BA 4101 Final Memo= Lego.docx

BA 4101 Final Memo= Lego.docx - CHRISTOPHER ANOSIKE...

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C HRISTOPHER A NOSIKE P ROFESSOR H OPKINS BA 4101= G LOBAL P OLICIES SECTION 401 F INAL M EMO L EGO (A): THE C RISIS
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INTEROFFICE MEMORANDUM TO : Jorgen Vig Knudstorp, CEO of LEGO FROM : C HRISTOPHER A NOSIKE , B USINESS A NALYST AT LEGO SUBJECT : N EW POSSIBLE S TRATEGY FOR LEGO DATE : 12/4/14 Executive Summary LEGO Company (LEGO Group) was established in 1932 as a family business. The founder, Ole Kirk Kristiansen had high expectations for the company. However, the company struggled to maintain its competitive position to its competition and loss in revenue from unsold products. Despite recent setbacks, the company had grown to be a large organization with tremendous prospects. Over the years, LEGO has wanted to capitalize on its competitive advantage by turning basic products (wooden toys) into more advanced products (moving gadgets). To pass on the legacy of the company, Ole Kirk Kristiansen appointed his son, Godtfred Kirk Christiansen as the vice president of the company. After some time, Knudstorp stepped down from his position as vice president of the company. Many others took notice to the company, such as Jorge Knudstorp, who became the new CEO in 2004. Statement of the problem & Analysis of the company LEGO was faced with many questions that would determine its way forward. Knudstorp needed to address the issue of elevated costs arising from poor inventory management and complex product line. Knudstorp also needed to decide whether to keep all of manufacturing in house or to outsource some of its products. Due to bad decision-making, LEGO struggled financially. Some of these decisions included adding wooden toys to its production, expanding its product line too extensively, and designing its bricks to match its current form . These three decisions have left LEGO’s CEO in the position to find solutions that address these problems. I will analyze LEGO’s business model through different frameworks. Here I will discuss the magnitude of LEGO’s competition using Porter’s 5 Forces; emphasize its strengths, weaknesses, opportunities and threats using a SWOT Analysis; highlight its Value, rareness, imitability and organizational structure using a VRIO model; focus on the nature its competition using a competitor analysis, and assess its accountability and financial stability using a financial analysis. This analysis will give you a better insight on the work that needs to be done in order to continue to meet consumers’ expectations and needs in an efficient way.
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Porter 5 Forces Framework (See Table 1) Threat of New Entrants The threat of new entrants in the industry is fairly moderate. The existence of copyrights and patents can make it difficult to enter into the industry, but many toy manufacturers can choose to ignore the risk of imitation. Additionally, LEGO has to worry about how to manage its economies of scale, which helps reduce costs by making its toys by dropping their costs.
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  • Spring '13
  • Attalia
  • Lego Group, CEO of Lego

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