Lego Group, Marketing and Operation Management Report Essays

The use of LEGOs is an extraordinary thing, but it is shocking to see exactly how controversial a small toy can become. People of all ages have been found to enjoy this toy. Companies and organizations such as MIT and NASA have even found a use for them. The toy has become known as a child’s imagination tool and has not been exclusively used for adults. The documentary shows that adults come together to compete in competitions on who can create the greatest LEGO sculpture. Many people may not know just how big this toy is used around the world.

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.

On one hand, partnering with such supplier has offered the company the greatest freedom to operate. One the other hand, technological spillover and inventions came up from the developmental stage are also likely to occur. The worst case is that competitor might protect those inventions which prevent the LEGO Group form using their own innovation. Protection of those inventions is deemed necessary to the growth of the

The marketing mix is a desirable place to begin when you are thoroughly considering creating a new product or service, and it offers you some

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.

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

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.

Based on the case study Lego appears to be using the Focus strategy. Michael Porter proposed three generic strategies Cost Leadership, Differentiation and Focus. Focus is a strategy where organization focuses on specific niche markets; this may include a particular geographic region or particular segment of customers. Organizations which use this strategy develop their products after having a study of dynamics of the segment and unique needs of customer. Lego before the appointment of the new CEO appear to use the focus strategy as their top priority was always to focus on innovation and creativity with taking profits into consideration. Add to that the case study also mention that Lego used to create products that primarily targeted boys. After the appointment of new CEO Jorgen Vig Knudstorp the company appears to have changed its policy form Focus to Cost-Leadership. Cost-Leadership is a strategy where organizations focus on gaining competitive advantage by offering products and services at the lowest possible price. They achieve this by increasing profits by reducing production cost and other way is to increase market share by reducing the prices of products compared to the competitors. Knudstorp after taking charge of Lego changed their focus on reducing the production

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

It is important to notify that Lego Classics and Make & Create (core products) double the sales in that year. In the same year the company was struggling with another category of the business that was not part of their core business the LEGOLAND parks, providing limited return to the company.

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

Knudstrop comprehended the necessity for the Information framework and enhanced hierarchical structure. His front line procedure of reusing the modules to fabricate new items went about as rescue, where the module utilization was diminished to 7000 from 13000. Every module cost around 50000 euro, which coordinated in decreased expense for developing. In further new alterations are developed in building up the module with decreased cost, managed quality and enhanced item subjects with current business sector pattern helped LEGO to enhance its money related position in the business sector.

LEGO A/S Aastvej 1 DK-7190 Billund, Denmark Tel: CVR-no: Residence: Reporting Year: Internet: E-mail: +45 79 50 60 70 54 56 25 19 Billund 1 January – 31 December www.LEGO.com sustainability@LEGO.com

the Lego offering the company has a strong association with contemporary IT, design and manufacturing

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