CASESTUDY 36

LEGO

PHAM NGUYEN BAO QUYEN BABAWE21601

Introduction
The name ‘LEGO’ is an abbreviation of the two
Danish words “leg godt”, meaning “play well”.
It’s our name and it’s our ideal.

The LEGO Group was founded in 1932 by

Ole Kirk Kristiansen. The company has passed
from father to son and is now owned by
Kjeld Kirk Kristiansen, a grandchild of the foun
der.

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 Demand for specific fad

BACKGROUND 1 toys could surge or

collapse rapidly

A number of LEGO
employees were convinced
Children gave up
that the company should
2 traditional toys for
enter the games market video games and
online activities
with a new product line.
However , there are still
some drawbacks
Fad toys seemed to be rising and
product life cycles declining,
3 perhaps not surprising for an
industry

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HISTORY TIMELINE :
Replacing wooden to brick toys by 1967
1916-1992 After 10-15 years, Kjied added new themes to 5 base colors
Expanding markets in Western and Eastern Europe-America-Asia

Total profit declined by 50% since Kjied had a severe illness and children tended to look for
1993-1998 fashionable and electronic products
1993 : LEGO introduced children’s wear
From1996 to 1998, LEGO launched website-LEGO Media and introduced watches

Managers are move rapidly

1999-2004 Some disadvantages in complexity, discipline, accountability, a
costing system
New growth strategy was not working

2006 : LEGO group was getting back on track

Knudstorp added later the ability to invent-design-unique
2004- present products
The industry booked wholesale revenues of $83.3 billion in
2010
By 2011, new products accounted for 60-70% sales each year

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Innovations came from FOUR GROUPS :
PMD
- Standing for Product and
Marketing Development
- The main product “engine”
- Developing innovations
within existing products and
themes
”Their responsibility is to keep
core portfolio fresh and
vibrant, and to add new
licensed brands”
Concept Lab
- Developing fundamentally
new products and physical
play concepts
- Applying existing concepts
to new markets
- Conceiving new concepts
for core markets
“The Lab’s 19 developers
focused on new-to-world toys
rather than line extensions”
CED
- Standing for Community,
Education and Direct
- Responsible for digital
innovations in online play
experiences
”They sit in joint gate
meetings and ask if projects
should be shared or handed
to another group”
New Business Group
- Conducting new business
models
“- Freedom to experiment
with small ideas” with
limited sales potential
”It’s harder to get specific
metrics at different gates, so
it’s more about deciding
what kind of investment we
are willing to make”
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 ACHIEVEMENT

Between 2004 and By 2010, its return In 2010, sales

2010, the Group’s on invested capital jumped to 37%
revenue had grow soared above 160 with net profit
n by 165% in a sta %
gnant global toy soaring 69%
market The company
increased its
return on sales
30%

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THANK
YOU