LEGO Group case study.docx - A carpenter known as Ole Christiansen the LEGO group in 1932 They initially manufactured bricks but later progressed into

LEGO Group case study.docx - A carpenter known as Ole...

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A carpenter known as Ole Christiansen, the LEGO group in 1932. They initially manufactured bricks but later progressed into toy manufacturing. LEGO group faced a major internal crisis in 2004 which nearly made it bankrupt. The company sales fell and the cost of its manufacturing and inventory went so high that it went out of control. Each of these problems arise as a result of poor revenue from production, lack of appropriate procurement procedures unsuitable diversification. Among its many of the initiatives the company decided to offshore large portion of its manufacturing to Flextronics. The group planned to license as much as 80% of its production on its search for cost cutting sourcing advantages, in addition to closing large parts of production in high cost country. Merely in after 3 years the long term was cancelled with Flextronics. As a result, it had even more severe impacts than before, such as stock piling, supply chain management difficulties and heavy financial losses. All these created an urgent need to establish practical strategies which can help
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