Journal on Lego
Mgt372.07
Journal # 04
Samia Farhana
Syeda Wasima Hossain
Chowdhury Farhat Asiya Nidhi
1110733030
1111275030
1010313030
Lego builds yet another record profit to become world's top toymaker
Summary: Lego, the most familiar brand name for children’s toys, has re-established its position into the world’s most profitable toy maker ahead of Barbie’s Mattel. But a decade ago, this Danish company was struggling highly to sustain in the industry as sales were declining at the rate of 26% each year. After replacing the CEO, the company has been able to increase its profit and break their records through consecutive ninth year. A research has found that its investment in quality and design has fuelled its recovery.
Analysis: During the years 2003 and 2004, the 82-year-old family-owned Danish toy company was in huge crisis. Now, after Knudstorp took over as CEO from Kjeld Kirk Kristiansen, grandson of the company's carpenter founder, the company’s revenue quadrupled in less than 10 years. Its high profitability comes from its ability to turn each kilogram of raw material plastic costing less than $1 into sets that sell for more than $75 per kg. Annual profits of the company increased by almost 10% to 8.2bn kroner (£900m) which is about the same as the profit Facebook turned in last year. Sales jumped 10% to 25.3bn kroner (£2.8bn). CEO of Lego stated about the success that it was due to constant innovation and the creation of 60-70 new products every year, including Harry Potter, Star Wars and SpongeBob SquarePants ranges. He also admitted that it is still a major innovation challenge to “stay on the top of children’s wish lists” against competition from iPads and computer games. The company needs to constantly become better to hold its position.
The main amplifier of their sales growth rate is considered to be its investment in quality and design. Toy analyst Jane Westgarth found that they are doing things that are taking Lego into a slightly different
Journal # 04
Samia Farhana
Syeda Wasima Hossain
Chowdhury Farhat Asiya Nidhi
1110733030
1111275030
1010313030
Lego builds yet another record profit to become world's top toymaker
Summary: Lego, the most familiar brand name for children’s toys, has re-established its position into the world’s most profitable toy maker ahead of Barbie’s Mattel. But a decade ago, this Danish company was struggling highly to sustain in the industry as sales were declining at the rate of 26% each year. After replacing the CEO, the company has been able to increase its profit and break their records through consecutive ninth year. A research has found that its investment in quality and design has fuelled its recovery.
Analysis: During the years 2003 and 2004, the 82-year-old family-owned Danish toy company was in huge crisis. Now, after Knudstorp took over as CEO from Kjeld Kirk Kristiansen, grandson of the company's carpenter founder, the company’s revenue quadrupled in less than 10 years. Its high profitability comes from its ability to turn each kilogram of raw material plastic costing less than $1 into sets that sell for more than $75 per kg. Annual profits of the company increased by almost 10% to 8.2bn kroner (£900m) which is about the same as the profit Facebook turned in last year. Sales jumped 10% to 25.3bn kroner (£2.8bn). CEO of Lego stated about the success that it was due to constant innovation and the creation of 60-70 new products every year, including Harry Potter, Star Wars and SpongeBob SquarePants ranges. He also admitted that it is still a major innovation challenge to “stay on the top of children’s wish lists” against competition from iPads and computer games. The company needs to constantly become better to hold its position.
The main amplifier of their sales growth rate is considered to be its investment in quality and design. Toy analyst Jane Westgarth found that they are doing things that are taking Lego into a slightly different