and develop new products despite the change in children’s preference in toys. The minor changes in toy manufacturing would save the company from spending more than expected (Robertson
When people hear the name “Lego”, the first thing that comes to their mind usually is the Lego brick. There are actually several kinds of products that the company offers in the market such as video games, amusement parks which cooperate with Merlin Entertainment (Merlin Entertainment, n.d.), magazines which are published by Dorling Kindersley (Dorling Kindersley, n.d.), and other licensed products.In this case, the paper will mainly focus on their core product which is Lego classical products.
LEGO started in 1932, when a father and his sons began designing wooden toys. The idea started out very small, but they ended up becoming one of the biggest toy leaders in the world. Although they are a huge success and known globally today, that does not mean they never encountered roadblocks; they actually ran into quite a few, including competitors, lawsuits, and loss of revenue (Bigus, 2011). Like every company, LEGO brand has their strengths, weaknesses, opportunities and threats, presented using a SWOT analysis (Rothaermel, 2017, p. 130).
LEGO, as we know, is everywhere today. Not only in their classic, cuboid shapes, but also in video games, on the movie screen, on clothes, and in the formation of theme parks populating the globe. Within a world that is increasingly being surrounded by colorful, snappable bricks, it is hard to describe LEGO as anything other than a major success story. However, the brick road has not always been yellow for the Danish firm. Up against the volatile toy industry, LEGO has had their share of ups and downs, nearing bankruptcy in the early 2000s. One may say that LEGO has always been unique, but it was not until this pivotal low they they became disruptive in the way they operated as a brand. This
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.