Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Lego's turnaround brick by brick case study

29/10/2021 Client: muhammad11 Deadline: 2 Day

LEGO’s Turnaround

LEGO’s Turnaround: Brick by Brick

IN THE DECADE between 2005 and 2015, LEGO—the famous Danish toy company—grew fivefold from some $1 billion in revenues to $5 billion (see Exhibit MC12.1). Rediscovering, leveraging, and extending its core competence allowed a successful revival for a company that was floundering in the early 2000s. How did LEGO construct a successful turnaround? To answer this question, we first need to understand a bit of the history of this Danish wonder company.The LEGO company was founded in 1932 by Ole Kirk Kristiansen. The name is a contraction of the Danish words Leg godt, which means “play well.” Only later did LEGO executives realize that le go in Latin also means “I assemble.” Throughout its history, LEGO has had numerous formidable competitors, but it has outperformed all of them. Tinkertoys were more complex, Lincoln Logs were limited in what could be constructed, traditional blocks had nothing to hold them together and were too large to show much detail. LEGO bricks were the right balance of simplicity, versatility, and durability.

LEGO competes for the attention of children and their parents who buy the product. Moreover, there is also a sizable group of adult LEGO fans. In the wake of the personal computer revolution in the 1990s, however, the popularity of LEGO began to wane because of attractive alternatives for children such as gaming consoles and computer games. By 1998, LEGO was in trouble. The Danish toymaker hired a highly touted turnaround expert to change its fortune. Unfortunately, he had no background in the toy industry. To make matters worse, the new executive decided that LEGO’s hometown of Billund, Denmark, (with 6,000 people) was too provincial. He continued to live in Paris and either commute or run the company remotely.

Things at LEGO went from bad too worse. It started hyperinnovating and diversified into too many areas, too quickly, and too far away from its core. Among a whole slew of other innovation failures, the company created a Saturday morning cartoon called “Galidor,” which flopped. During this time period, it also decided to become a lifestyle company and to offer LEGO-branded clothing and accessories.

LEGO’s Turnaround

By 2003, LEGO was on the verge of bankruptcy. To avoid this fate, the closely held private company, owned by the Kristiansen family since its inception, needed to do something drastic and quickly. Almost out of desperation, it hired Jørgen Vig Knudstorp as CEO. His résumé was quite unusual to say the least: He was only 35 years old (in comparison, the average age for a Fortune 500 CEO is 55 years), held a doctorate in economics, and was a former academic. Knudstorp had transitioned to McKinsey, one of the world’s premier strategy consulting firms

Knudstorp decreed that LEGO must “go back to the brick” and focus on core products. As a result of the strategic refocusing, LEGO divested a number of assets including its theme parks. It also drastically culled its product portfolio by almost 50 percent, from some 13,000 pieces to 7,000. At the same time as Knudstorp focused LEGO again on its fundamental strengths, he was also careful to balance exploitation—applying current knowledge to enhance firm performance in the short term—with exploration—searching for new knowledge that may enhance a firm’s future performance. This allowed LEGO to improve the performance of traditional product lines, while at the same time to innovate, but this time in a much more disciplined manner.

In particular, LEGO increased sales of its well-known existing products by strengthening the interoperability of various LEGO pieces with other sets to encourage user innovation and creativity. To drive innovation, LEGO has brought its adult fans into the new product development process to leverage crowdsourcing—obtaining ideas from a large fan base using online forums and other Internet-based technologies. To drive future growth, LEGO under Knudstorp has been much more careful with its product extensions. In the past LEGO had licensed its brand freely to other brands, including Star Wars, Indiana Jones, Harry Potter, the Lord of the Rings, Batman, the Simpsons, and Iron Man. The problem was that the benefits from these licensing agreements accrued mainly to the existing brands, because LEGO did not own the more critical intellectual property. Knudstorp focused on owning and leveraging the core intellectual property. As a case in point, The LEGO Movie in 2014 was a particular high for the company, grossing $500 million on a $60 million budget in the first year alone. Unlike in previous movie tie-ins, LEGO owned the intellectual property, which meant that LEGO did not need to split profits with existing brands.

Challenges

Although LEGO has grown fivefold since Knudstorp took over, it faces a number of challenges. LEGO needs to strengthen its triple-bottom-line performance (along economic, social, and ecological dimensions) and address globalization challenges.

LEGO must address ecological concerns in the face of growing consumer criticism: Its signature bricks are made from petroleum-based plastic. The company is searching for an environmentally friendly material to replace its bricks that date back to 1963. To overcome its relatively large carbon footprint, the company is spending millions on a 15-year R&D project in hope of finding an eco-friendly alternative. The goal is to invent and then be able to manufacture bricks cost-effectively from a new bio-friendly material that will be virtually indistinguishable from the current blocks. It is a difficult problem to solve because LEGO bricks are precisely engineered to four-thousandths of a millimeter, hold a large range of colors well, and even have a particular sound when two pieces are snapped together.

Page 459

To continue to grow, LEGO must become stronger in emerging growth markets such as China. LEGO is a comparatively new entry into China because of the fear that knockoff bricks have sufficiently damaged its brand. Knockoffs, which are rampant in China, are of inferior quality and even have injured some consumers. Yet, with growth in Western markets plateauing and a larger number of Chinese entering the middle class, this market opportunity is critical to LEGO’s future success. Moreover, Chinese government officials endorse LEGO as a “mind toy,” which helps children to develop creativity. The hope is that creative children will grow up to drive innovation in firms, something many critics say Chinese companies lack. In addition, Chinese parents and grandparents are eager to spend money on things that are perceived to help their offspring to excel academically. In general, parents around the globe are more than happy to spend money on games that get their children away from mobile devices, computers, and game consoles.

To take advantage of the growth opportunity in China and other Asian countries such as India and Indonesia, LEGO opened offices in Shanghai and Singapore as well as a factory in Jiaxing, China. To address the globalization challenge more generally, LEGO also needs to internationalize its management. At this point, it is a local, small-town company that happened to be successful globally, especially in the West. LEGO hopes to become a global company that happens to have its headquarters in the 6,000-people town of Billund, Denmark.

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Math Guru
Maths Master
Essay Writing Help
Top Writing Guru
Solutions Store
Solution Provider
Writer Writer Name Offer Chat
Math Guru

ONLINE

Math Guru

I have worked on wide variety of research papers including; Analytical research paper, Argumentative research paper, Interpretative research, experimental research etc.

$50 Chat With Writer
Maths Master

ONLINE

Maths Master

As per my knowledge I can assist you in writing a perfect Planning, Marketing Research, Business Pitches, Business Proposals, Business Feasibility Reports and Content within your given deadline and budget.

$45 Chat With Writer
Essay Writing Help

ONLINE

Essay Writing Help

I am an experienced researcher here with master education. After reading your posting, I feel, you need an expert research writer to complete your project.Thank You

$41 Chat With Writer
Top Writing Guru

ONLINE

Top Writing Guru

I am an experienced researcher here with master education. After reading your posting, I feel, you need an expert research writer to complete your project.Thank You

$19 Chat With Writer
Solutions Store

ONLINE

Solutions Store

I am an experienced researcher here with master education. After reading your posting, I feel, you need an expert research writer to complete your project.Thank You

$26 Chat With Writer
Solution Provider

ONLINE

Solution Provider

I have worked on wide variety of research papers including; Analytical research paper, Argumentative research paper, Interpretative research, experimental research etc.

$41 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Human resource exam - Community Nursing DQ 1 Student repply Vivian Guillen - Paul richard heinrich blasius - Drawing aoa network diagram - Under armour vrio analysis - Entire class work - Trifles essay thesis - Reflective essay on effective communication - Gcse french speaking aqa - Graded_Assessment_WorldLit - I need three essays - Griffith university late penalty - Unsw apa style referencing - Https connected mcgraw hill com answer key - Why are koch's postulates important to microbiology - City west homes lisson green - Macro Exam - Barclay barrios emerging pdf - Research article - Research Data Analysis 1 - Cost of control account is credited with - Consider the following phonetic data from the bantu language luganda - Australian koala foundation reviews - Ghent university language requirement - What are multivariate tests in spss - Health care information systems terms - 400 word discussion - A fitness appraisal may include - Breeding bird survey codes - Ariticles Summary - Ramblin rose meets jamestown quilt - How does hipaa affect medical assistants - Southwest airlines swot analysis - 2parts - Walden Module 6 Pathophysiology Knowledge Check - Determination of a rate law lab report - Vodafone employee advantage scheme - Social science question - Natalie nairn dentist perth - Andrew robson bridge flipper - Risk assessment in physical security - TLMT601 Week 3 Case Study 1 - Archaeology activities for classrooms - Chapter 27 Synopsis - Week 2 discussion law enforcement - Assignment - Bbc bitesize national grid - Under the partial equity method the parent recognizes income when - Gym class heroes girlfriend - Managerial accounting final project - Market research survey - Argumentative essay on cell phones - Little red cap carol ann duffy - 36 tom packer drive athelstone - General environment and task environment - Scottish power safety rules - Week 2 assignment english 1150 - I love big buttes and i cannot lie shrek - 4 Responses Oct 15 - Fin 571 financial ratio analysis - Heat capacity constants abcd - Sylvania 250 multi function led euro cluster lights - The heavenly christmas tree pdf - Test - Is human capital the key to avoid being structurally unemployed - Attack of the mamazon - T flip flop counter - 12 angry men video questions - 11 27 - From a tangle of pathology to a race fair america - T4 syndrome mayo clinic - Week 3 Discussion - Cairns state high school past students - Unit 3 macroeconomics lesson 2 activity 22 - Adding and subtracting radical expressions worksheet - Functional level strategy is formulated by - Social work - Crieff to perth bus - The key to disaster survival friends and neighbors - Trapped in america's safety net sparknotes - University of washington medical center directory - Motivation - Project proposal - Code of ethics for electrical engineers - Skin care from the makers of proactive - What does homework soundtrack mean - Advanced Pathophysiology. Assignment - Jack ma characteristics as a leader - C++ coding exercise about Lighting Equations (GLM) - Anthony horowitz childhood facts - Cultural Competence and Nutrition in Health Promotion - Aida model was developed by - What is selective exposure in marketing - I am sam cast - Lazarus come forth sermon - 50 ml graduated cylinder significant figures - Cognitive behavioral therapy group settings versus family settings - Literal meaning of the poem the road not taken - Diameter of table tennis ball - Leaded gasoline contains an additive to prevent engine knocking