Lego Case Analysis

Individual Case Project - LEGO

1) A SWOT analysis for LEGO

a) Strengths

Unique system of play

Reputation in toy industry

Good company culture

b) Weaknesses

Conflict between hot products with complex designs and minimizing the complexity

c) Opportunities

Established relations with retailors in wide markets

d) Threats

Rapidly changing demand in toy market

Competition from videogames and other online activities

2) The key external factors relevant (PESTEL model)

a) Sociocultural

For quite some time, LEGO bricks were toys for children, considered beneficial to the mental development of kids. As time goes by, more and more adults now interest in toys with creativity, and some of those become loyal fans, AFOLs in LEGO fans clubs or groups. They have special demands differ from the traditional consumers – children, also much better abilities of joining the consumer panels and getting involved into the developing processes of new LEGO products.

b) Technological

The wide use of information technologies directly leads to the emerging of LEGO websites (both LEGO official and fans-sites) and the LEGO games. Moreover, improving technologies make the capabilities of manufacturing better.

3) Knudstorp’s turnaround plan

The most important reason to the success of Knudstorp’s turnaround plan was the correct decisions about the strategic positioning.

At the first stage of the turnaround plan, Knudstorp focused on reducing cost with measures like cutting, selling or outsourcing non-core products and processes, as LEGO was crying for debt paying ability to keep themselves from collapse. After the carry-back of loss and the getting back the market share, the strategy changed to differentiation, creating brand new products, offering better services and building better relations to both consumers and customers.

The most critical and most overall-strategy-relevant part of Knudstorp’s plan was the disciplined innovation and production...