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Running Head: LEGO CASE STUDY

LEGO CASE STUDY

Lego Case Study

Name

Institution

Date

How did the information systems and the organization design changes supplemented by

Knudstorp align with the changes in business strategy?

Cost-cutting, product development, and reaching a larger market were all part of the company's business strategy. When it came to cutting costs, Knudstorp intended to do it as efficiently as possible while maintaining producing high-quality goods. Additionally, he wanted Lego to expand into other markets such as the film industry and to reach a broader audience. To help with this, adjustments were made to the organization's structure and information systems. Relocating distribution and production operations to a less expensive area was one strategy utilized by the firm to reduce costs. Additionally, they repurposed Lego components for many designs and products to reduce costs while maintaining a strong focus on product development (Perez, 2020). Rather than using up all of the Lego pieces on a single design, they instead repurpose and recycle the pieces. This was a significant reduction in product design expenditures, which also eased the supply chain's strain. Video gaming and virtual interactions through the Internet were also incorporated into the organizational architecture to attract a broader audience. This aided in reaching a broader demographic of young people, such as video gamers. Because of the initial software and database established to begin the online virtual games, this was not only an organizational but also an IS transformation. Additionally, rather than focusing exclusively on boys, they developed a line of products for girls, which was a significant organizational shift. Among the information systems adjustments made to coincide with the business strategy was the creation of a new employee management system to accommodate the more personnel hired as a result of the company's expansion. Additionally, the

corporation implemented an enterprise system to assist management, production, data management, and operations. Although organizational design changes are done more frequently than information systems changes, all of these methods ultimately match with changes in the company strategy to reduce costs, focus on product development, and reach a broader target audience.

Which of the generic strategies does Lego appear to be using based on this case? Provide

support for your choice.

Lego looks to be employing two of the common tactics in this case study. Cost leadership and concentration are the two strategies. The focus strategy is divided into two components: cost and differentiation. Given that cost leadership is essentially a version of focus, I shall assert that Lego appears to be primarily pursuing the focus strategy. To reduce costs, the company revamped its goods and manufacturing processes using Lego components. Lego was able to create a product that was simply fantastic and appealed to a wide variety of audiences, including boys, girls, adults, and gamers. Numerous other cost-cutting measures were implemented, including "a reduction in the number of its logistics providers from 26 to three or four — sufficient to assure the resilience and achieve higher economies of scale while still fostering competition among suppliers." This measure alone resulted in a savings of more than 10% in transportation costs." With regards to distinction, the corporation desired to be as inventive as possible to reach out to a variety of different audiences. As stated in the article, "Brick by Brick," "the new CFO and CEO adopt harsh steps to rebuild the company, focusing on "profitable innovation"—as opposed to innovation for the sake of innovation—and listening to the

consumer" (Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry - All Together, 2019). The corporation expanded its platforms to penetrate the film sector. Additionally, they developed video games for online distribution to expand their target demographic and gain a competitive edge.

Are the changes implemented by Knudstorp an indication of hyper-competition? Defend

your position.

Knudstorp's changes, in my opinion, do not point to hyper-competition. As a result of intense competition between firms and rapid market change, hyper-competition occurs. As far as I can tell, Lego isn't in competition with any other rapidly expanding businesses. When it comes to competition, the company only competes with itself to improve. Lego does not have to demonstrate anything to markets or shareholders, according to the author of the article "When it clicks, it clicks." Christiansen's heirs, according to Knudstorp, only have two official objectives: that Lego continues to create innovative play experiences for children and reach more children every year. "The shareholder," he says (Fast Company Staff, 2018). That the company's sole goal is to satisfy its clients while remaining innovative is evident. Because the company was on the verge of going out of business, its initial focus was on cutting costs and reestablishing operations. Rather than battling for supremacy in the market, Knudstorp was focused on cutting costs and increasing profits. To be sure, Knudstorp's goal was not to beat his competitors but to bounce back from the losses he had accumulated and innovate new products that made Lego a leader in the industry.

What advice would you give Knudstorp to keep Lego competitive, growing, and relevant?

By encouraging employees and management to never stop learning, I hope to keep Lego competitive, growing, and relevant. As Forbes puts it, "businesses need to push past traditional wisdom that confines them to thinking inside a box." Understanding and knowing their clients on a deeper level. Keeping up with the latest trends is also important for the organization to keep reaching out to new customers. In addition, I believe that marketing and promotion strategies should be improved. Working on this case study has taught me that to keep things running smoothly, you need a variety of strategies. Also, I learned that you can turn around a business by creating a strategy and implementing the necessary changes to go to the top. Lego has continued to grow and evolve since the publication of this case study. They've remained one of the industry's top competitors ever since. "Lego regained its top spot after a brief respite last year, beating out Google, Nike, Ferrari, and Visa, and its future continues to seem bright," according to a recent Business Insider study. They released The Lego Movie in 2014, and it was a huge hit. A sequel is already in the works. I can apply what I've learned in this case study to my consulting practice in the future to help other companies solve their problems (Bagley, 2020).

References

Bagley, R. O. (2020). Innovate, Grow, Succeed: Staying Competitive in Today’s Economy. Forbes. https://www.forbes.com/sites/rebeccabagley/2013/03/18/innovate-grow-succeed/#:~:text=Innovate%2C%20Grow%2C%20Succeed%3A%20Staying%20Competitive%20in%20Today

Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry - All Together. (2019, June 12). https://alltogether.swe.org/2019/06/brick-by-brick-how-lego-rewrote-the-rules-of-innovation-and-conquered-the-global-toy-industry/

Fast Company Staff. (2018, January 8). How Lego Became The Apple Of Toys. Fast Company; Fast Company. https://www.fastcompany.com/3040223/when-it-clicks-it-clicks

Lego Overtakes Ferrari as the World’s Most Powerful Brand | Press Release. (2019, February 17). Brand Finance. https://brandfinance.com/press-releases/lego-overtakes-ferrari-as-the-worlds-most-powerful-brand

Perez, P. (2020). Rebuilding Lego, Brick by Brick For further information. Academia.edu. https://www.academia.edu/8990679/Rebuilding_Lego_Brick_by_Brick_For_further_information