28/11/2014

Size: px

Start display at page:

Download "28/11/2014"

Scott Owens
5 years ago
Views:

1 28/11/2014

2 Presenta(on of LEGO business case Student teamwork Discussion

3 Mission: Inspire and develop the builders of tomorrow Vision: Inven7ng the future of play Children - and their parents - should con3nue to have very high expecta3ons of us CEO, the LEGO Group Jørgen Vig Knudstorp

Ownership and locaeon Family owned company The LEGO Group is today owned by the third and fourth generaeons of the Kirk KrisEansen founding family: Kjeld Kirk KrisEansen and his three children.

4 Ownership and locaeon Family owned company The LEGO Group is today owned by the third and fourth generaeons of the Kirk KrisEansen founding family: Kjeld Kirk KrisEansen and his three children. Kjeld Kirk KrisEansen was appointed President and CEO of the LEGO Group in 1979 In 2004, Jørgen Vig Knudstorp succeeded Kjeld Kirk KrisEansen as President and CEO of the LEGO Group. Australia Austria Belgium Canada China Czech Rebublic Denmark Finland France Germany HongKong Hungary Italy Japan Korea Mexico Netherlands New Zealand Norway Poland Russian FederaEon Singapore South Africa Spain Sweden Switzerland, Taiwan United Kingdom United States The LEGO Group is represented in many parts of the world.

5 about 3,5 million LEGO in numbers

History short summary of important historic events Only the

toys that were designed to last through years of play.

6 History short summary of important historic events Only the best is good enough. Danish carpenter, Ole Kirk KrisEansen, starts making wooden toys He use high quality materials and workmanship to produce toys that were designed to last through years of play. Company name LEGO formed from the Danish words "LEg GOdt meaning "play well ("I put together in LaEn)

Learn concept The LEGO Brick is launched with

7 History short summary of important historic events The fist plasec LEGO bricks named AutomaEc Binding Bricks - are created and sold LEGO System of Play with the first Play and Learn concept The LEGO Brick is launched with a new coupling system - the one we know today

LEGO too LEGO DUPLO is launched for the youngest

role play and characters in the LEGO play experience.

8 History short summary of important historic events LEGOLAND Park in Billund (Danmark)- Now you can be LEGO too LEGO DUPLO is launched for the youngest children The first minifigure is born introducing role play and characters in the LEGO play experience. The minifigure as we know it today is launched in

9 History short summary of important historic events LEGO Technic is launched. The product challenges older children to construct vehicles and other machines The EducaEonal Department is formed. It develops and launches educaeonal teaching materials The first official LEGO World Cup building championships are held in Billund

History short summary of important historic events www.lego.

MINDSTORMS is launched based on the collaboraeon between the

10 History short summary of important historic events is launched The first computer game is released LEGO MINDSTORMS is launched based on the collaboraeon between the LEGO Group and Massachuseos InsEtute of Technology, USA

11 History short summary of important historic events The LEGO brick is elected Toy of the Century and LEGO World Shop opens on the internet The LEGO Group presents a major deficit and faces a serious crisis The LEGO Cuusoo, an internet based plaporm which brings new product ideas to market Online game LEGO Universe launch

LEGO Movie premieres in cinemas all over the world

12 History short summary of important historic events LEGO Friends is launched introducing a new mini doll figure The LEGO Movie premieres in cinemas all over the world hops:// watch? v=lpny2njsjrg&spfreload=

13 Direct compeetor: CompeEtors Toy Market: Lego becomes world's second- biggest toy maker

2004. The decline was parecularly marked in the US where sales dropped by

14 Financial crisis In the late 90s, LEGO market share has begun to decline and the company has reported losses of $228 million in 2003 and a loss of $207 million in The decline was parecularly marked in the US where sales dropped by approximately 35 percent compared to Asian markets experienced a fall of 28 percent.

15 Causes of the crisis 1. Changes in the toy industry: kids were playing more with video games, and other toys à LEGO wasn t cool anymore. 2. Inefficient and expensive distribu(on strategy: 26 different providers that shipped products from mule- levelled distribueon networks à this creates a backlog of order and inefficiencies in inventory levels. LEGO spends a lot of Eme to deal with thousands of smaller independent stores. 3. Increasing compe((on : some companies introduce plasec bricks that were compaeble with the LEGO brick design (i.e. Tyco Toy, Mega Brands) Some court baole with compeetors. For example with Mega Brands. The European Court of JusEce ruled in favour of Mega Brands, staeng that shapes used for a technical result did not qualify for a trademark. This decision leads to an increase in compeeeon

16 Causes of the crisis 4. LEGO diversifica(on strategy which included soxware (LEGO Moviemaker), learning concepts (LEGO educaeon), lifestyle products (LEGO Kid s wear), girls toys (LEGO dolls), books, magazines, television, theme parks and own retail with a goal of over three hundred retail stores. These new products are becoming an expensive distraceon to management and to the overall direceon of the company. They have lost the focus on the core business ( The Bricks!) 5. Disconnec(on from customers many new products do not saesfy what kids want, there aren t feedback from the customer base

Remedies to the crisis The LEGO CEO is decided to change the business strategy and set out a series of specific inieaeves in order to ensure a stable plaporm for the

17 Remedies to the crisis The LEGO CEO is decided to change the business strategy and set out a series of specific inieaeves in order to ensure a stable plaporm for the Company s development. The aceon plan to survive, cut costs, sell businesses, restore compeeeveness, generate cash and ignore the dash for growth in the immediate future.

18 Remedies to the crisis 1. Focus on the core business: THE BRICKS RaEonalise the product offer - cut 30% of the product offer Revitalizing the core product line and transforming them: LEGO DUPLO, LEGO BRAND and LEGO FRIENDS for the girls (beoer segmentaeon) Profit from the core business 2. Close to customers and bever understand the end user s needs: orientaeon would be developed using focus groups and paying more aoeneon to the AFOLs, the Adult Fans of Lego. The program LEGO Ambassador consiseng in seleceng around forty ambassadors in over twenty countries around the world among the community of fans that had naturally developed on the Internet. These ambassadors represeneng these communiees, are responsible for transmi{ng informaeon

19 Remedies to the crisis 3. Reducing cost of produc(on: cu{ng the seleceon of colours brick in half, reducing number of mini- figures availables 4. Improvement in distribu(on strategy: delivering to stores the right kits in the right volumes at the right Eme, creaeng a balanced porpolio on the shelf. To ensure the right kits arrived at the right Walmart store at just the right Eme, logisecs would demand the co- ordinaeon of operaeons involving warehouses in Mexico and USA with manufacturing operaeons in Denmark, Hungary, Czech republic, China and USA 5. Licence rights acquisi(on: LEGO buys the license to produce toys inspired by successful cartoons or films. The first licence acquisieon is for Star Wars (Lucasfilm Ltd.),then follow Harry Pooer, Spiderman, Batman, Indiana Jones

20 Remedies to the crisis 6. From Close innova(on to Open innova(on: LEGO Architecture. The LEGO Architecture series presents iconic buildings of world architecture, all realized as LEGO models. Our ambieon is to inspire minds of all ages as they learn about the world s most iconic buildings and structures. Lego Mindstroms NXT. LEGO Mindstorms (LEGO equipped with sensors and programmable), advanced users began to hack the system to customize and use it in a way that the Danish company had not foreseen. Axer trying to fight these hackers, LEGO finally became aware of the poteneal that laid behind them. LEGO finally allowed such forced collaboraeon and it created Lego Mindstroms NXT. This allowed LEGO to benefit from crowdsourcing. Lego Idea (ex LEGO Cuusoo). It presents a Web- based Open InnovaEon and crowdsourcing plaporm where consumers are able to submit and vote for their favourite ideas for new LEGO products. it is the evolueon of LEGO Cuusoo version beta.

21 Teamwork

22 Swot Analysis Helpful to achieve the objeceve Harmful to achieve the objeceve Internal (aoributes of the organisaeon) STRENGTHS These are the characterisecs of the business that give you an advantage. WEAKNESSES These are the characterisecs of the business that give you a disadvantage. External (aoributes of the environment) OPPORTUNITIES External elements that may give you an increase in sales and a future advantage. THREATS External elements that may hinder your chances to increase sales and may provide you a future disadvantage.

23 What is/are the success strategy/ies of LEGO?

In June 2003, Jørgen Vig Knudstorp, a young ex-consultant, presented the findings of his study to the LEGO Board of Directors.

In June 2003, Jørgen Vig Knudstorp, a young ex-consultant, presented the findings of his study to the LEGO Board of Directors. The Board, led by LEGO CEO Kjeld Kirk Kristiansen, was stunned. In January