A Case Analysis on Lego Corporation

A CASE ANALYSIS ON LEGO CORPORATION

I. Viewpoint

Jorgen Vig Knudstorp, appointed CEO of Lego Corporation in the year 2003

II. Time Context

2007

III. Problem Statement

How can Lego Corporation continue to make the company grow and be profitable regardless of  increasing rivalry among other products and competitors?

IV. Objectives o

To expand strategies, to reduce cost of product, increase Lego’s income and improve the company’s production and operations in the years to come.

o

To identify consumer desires, enhance and build significance for Lego’s classic toy offering.

V. Area of Consideration

Strengths:

Opportunities:

1. One of the most famous toymakers worldwide

1. Growth and Development of Technology

2. Ability to adapt the latest trends in the market

2. Product options like manufacturing manufacturing

3. Stable and well-established company

3. Increasing population

4. Good quality of products

4. Translate production at places with cheaper  labor 

Weaknesses: 1. High- priced product

Threats:

2. Based in a high-cost economy

1. Toy industry changing dramatically

3. High production costs

2. Emerging toy manufacturers and developers

4. Complexity of product development

3.Growing completion

VI. Alternative Courses of Action ACA 1: “Diversified Manufacturing Plants, Specific Labors” Labors”

Advantages:

Disadvantages:

1. Lesser cost of production

1. May encounter difficulties in implementing

2. Involvement of consumers to product features

tasks

and designs

2. may stumble upon the quality of the product

3. Increase profitability

ACA 2: “Reduce Operational Cost With Cost-Cutting Measures”

Advantages:

Disadvantages:

1. Decreased costs in supply chain

1. May affect efficiency of production

2. Prevent overproduction of toys

2. May not contribute to growth of net income

3. Possibly increase net income ACA 3: “Offer Lego Products In A Lower, Yet Reasonable Price and Add Other Features to Products”

Advantages: 1. Maintain existing consumers and attract new

Disadvantages:

consumers

1. Could affect and lessen product quality

2. Could increase the company’s total revenues generated

VII. Decision Matrix

*5 highest; 1 lowest ACA 1

ACA 2

ACA 3

Increase Productivity

4

2

3

Cost Efficiency

5

3

3

Increased Profitability

4

4

4

Consumer Satisfaction

2

3

3

Timeliness

3

3

3

18

15

16

VIII. Plan of Action

Lego Corporation had encountered problems in the past due to high cost of product against low  priced product from competitor. The best action that must be pursued by the corporation is to diversify

manufacturing plants, specific labors. The following action plans must be done to possibly solve Lego Corporation’s problem. a.

Reduce overall time and cost in manufacturing

 b. Transporting materials from high cost country to low cost country. c.

Deicide which low cost country to source into. The diversification of manufacturing plants strategy requires profound study on the cost of each

target country. The completion of the entire process of diversification can be time consuming but could contribute to the company’s overall growth and development.

IX. Conclusion

The company’s main problem is how to sustain the company’s profitability and growth and development. Lego group is recommended to diversify its manufacturing because this will allow the company to reduce cost and have a higher production capacity. With this Lego will get a favorable competitive market position and will respond easily to direct competitors strategies. The alternative will give to the company higher returns and the ability to respond to environmental needs.