This case analysis report of the LEGO Group is to analyze the company´s current situation, its future campaign

strategy and its further potential of innovative development. The objective is to analyze the management strategy in an objective perspective and find out how a company such as LEGO reaches a certain desirable position on the market. The LEGO group has made itself a giant in the market for children’s toys. The firm began as a manufacturer of wooden toys in Denmark seventy years ago. Sales allowed the Danish company to survive, but not to thrive until it introduced in 1949 miniature plastic blocks, with these plastic blocks the company was able to market to all countries over the world. LEGO has a strategic position in the market, is like a form of oligopoly. Consumers are loyal followers of their brand, while the company's name is associated with the interlocking bricks. Their internal organization is characterized by the centralization of power, which is featured in the family business as the case of LEGO. Its mission is to inspire and develop the builders of tomorrow so the innovation and development is really important in this company. They have to be first in everything, they are focused in growth and for this they must be original, must give consumers what they want and adapt to market changes This case study allows one to enter deeply into the company´s organization in order to understand all aspects of this success. In the project, the reader will be able to understand how a company that began as a simple carpenter has become a leader in the market, and how the company can manage to maintain this success and reach more costumers and larger market share in the future.

The Lego group up to 2004:
In 2004 the Lego group was under the leadership of CEO Kjeld Kirk Kristiansen, the company faced a large number of problems including posting a loss for the year of DKK 1,800m despite a group turnover of DKK 6,295m. As a result Kristiansen stepped down from the chiromancy and deposited a further DKK 800,000 of personal funds into the company. Despite these headline figures the problems facing the Lego group in 2004 may be considered has having a longer history than the single year of such great losses and be routed in both problems in the internal and external environment.

SWOT analysis
A key tool in considering the overall strategic fit is that of a SWOT analysis, a SWOT analysis considers both a company's internal elements (Strengths and Weaknesses) and attempts to considers how these factors fit against the external elements of Opportunities and Threats.

Lego's key strengths may be seen as coming from both its brand recognition and its ability to use innovative technology without moving away from the company's core values. Whilst there are many other competitors in the toy or children's entertainment

Firstly the company has failed in a key area of the understanding of marketing in regard to understanding the needs of their customers which may be seen as the focal point of the marketing concept This can be clearly seen in the role out of the Explorer range. . As the case study indicates despite the traditional nature of the Lego offering the company has a strong association with contemporary IT. Opportunities and Threats The opportunities and threats to Lego in the run up until the end of 2004 may be seen as indivisibly linked representing a threat or opportunity based upon Lego's reaction to the element hence they will be considered Lego remains the brand of choice in the field of construction toys despite the fall of other long term historical brand such as Meccano and the rise of alternative substitute products such as video games. Such considerations are demonstrated by Lego's initial development of such innovative actions such as programmable parts for its Technic range as far back as 1986 but a contradictory failure to react to further developments in manufacturing processes such as CAM and CAD or product developments such as those associated with video games until much later. Previous to 2004 Lego had already made some diversifications into the areas of direct retails with its Lego stores and the opening of its "Lego Land" amusement parks. in this case the company designed a product which failed to appeal to those who were not buying Lego products but subsequently didn't meet the needs of those who were buying the current Lego products. Weaknesses Lego's key weakness in the run up to 2004 may be seen as two fold. this however represented at the time a considerable opportunity for further development. Despite the threat to Lego's core product offering in this trend in the run up to 2004 there was also a significant opportunity for Lego to use such threats as opportunities to generate spine of sales in the form of Lego sets associated with games and films as well as the development of non-traditional Lego products presenting Lego with the opportunity to diversify. The largest threat to Lego may be seen as the changing nature of the market in the run up until 2004. Whilst Lego has remained the market leader in construction toys there must be the consideration that for a large part there has been a decline in the overall market for traditional toys has children have increasingly substituted to alternative forms of entrainments largely in the electronics sector. design and manufacturing systems which help to make the product both more durable as well as helping to reduce manufacturing costs thus making the field of technology as key strength for the business. The second weakness of the Lego group in the run up to the changes at the end of 2004 may be seen as the lack of ability to translate key corporate strengths and innovations into implemented strategies.

In outsourcing production there is the consideration that Lego will lose some of the control it had over its operations previously. In the first instance one should consider that at the start of 2005 Lego started with a new CEO and by the end of the year posted a profit of DKK 214 a figure which has since risen in 2008 to DKK 1. . operations in counties with relatively high labour costs such as Europe and the US have been outsourced to companies in Singapore and Mexico respectively.352. In adapting to the new business environment Lego may be seen as adopting two key strategies in relation to innovation and technology. These structural changes which have taken place within Lego's operational function have allowed the company to make significant savings in labour costs. Such a change has allowed Lego to re-define its operations allowing the company to move into new diversified markets such as the use of the Lego brand in relation to computer games and the production of traditional sets which are related to television and cinematic spin offs. Other structural changes relate to the company’s operations. Firstly the company has used new forms of technology for internal manufacturing processes. The first change for the company's structure may be seen as beginning with the appointment of a new CEO an action which may be seen as both a large pragmatic change for any organization but also a significant one from a symbolic perspective. Such innovations include the use of computer modeling and computer aided design and have allowed the company to speed up the design process as well as well as maintain the company's values in relation to quality and manufacturing tolerances which contribute to the consumer experience. something which may be damaged if outsourcing is not managed correctly.The Lego group 2005 and beyond: This section will now consider the position of Lego from 2005 onwards and as such will attempt to consider how Lego has adapted to the issues highlighted as facing the company in the run up to and including 2004. In addition the company's operations in the Czech Republic whilst remaining under the ownership of the Lego group have been put under the day to day management of the companies joint venture partner Flextronics. Structure: In the first instance the structure of the Lego group may be seen as changing significantly since 2004. IT/Innovation: One of Lego's key strategies since the restructuring of the company at the end of 2004 has been the company's attitude towards IT and innovation. this is a key consideration for Lego as the success of the company and its brand has previously relied on a high association with good quality. Despite these advantages there must also be the consideration that there are some draw backs.

technological innovation. such innovations have seen adaptations of Lego's traditional lines to incorporate more electronic features through to the outright diversification into new product areas such as computer games based upon a Lego theme or using the Lego brand. Following the appointment of a new chairman in 2005 the company has successfully turned its fortunes around seeing that the key strengths of the company in the form of brand. and corporate values have been used to create a strategic fit which matches the challenges of the contemporary business environment. Firstly in considering Lego's potion previous to 2005 one could argue that the company had a strong set of internal resources but had failed to respond to changing external considerations in the market. From a strategic perspective this also shows the recognition on the behalf of Lego executives of the need to compete in a wider market than merely that of traditional children's toys. The result of such a lack of strategic fit ultimately put the company in a relatively weak financial position generating substantial losses in 2004.Secondly the company has used IT and innovation in diversifying its product ranges. As such the element of innovation may be seen as one of the most important elements in the turnaround of the company's fortunes since the end of 2004. One may take the view that whilst Lego will face significant challenges in the future due to the continuing nature of changes in the market the company has not adapted its structure and processes so as to be able to deal with such challenges successfully in the future. Conclusions: Having considered the research there are a number of conclusions that may be drawn. Such diversifications may be seen as providing a key hedge against the risk which is inherent in operating with a lower level of diversification. .

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