Group # 1

Group Assignment : 1
LEGO case study
Subject;
New Product Development
Members:
Faizan Masood
Hunain Javed Mehtab
Jahanzaib
Maryam Zubair Baig
Syeda Bariha Fatima

Submitted to:
Sir. Kashif Baig
 Group Assignment : 1

Case Study: LEGO

Timeline of events occurred considering important dates.

•Founded in Denmark by Olie Kirk Christiansen.

1932 •Manufactured wooden toys for the first few years

•Christiansen brought a plastic injection modeling machine

1947

•The company starts manufacturing familiar plactic bricks.

1958

•LEGO has introduced Castle, Space, Fabuland play themes and Technic building system .
1978

•LEGO began product line extentions, trippling the numbers of stock keeping units.
•Overall company sales was unaffected and the product development efforts ate into
1990 company's profit.

•Company lost its money and laid off 1,000 workers.

1998

•Children were losing their interest in building blocks earlier due to video and electronic
games.
•Beside consumer trends, Industry changes were also taking place.
•Many competators were manufacturing in China while LEGO still produces at expensive
late location in Europe.
1990 •Channel power and game industry had shifted away from manufacturors and belongs to
huge retailors like Toys "R" Us.
•LEGO's patents on bricks was about to expire, leaving company in do or die situation.

•LEGO developed new ,mission statement to boost innovation throughout the company.
2000 •LEGO followed the wisdom of best business consultants and academics.

• LEGO sold most of the LEGOLAND parks and its headquarter buildings.
• Production was outsourced to cheaper location
2003 • Number of SKU's were cut in half.
• Within a year, LEGO had raised enough cash to starve off bankrupt
 Group Assignment : 1

Some of the most notable activities of lego are as followed:

LEGO hired creative people internsationally for Concept Lab new

product center to incerease diversity.
LEGO created a wide spectrum of innovations including:
LEGOLAND amusement park, education centers and retail stores
Partenering with movie producers to introduce Star Wars and
Harry Potter LEGO sets in addition to Steven Speilberg Movie-
Maker toys.

New electronic toys like Galidor, Bionicle and Mindstorms were

introduced.

LEGO launched Digital Designer by using which children can

design virtual LEGO blocks.

Timeline of events occurred considering sales.

1958-1978 Sales grew at a steady base about $180 million worldwide.

till 1993 Sales double once every 5 year

early Sales gradually starts declining
1990s
Research suggested several reasons for the decline in sales and
1998
profit.
2003 LEGO had lost about $300 million and was almost bankrupt
 Group Assignment : 1

Questions/ Answers

1. What would you recommend to LEGO in order for the company to institute this guidance
system?

Ans: First and foremost , in order to properly implement this guidance system LEGO need a person to
organize them properly because it seems that they are working on ideas without even thinking about its
pros and corns which shows that they are not focused. Like it is said in the case that LEGO’s innovation
engine had launched them down the path at a very high speed without the ability to navigate the curves in
the road ahead. They did several things that consultants and academic experts recommended the
company to boost its innovation but still lacked in some areas. Which shows that they are putting efforts in
the wrong direction in order to get back on the right path they need to slow down and think carefully, and
before taking any innovative idea into action, they should find the answers to these questions:
 Will it be able to satisfy customer needs?
 Will it brings a positive return on their investments? and most importantly,
 Will it work?
 Therefore to get the answers of above mentioned questions LEGO should go for marketing
research, where they are lacking the most.
Secondly, here the company needs to understand that boasting innovation is not enough to make it
profitable. To get profitable innovation it is necessary to be focused and have to direct team efforts, for
which the company needs to trust their teams by giving them space to create and direction to deliver.
LEGO must adopt customer driven marketing strategy. The company should not only focus on talking to
the customers and giving them what they want but needs to develop relationships with customers in
order to better determine their needs and then fulfilling those needs as best they can. LEGO should work
hard to have a proper guidance system which was initially missing so that they could forecast upcoming
challenges; that they might be facing in future.

2. In your opinion, what are the strengths that LEGO could build upon, and where is their room for
improvement?

Ans: With all the changes and initiatives that LEGO made it and introduced new products, it would seem
that the company had achieved what they want to and proved themselves up what they needed to build.
It was shocking to read when the case said that they almost went bankrupt. While in our opinion the
LEGO’Ss popular product the Mindstorms was a strength that LEGO could build upon. Another strength
that differentiates LEGO is their innovation system. For which they hired creative people internationally,
from Italy to Japan to the US for their concept lab new product centers to increase diversity and stimulate
creativity.

On the other hand, while reading the case, it seems as though Lego didn’t have too ,many weaknesses
there is some room for improvement as well like innovation is good but LEGO needs to be focused at one
plan at a time rather than working in different dimensions, they should be fully- focused with the
implementation of effective promotional tools. Their strategy seems to be good ideas but still they seemed
lose money. One weakness that the case presented dealt with them is being desperate in getting back on
track. It seems as though that LEGO was going with ideas without thinking ahead. Another weakness that
we come across was their inability to shift to consumer needs.
 Group Assignment : 1

3. How could LEGO use some of the concepts in this chapter to get back on track and institute
a long term plan for success, centered around innovation?
Ans: In order to get back on track and institute long term plans for success LEGO can use following
measures:
 By effectively working on Product Development Focus.
 By assigning right people for the accomplishment of right task.
 By pursing effective team management, so that employees could be empowered work
effectively in cross-functional teams which ensures that there is a positive innovative culture
in working place. This lead to a proper strategy development session, managed new product
evaluation meetings, participation in resource planning and well-trained employees so that
their expertise could spread quickly throughout the firm.
 Marketing of the product should be immediately started once the product is prepared or
developed.
 Concept testing must be done which means that it must be verified by testing the product
before launching it or investing a huge amount of company that will the product be able to
deliver what the potential customers thinks about it?
 Before properly launching a product in market a market testing should be conducted first.