Lego the crisis Harvard Case Solution & Analysis

The case illustrates the dilemmaLego is facing due to ailing profits which have incurred due to too many initiatives taken at thesame time. The case outlines that how under the leadership of Knudstorp, Lego group has to take the serious decision regarding the future of the organization. Over the period of time, the Lego group remains successful and offered great toys in the market. Such included the Lego bricks as the major signatureproduct line that took company to penetrate strongly in European market.However,with the change in market trends and customer behavior the company increased the product line by establishing the theme parks and by including Harry Potter and Mulan London animated toys.Moreover, it also included the Star Wars product line in the business to reform the organizational product strategy.
However, even with adaption of different strategy, the company failed to gain the profits in the market and decided to lay off the employees to cut cost.Though, the decision allowed the company in maintaining some of the cost, but the issues of ailing financialperformance remain ahead of the business strategy.
In such situation, Knudstorp has to decide whether and how to make the Lego group stand back in the highly comparative market where the players like Mattel and Hasbro have already developed a strong stance, along with the issue of dealingwith the changing customer behavior in the market.
Lego the crisis Harvard Case Solution & Analysis

Keywords: Competitive Edge, Porter 5 forces, Value chain Analysis

The company Lego wasfounded in 1932, by Ole Kirk, with an aim to offer the toys to the children that increases the creativity and imagination.Doing so, the companydeveloped the first ever Lego bricks that gave great surge in the European market and made the group the 5th largest group in theEuropean market.The. company named itself as Legoafter the Greek pronunciation of “play well”.Over the period of time, the company grew in size and extended its product line by including more variation to the brick, whilealso adding more products through product development strategy.
All these variationsallowed the company to grow in the market, however, in the late 90’s, the company faced the financialcrisis due to stagnant sales.To respond the crises, the company lay off the employees and also reduced the operations to meet the market trend and to overcome the losses.The company also hired Knudstrop to offer the consultancy service in dealing with the issues.
There have been number of issues prevailing in the business strategy of Lego, including moving towards too many business growth initiatives at the same time, along with improper financial budget allocation and analysis and the inability to distinguish between the profitable and failing products from the product portfolio in the market.In such situation, the consultant hasto offer certain decision to the company in either sustaining its position in the market or selling the group.

What has led the LEGO Group to the edge of bankruptcy?
By the end of 2003, Lego group has been already facing the ailing profitsdue to the changing customerbehavior from the “time consuming” toys to Video games andother outdoor activities that reduced the attractiveness of the Lego toys, along with the non-profitability of some of the toys’product line of Lego.............

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