Exercise 3: Risk identification – Lego case

Thao Nguyen- 612068

Explaination:

Lego started its 2017 with a higher than optimal levels of inventories, and because of the failure in estimating
the actual sales at the retail stores, the company had to actively sell off its inventories at the cheap prices to
make the room for the new productions. LEGO have been making and have just blindly consumed positive spin
and manufactured excitement from sources. This action has made the operating profit fell 17% to DKK10.36
billion as well as the total revenue declined 8%.

Besides, outside of China which saw positive growth, people all over the world were buying less LEGO in 2017
than the company had forecasted. The company struggled at retail markets in two established markets:
Europe and North America, and as well as the decrease brick price, there was a 1% loss in the market shares of
Lego in 2017. Because of the unhappy financial result, Lego decided to lay of nearly 1400 employees to cut
down the costs and mitigate the complication in its business.