Lego case study

Topics: Lego, Lego Group, Kjeld Kirk Kristiansen Pages: 2 (749 words) Published: October 20, 2014
Program : Global MBA
Course : Strategic Thinking


Discussion Questions for “LEGO”

1. What led the LEGO group to the edge of bankruptcy by 2004? Please focus on the management moves during “the growth period that wasn’t” (1993-98) and “the fix that wasn’t” (1999-2004). 2. Why did Knudstorp’s turnaround strategy work? In your opinion, which actions were the most effective? Which actions were the least effective? Be specific. 3. Should LEGO launch the new line of board games?


Ans 1 :

The early 1990s bought about a seismic shift in the toy market. Big Box toy discounters lowered prices dramatically and it affected LEGO in a big way. Birth rates declined too, children had less time to play and not much interest in toys that didn't offer instant gratification. These external and market changes did not play well to LEGO’s strengths. Along with the external factors, serious changes were also happening in the LEGO Group. Then CEO, Kjeld appointed a five-person management team to help him run the company when he returned. The group focused mainly on driving growth. When a benchmarking study revealed LEGO's global name recognition was on par with industry giants like Disney, the team started churning out new products and ideas to leverage the brand's untapped value. A line of LEGO-branded children's wear was created and a division of the LEGO Group was charged with pitching book, movie, and TV ideas. LEGO building sets became increasingly complex with more unique components. While the number of LEGO-branded items grew, sales did not, and the company suffered its first financial loss. The top-line growth was slowing down but their cost was accelerating, so they were starting to lose some significant money. There were...
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