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 o To expand strategies, to reduce cost of product, increase Legos income and improve the companys production and operations in the years to come. To identify consumer desires, enhance and build significance for Legos classic toy offering.

V. Area of Consideration

Strengths: 1. One of the most famous toymakers worldwide 2. Ability to adapt the latest trends in the market 3. Stable and well-established company 4. Good quality of products

Opportunities: 1. Growth and Development of Technology 2. Product options like manufacturing 3. Increasing population 4. Translate production at places with cheaper labor

Weaknesses: 1. High- priced product 2. Based in a high-cost economy 3. High production costs 4. Complexity of product development VI. Alternative Courses of Action ACA 1: Diversified Manufacturing Plants, Specific Labors Threats: 1. Toy industry changing dramatically 2. Emerging toy manufacturers and developers 3.Growing completion

Advantages: 1. Lesser cost of production 2. Involvement of consumers to product features and designs 3. Increase profitability

Disadvantages: 1. May encounter difficulties in implementing tasks 2. may stumble upon the quality of the product

ACA 2: Reduce Operational Cost With Cost-Cutting Measures Advantages: 1. Decreased costs in supply chain 2. Prevent overproduction of toys 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 consumers 2. Could increase the companys total revenues generated Disadvantages: 1. Could affect and lessen product quality Disadvantages: 1. May affect efficiency of production 2. May not contribute to growth of net income

VII. Decision Matrix *5 highest; 1 lowest ACA 1 Increase Productivity Cost Efficiency Increased Profitability Consumer Satisfaction Timeliness 4 5 4 2 3 18 VIII. Plan of Action ACA 2 2 3 4 3 3 15 ACA 3 3 3 4 3 3 16

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 Corporations 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 companys overall growth and development.

IX. Conclusion The companys main problem is how to sustain the companys 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.