Lego Of The Lego Group

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Background The Lego group was established in 1932 by Ole Kirk Christiansen in Billund, Denmark. Lego today is one of the most recognizable brands in the world. However, that does not mean that they haven’t had to make some changes along the way to reach and stay at that position. Lego needed to change because of increased expansion of their product line which lead Lego to the brink of going bankrupt. In the year 2000, the Lego group had a huge sales growth. By 2004, they were projected to lose somewhere around two billion dollars. This lead to talks about bankruptcy, breakup of the company, or even the sale of the company. Regardless of the talks, it was quite obviously that something had to be done before any of that talk became a reality…show more content…
Kids were starting to lose interest in toys earlier than normal and became more interested in electronic multimedia. The second change was that retailers who sold Lego products were changing to become super stores like most are today. This lead to manufacturers needing to now also compete for shelf space as well as customers. The third change in the toy industry was that manufacturing was being outsourced to Asia. The cheaper labor costs in Asia lead to companies pricing their products lower. This and the US dollars’ worth going down hurt the Lego group because there were more cheaply available products in the market. The last change in toy industry was basically an exact copy of the Lego bricks that were being sold cheaper than Lego’s. These new competitors were able to produce a cheaper product and bring new products to the market faster that Lego could. This became more trouble when the court failed to give them trademark protection on the bricks. Overall, these were the major occurring to the toy industry that lead to a needed change by the Lego group. Change Initiatives As discussed in the background, the Lego company needed to make some changes to avoid bankruptcy and the breakup of the company. To make these changes the Lego group hired Jorgen Vig Knudstorp as their new CEO in 2004. These changes were broken down into three phases that would eventually bring the company out of potential bankruptcy. The three
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