LEGO CASE: THE CRISIS 1
LEGO CASE: The Crisis
Angel Flores
Jose Gonzalez
Hanny Medina
Katherine Sierra
BUS 532 – Business Strategies and Decision Making
Millennia Atlantic University
November 27,2014
,LEGO CASE 2
LEGO: THE CRISIS
Background
History of the LEGO Company found it’s begging in 1916 when Ole Kirk Christiansen
bought a woodshop in the rural Danish village of Billund and began to build houses and furniture
for farmers. In 1932 the financial situation of the company got worst and Mr. Christiansen found
he in the necessity of dismiss all his employees. Shortly after Mr. Christiansen suffer the lost of
his wife with the responsibility of his four sons had the idea of create toys for his children
looking for relief their sorrow. After realizing how happy and pleased were their children he
thought that would be a good idea to star building toys.
In 1932 since the sales of its toys were running slow Ole Christiansen thought that
perhaps the company needed a good name then he wanted to convey the Danish expression “Leg
godt” which meaning is “playing well” in a short word that was easy to remember and that was
how the name of LEGO came through. In 1936 the company started registering its profits, due
that Mr. Christiansen decided that was time to optimize its process by acquiring high-end
equipment. In 1942 a fire consume the workshop and all the drawings and models were
destroyed then Mr. Christiansen started a the construction of a new and bigger factory and went
to Copenhagen looking for a new plastic-molding machine that has just arrive to Denmark. He
started to produce plastic bricks after experimenting with some different figures.
In 1947 after the introduction of the Ferguson tractor; the plastic brick toys became a
success. Unluckily the sales were dropping during the summer and the company had too many
toys in stock then Godtfred Christiansen who joined his father on this venture in 1932 decided
that his toys were not just to be sold seasonally and went to his distributors in order to sale his
current product. In 1954 during a business trip to England a purchasing agent complained to
Godtfred that the toy department were a mess: toys lacked of systematic organization. This
comment moved Godtfred to consider the “LEGO system of play” due this in 1958 the company
changed the design of its brick to match its current form. Ole Kirk Christiansen died and
Godtfred Christiansen assumes the head of LEGO.
, LEGO CASE 3
In 1960 a fire destroyed the LEGO’s group wooden warehouse and Godtfred Christiansen
decided not to resume the wooden toy production. In 1961 looking for expansion and opening
Godtfred realize that he needed to sell his product world wide, for that reason he started to build
the Billund Airport this move make easy to bring guests and business connections to visit the
factory. In 1963 Godtfred laid out ten principles of “Good play” the defined LEGO product
characteristics. In 1967 the company reach the ability to produce LEGO bricks in 218 shapes. In
1968 since Godtfred felt the necessity to expand his showroom center he realize that a theme
park would be a great idea to show his products and then LEGOLAND was founded.
Furthermore, the group expanded its audience in 1968 with the larger “DUPLO” bricks for
children under 5 and 1977 were launched LEGO technic line for teens. By 1980 about the 70%
of Western European families with children over 14 years old owned LEGO brick.
Executive Summary
The LEGO Group is a Denmark toy company founded in 1932 by Ole Kirk Christiansen.
The firm has been in the market for some time and was used to have stable growth and
profitability. However, the situation changed at the beginning of the 2000s, when the brand
couldn’t maintain its steady ground. During this period of time sales decreased by 29% to DKK
6.8 billion and the company lost DKK 935 million, which led LEGO to the edge of bankruptcy.
Corporate and Competitive Strategies Used
The LEGO Group is pursuing a corporate growth strategy based on differentiation, which
is fundamental for the success of the company, since their costumers choose to buy the products
based on quality and not so much on price. The firm’s competitive advantage is built upon
innovative products that promote creativity and fun when playing.
LEGO CASE: The Crisis
Angel Flores
Jose Gonzalez
Hanny Medina
Katherine Sierra
BUS 532 – Business Strategies and Decision Making
Millennia Atlantic University
November 27,2014
,LEGO CASE 2
LEGO: THE CRISIS
Background
History of the LEGO Company found it’s begging in 1916 when Ole Kirk Christiansen
bought a woodshop in the rural Danish village of Billund and began to build houses and furniture
for farmers. In 1932 the financial situation of the company got worst and Mr. Christiansen found
he in the necessity of dismiss all his employees. Shortly after Mr. Christiansen suffer the lost of
his wife with the responsibility of his four sons had the idea of create toys for his children
looking for relief their sorrow. After realizing how happy and pleased were their children he
thought that would be a good idea to star building toys.
In 1932 since the sales of its toys were running slow Ole Christiansen thought that
perhaps the company needed a good name then he wanted to convey the Danish expression “Leg
godt” which meaning is “playing well” in a short word that was easy to remember and that was
how the name of LEGO came through. In 1936 the company started registering its profits, due
that Mr. Christiansen decided that was time to optimize its process by acquiring high-end
equipment. In 1942 a fire consume the workshop and all the drawings and models were
destroyed then Mr. Christiansen started a the construction of a new and bigger factory and went
to Copenhagen looking for a new plastic-molding machine that has just arrive to Denmark. He
started to produce plastic bricks after experimenting with some different figures.
In 1947 after the introduction of the Ferguson tractor; the plastic brick toys became a
success. Unluckily the sales were dropping during the summer and the company had too many
toys in stock then Godtfred Christiansen who joined his father on this venture in 1932 decided
that his toys were not just to be sold seasonally and went to his distributors in order to sale his
current product. In 1954 during a business trip to England a purchasing agent complained to
Godtfred that the toy department were a mess: toys lacked of systematic organization. This
comment moved Godtfred to consider the “LEGO system of play” due this in 1958 the company
changed the design of its brick to match its current form. Ole Kirk Christiansen died and
Godtfred Christiansen assumes the head of LEGO.
, LEGO CASE 3
In 1960 a fire destroyed the LEGO’s group wooden warehouse and Godtfred Christiansen
decided not to resume the wooden toy production. In 1961 looking for expansion and opening
Godtfred realize that he needed to sell his product world wide, for that reason he started to build
the Billund Airport this move make easy to bring guests and business connections to visit the
factory. In 1963 Godtfred laid out ten principles of “Good play” the defined LEGO product
characteristics. In 1967 the company reach the ability to produce LEGO bricks in 218 shapes. In
1968 since Godtfred felt the necessity to expand his showroom center he realize that a theme
park would be a great idea to show his products and then LEGOLAND was founded.
Furthermore, the group expanded its audience in 1968 with the larger “DUPLO” bricks for
children under 5 and 1977 were launched LEGO technic line for teens. By 1980 about the 70%
of Western European families with children over 14 years old owned LEGO brick.
Executive Summary
The LEGO Group is a Denmark toy company founded in 1932 by Ole Kirk Christiansen.
The firm has been in the market for some time and was used to have stable growth and
profitability. However, the situation changed at the beginning of the 2000s, when the brand
couldn’t maintain its steady ground. During this period of time sales decreased by 29% to DKK
6.8 billion and the company lost DKK 935 million, which led LEGO to the edge of bankruptcy.
Corporate and Competitive Strategies Used
The LEGO Group is pursuing a corporate growth strategy based on differentiation, which
is fundamental for the success of the company, since their costumers choose to buy the products
based on quality and not so much on price. The firm’s competitive advantage is built upon
innovative products that promote creativity and fun when playing.
