Problems faced by lego:

1. Loss in 2004 due to major internal crisis lead to bankruptcy and loss of Dkk 2.2 milllion per day

(mainly in its core product lego bricks)

2.Failure in newly entered market more diversification lead to confusion among customers and
employees (computer game, television and clothing)

3.Inflexible supply chain because of different shapes and colors of LEGO elements

4.Manufacturing in high cost countries

5. Decentralised distribution centre

6.Rigid manufacturing in Flextronics but lego wanted flexible manufacturing and rapid manufacturing by
Flextronics become hard to move the products fast

7. Documenting work process

8.seasonal fluctuations nearly 30%

Solutions to the problems:

1.SHARED VISION strategy is followed with three principles

2.Divesting in theme parks

3.limited the growth in number of product components and then to gradually reduce

4.More focus on large retail chains

5.Documentation work process is increased

6.Applying Sales and Operation plan

7.clearly defined service policies were established and colored resins purchase was reduced

8.Outsourcing & Relocating production to low cost countries

9.five European distribution facilities centralised

10.Outsourcing collaboration cancelled after 3 years

11.Reducing more unique and product specific bricks

12.LEGO mini figure POLICEMAN was reduced to 4 variants from 16