Rather, there are a multitude of factors that have taken their toll, slowly over time (Reference Exhibit 1 – SWOT Analysis). Arguably, the most significant contributing mistake would be Lego’s mismanagement of inventory, amplified by the rapid introduction of new products. In 2004, there were 3,560 different shapes, 157 colors, and 10,900 elements (assumed to include Lego people, accessories, stickers, etc…). This complex array of components led to increased inventory costs, write-offs, and obsolescence. As a former employee stated, Lego management demonstrated a lack of discipline, accountability, and a formal costing system.
This contract did not give the results they had forecasted, so they broke the contract in 2008 (Larsen, Pedersen, & Slepniov, 2013). The LEGO Group was now faced with the task of figuring out a new strategic plan. In this case study analysis, we will discover opportunities that can be seized and the short-term objectives that need to be set and implemented in order to move the LEGO Group forward. Synopsis of the Situation In order to create growth, the LEGO Group decided to diversify and began to expand operations through new products and portfolios
The problems that Robin Hood and the Merrymen are facing are the growing strength of the Sheriff, the growing numbers of the Merrymen, the diminishing resources, whether to assist King Richard, and if their mission and strategy is obsolete. Each problem is different in many ways but also if handled in certain ways some problems will be able to aid in the solution to other problems. The growing strength of the Sheriff is causing a problem to the group because he could soon out-power Robin Hood and the Merrymen. If this were to happen the mission of the group would die and the poor would have to find someone else to turn to for their needs. This would be very impossible because no one would no longer want to challenge the Sheriff.
that they believed would allow them to build a stronger connection with the customer and therefor, a stronger brand within the large toy industry. While in theory this action seemed that it could address some of the original product flaws (which was that Lego was a very one-dimensional product producer/products took too long to build), the brand extensions were too far away from their core business and thus moved away from their original customer base. Lego had no competitive advantage in designing or producing these new products, and given their philosophy to produce everything “in house” rather than outsourcing, it would take time and money to bring these products to market. While the new product launches made sense to management, there was confusion within the market place as to why Lego moved away from its core business – the large issue being that management trusted their own knowledge of the brand rather than listening to their consumers. While growth was the focus, the company
LEGO CASE STUDY Caiazza Leonardo 4105451 Ghidini Andrea 4105455 1) What is the competitive environment in which Lego operates? How does it relate to LEGO's strategic choices? The toy industry is a highly volatile and competitive industry subject to rapid changes in terms of technology and innovation. In fact, a toy company, such as LEGO, has to compete not only with similar companies but also with generational changes in lifestyles, in fact, children today seem to spend more time watching TV, playing computer and video game rather than have fun creating forms and constructions . A company, to gain a competitive advantage in this industry, must understand and identify beforehand the future preferences of consumers acting with speed and flexibility on the market.
1.How did the information systems and the organization design changes implemented by Knudstorp align with the changes in business strategy? Knudstorp’s business strategy cut the cost, broadened the products and discovered newcustomers.In the Organizational Strategy Lego also focus on the cost. It used the KPI to courage employees and decreases the time of development and moved some production line to cheaper place. The IS strategy support the organizational strategy, managers built up a new IS that can leads to a shorter development time and less expensive cost. 2.
When Electrolux faced rising costs and was losing the battle of middle-market products to competitors from Asia and Eastern Europe, Electrolux’s Chief Executive Straberg had to give the company a makeover to increase communication between departments. Straberg’s strategy was to ramp up Research and Development (R&D) and ensure a single cohesive effort was being put forth amongst all the departments to collectively create innovative products. This focus to break down communication barriers between departments would influence his designers, engineers, and marketers to synergistically develop new products. Straberg also hired executives from Procter & Gamble and Pepsi who have had reputable histories of innovative ideas at their respective companies. Furthermore, Straberg wanted to battle groupthink across Electrolux’s departments.
3. From a marketing/sales perspective, what are the most important internal (organizational) challenges? One of the most important internal challenges would be the Lego Group’s finances. The Lego Group has had lengthy court battles that tied up finances and resulted in decreased cash flow. The Lego Group also lost the 8-stud brick as a trademark and therefore, has lost some competitive edge.
When he found out that the chief engineer, Curt Andrews, lacked administrative skills which are a necessary component for managers starting up new operations, Erik Peterson made every effort to address this issue even to the point of replacing him with someone more capable in this position. This became an immense problem with Curt because he definitely lacked the required technical skills for starting up this brand new operation. However, Peterson could not be very open with the people in upper management because he too did not have these required skills either. So, at the very start of his job he was in a predicament that he attempted to fight in the October visit to Los Angeles by asking management to reassign and replace Curt to somewhere else so that a person with the required technical skills and emotional intelligence can be hired in his place. This was not an option for management and Peterson decided to make do with what he had by implementing three solutions to this dilemma.
* A business should focus on increasing strategic advantages. Back then, the main goal of a business was to make a good profit, but today in addition to making a profit, companies pay more attention on ‘time to market’. Project management helps in shortening the product life cycle which makes it an important force of modern business. A product life cycle of 10 to 15 years those days has been compressed to a life cycle of 1 to 3 years. It is said that a delay of 6 months in a project can cause a loss of 33% in product revenue share.