Lego Case

* What were LEGO’s fundamental problems? Consider both external and internal factors.

Fad toys rising, product life cycles declining; less unscheduled time to play, demand shift towards technology, give up traditional toys for videogame & online activities 2

“the impact of new product introductions was muted by rapid imitation and limited protection of intellectual property” 2

“retailers focused on profit per square foot and consequently considered margin, turn, and product space requirements” 2

“Kjeld felt that the company’s sustained growth required new bricks” 3

Before had a trip on the market and unmet demand so graduatlly added new products and could control sales growth 3

Birth rates in core markets declined, household spending on toyus declined, retail channels consolidated, mass discounters featured toys more aggressively, less unstructured play, shorter attention spans, want instant gratification 4

Potential seemed to be everywhere; felt had huge untapped potential; tailred products to different untapped markets ilke southern Europe 4

Branched out to family leisure park, videogame software, children’s ware, watches, robotic bricks

“There seemed to be potential everywhere” “our brand must have huge untapped potential” 4

Ploughman: moved managers around, “’Fitness Program’ included measures to steamline production, reduce organizational layers, and increase responsibility and customer focus, all to build a simpler, more responsive, global business system” 5

Repositioned preschool line, tap into emphasis on child development, learning focused 5

“nobody had kept an eye on complexity” 6

“lack of discipline, or accountability, and a costing system that I could not figure out” 6

No indivation of how net production prices were dteremined or which products were profitable

“inventory costs were exploding, we had a lot of write-offs and obsolescence” 6

Tried to control costs by ordering fewer molds, but then couldn’t meet demand anymore...