Lego Case Study Essay

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.

Thus, in the LEGO Case study provided, the new CEO Knudstorp has very efficiently aligned the IS and organization design with respective to the business strategy to bring success for the company.

Lego Corp was established in 1932 by founder Ole Kirk Kristiansen. With just 10 employees, they start crafting wooden construction toys. The most famous of these were the wooden duck. As the popularity of plastic toys rose in the mid-1950s, the company did away with wooden toys and started focusing on manufacturing plastic automatic binding blocks. As early as the beginning of the company, their motto was “Only the best is good enough.” High quality and safe products have been the focal point of LEGO Group for decades. Over the years LEGO Group has kept its word on that motto and has supplied millions of families with creative toys that last.

Advances in the field of information technology and introduction of new hi-tech form of entertainment such as tablets and gaming consoles had left Lego trailing in the entertainment field. Jorgen Vig Knudstorp was appointed as the CEO to revamp the company’s business process, organization structure and information systems. Knudstorp was quick to act and first made changes in the company’s production process. He encouraged designers to use the unused components in development of new products and design, thus reducing the number of unused

Growth strategy: With the help of growth strategy, LEGO introduced new toys in the market. Initially LEGO was something that boys liked playing with but Knudstorp introduced LEGO for girls thus targeting girl child audience which increased his market. Not only this, they also entered the video game sector by making virtual games after collaborating with Sony (which was ruling the gaming console market at that point of time). Later, they started making figures with famous characters from Hollywood movies (Star wars, Batman, The Avengers, etc.).

1. What led the LEGO group to the edge of bankruptcy by 2004? Please focus on the management moves during “the growth period that wasn’t” (1993-98) and “the fix that wasn’t” (1999-2004).

* Lego is as an esteem brand and is looked upon not only as a toy company but also a company with toys that develop learning and new skills

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

By 2004 LEGO was racking up with misfortunes of around 1 million per/day. Knudstrop as the new CEO with his administration ability and insight in business methodology put LEGO in most commended position. The entire business had been a massive disappointment with the huge misfortunes that affected Knudstrop to reconsider the pay structure by focusing on the cream layer of the association.

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.

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 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).

Lego has been a really successful company worldwide, and in this case study it has been shown that how they went through their growth stages and what strategies they implemented.

LEGO is one of the largest companies in Denmark and a company with a very strong brand. But even so, their economy fell apart in 2003-2004 and we are interested in what they did wrong and what they did to turn their significant loss around to a profit in 2005. So our problem is:

One of their first patents passed in October 1961, three years after the initial filing date was the concept of the Toy Building Brick. “This invention relates to toy building elements and more particularly to toy building bricks or blocks adapted to be connected together by means of projections extending from the faces of the elements and arranged so as to engage protruding portions of an adjacent element when two such elements are assembled- Toy elements of this kind will be referred to generally as building bricks, and the principal object of the invention is to provide improved coupling means for clamping such building bricks together in any desired relative position thus providing for a vast variety' of combinations of the bricks for making toy structures of many different kinds and shapes.” The full patent will not be cited, but a main aspect of this paper is to find out exactly what DOES make sense for Lego, and this here is the perfect example of a positive play on IP and protecting an invention that was created by the company that could not simply be published nor kept a trade secret as it is their main product that they offer to