Lego Case Study

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Lego Case Study

2012
Profit for the year
The LEGO Group’s profit for the year amounted to DKK 5,613 million in 2012 against DKK 4,160 million in 2011, which is a higher increase than expected at the beginning of the year. The very positive results are first and foremost related to the continued successful innovation of the product portfolio. As new products make up approximately 60% of the total sales each year, a highly innovative and consumer oriented devel¬opment process is key to continued success. Furthermore, the company’s operating model, and the strategy of manufacturing close to the markets, ensures a constant focus on optimisation and improvement, while securing end to end col¬laboration to deliver against customer demands. Intellectual capital resources

As a consequence of the company’s considera¬ble sales growth, a large number of new employ¬ees joined the LEGO Group in 2012. The average number of full-time employees was 10,400 in 2012 against 9,374 in 2011. Welcoming a high number of new employees places high demands on the company’s capabili-ties within recruiting and onboarding. In 2012, the strengthening of a global onboarding initiative con¬tinued in order to meet this important challenge. The considerable growth, which is expected to continue in the coming years, is only possible because of the skills, dedication and commitment of LEGO employees. It is therefore of the utmost importance for the company to secure continuous development of the skills of its employees. Con¬sequently, both talent development and general competence development are very important ele¬ments of the Group’s People & Culture strategy. All employees in the LEGO Group participate in a Performance Management Program (PMP). This Program ensures that the goals set for the performance of the employees relate directly to the overall objectives of the Group. On a current basis during the year, the manager and the employee follow up on whether the goals are achieved. For white collars a differentiated bonus scheme is attached to the Program, whereas blue collars are rewarded on a team based scheme.A total evaluation of the employee’s and the com¬pany’s performance compared with the defined goals, which is carried out at year end, decides the amount of bonus for each individual employee. Research and development activities

Each year, new launchings account for approxi¬mately 60% of the LEGO Group’s sales to con-sumers. Therefore, the Group has considerable development activities, comprising anything from trend spotting and anthropological studies to the actual development of specific products and cam¬paigns. Approximately 160 designers from about 20 different countries make up the creative core of product development that is mainly based at company headquarters in Billund, Denmark. Moreover, the LEGO Group cooperates with a number of educational institutions concerning various research projects within, among other things, children’s play and new technologies.

Market development
The LEGO Group’s main activity is the develop¬ment, production, marketing and sale of play materials. The market for traditional toys, in which the Group operates, experienced a de¬cline in global value in 2012. North America saw a slight decrease in 2012, and in Europe growth was only seen in the central and Eastern parts of the area. Southern European markets decreased considerably, whereas the toy market in the Northern parts of Europe stagnated or experi-enced low decline rates. In contrast, the toy mar¬ket in Asia experienced high growth rates during 2012, except the large Japanese toy market that saw a decrease during the year.

Double-digit sales growth rates were achieved in most markets in 2012. The strong growth of recent years in the company’s largest market, North America, continued, and in Asia, which is still a relatively small market for the LEGO Group, the sales growth was very strong. This is particu¬larly encouraging since the...
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