The Lego Group

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Student Name : Marimuthu, V.K. : Hariram, E. : Singh, R. Student Number : 19852274 20101233 20054057 Assignment Title : The LEGO Group: working with strategy. Date : 03 March 2012 Programme : BTECH-MANAGEMENT IV Question 1 Explain how the development of strategy at the LEGO Group reflect the key characteristics of strategic management outlined in section 1.2 and in the model in Figure 1.4? “Strategy is the long-term direction of an organization” (Johnson, Whittington and Scholes, 2011, p.3). The LEGO Group started with the manufacture of stepladders, ironing boards, stools and wooden toys and has grown into one of the top five toy makers in the world (Johnson, Whittington and Scholes, 2011).…show more content…
Due to heavy financial losses and a weak capital structure affecting investment opportunities, the Lego Group had to look within to find a path forward (Johnson, Whittington and Scholes, 2011). The company had remained a family run firm for most of it`s history and by Kjeld reinforcing his responsibility as CEO, it sent a clear signal that the family was behind the company. By divesting in LEGOLAND parks, writing-off other assets and simplifying the corporate structure, this allowed the LEGO Group to focus on it`s core business. Attention was directed towards resolving distribution problems and getting closer to retailers in order to understand their sales to end customers. Focus was placed on cutting costs and the entire procurement process was revised, resulting in fewer suppliers and significant cost reductions. Supply chain management philosophy changed from outsourced management, to in-house management. This strategy allowed for flexibility and the ability to react to short-term changes in customer demand as a priority over cost (Johnson, Whittington and Scholes, 2011). “Research shows that play and the use of toys like LEGO can aid a child`s development immensely. It helps with basic spatial awareness and colour recognition, but also stimulates a child`s creative and imaginative thinking” (Block Toys, 2011). However, a rapidly evolving society, leaning more towards electronic games,

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