LEGO (A): The Crisis Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

lego (a) the crisis case solution

Question#1:

What has led the LEGO Group to the edge of bankruptcy?

Lego lacks discipline, accountability and has a complex costing procedure. Lego is finding it hard to balance the demand and supply due to the exploding inventory costs. As Lego is not able to meet the demands of the customers due to inventory costs, therefore customers are getting agitated due to non-availability of the brand on the shelves of retailer shops.

Lego has started to launch new products like Lego Star Wars, which is rising to become 35% of the total revenue of the organization. The company is re positioning its trademark product LEGO DUPLO,which is not communicating the promises of the brands with the consumers and the consumers are finding it hard to relate with LEGO DUPLO as they used to in the past. The sales are weakening with every passing day.

The strategies that are being introduced by top line management are not working. The desired results are not achieved by expanding the product line, in fact these steps have increased the costs and more importantly, some of the new products have demolished core products of the company, which have confused the customers and eroded earnings. The company is continuously getting rid of its employees due to losses one after another. These losses almost led the LEGO group towards bankruptcy.

Question#2:

What is your assessment of management moves during “the growth period that wasn’t”and “the fix that wasn’t”?

The playing trends of children have changed a lot, as in the past, children used to play with toys that lacked electronic additions to it. Nowadays, children prefer playing on a technologically advanced level. Children now have shorter attention spans and are attracted more towards electronic products.

These drastic changes in the toy industry were not according to the strengths of LEGO Group. These elements forced the organization to start focusing on growth and how it can be achieved at any cost. The group perceived that they can stand amongst the top 10 toy manufacturers by extending their product line outside their core products, therefore these changes would also make the company more responsive towards the changing dynamics of the industry. The organization is focusing on creating more themes for their products. The company is branching itself out of its core offerings.

The successful family park created by the LEGO, name LEGO LAND and the development of the official website of the company, which is initiated with the intentions of developing video games and the children’s wear being introduced by the company, all these introductions were not able to contain the position for the company.

The company is still not able to lower down its costs as they have lost the focus upon their core products. The consumers heavily reliedon the core products of the company and wanted the company to focus on them rather than introducing new products to their portfolio just for the sake of achieving growth.

LEGO is trying too hard to gain higher profits and growth by coming up with several strategies and products, internally and externally both. LEGO missed out a very important factor for achieving growth. Growth cannot be sustained at the cost of customers’ need and expectations neither at the cost of letting go of their hard working employees.

Question#3:

As Jørgen, what would you do throughout the LEGO Group in order to turn the company around? Be specific.

Jorgen should first of all stop firing people in the organization. This gives a bad impression in the market and the consumers that the company is willing to achieve growth and higher profits at the cost of their people. Jorgen has the advantage of the company’s brand image over the image and how he has been meeting the brand’s promise of making the best toy experiences for the children. People have strong brand attachment with the LEGO products as it has been in the industry for more than 80 years and the people are aware of the brands offerings.

Yes, LEGO should focus one x tending its product line and creating experiences for the children would create strong relations with the brands, how ever LEGO should not lose its focus from its trademarks products such as LEGO DUPLO as people are highly affiliated LEGO due to its core products. If the customers feel that the brand is not able to ful fill its promise for its core products, then the chances of them buying from the extended product line would be low.........................

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