LEGO+Case


 * LEGO Case**

====**Immediate Issue/Problem Being Faced:** LEGO is facing the crisis which might leads company bankruptcy due to four main problems. First, competitors was increasing due to change of technology. Electronic games were replace LEGO's toys, also there are many substituted toys selling in many places such as Walmart. Second, industry of toys is changing. The preference of children is changing too. They prefer more multimedia products world like video-games. Third, new retailer use outsources of production and assemble manufacturing from Asia which is a much more cheaper way for production and transportation. Last, there are look-alike products that similar LEGO elements which could substitute LEGO's traditional toy. All of these reasons lead LEGO sale rapidly down, and near bankruptcy. They must come up with a strategy in order to become more efficient, cut costs to reduce debt and be competitive in the market. ====

**Basic Issues: **
- LEGO started with wooden toys which focus on creative playing/ building products by Ole Kirk Christiansen in 1932. - LEGO was passed to Christiansen's son, and was success with more than 5 billion sale in 1988. - In 1998, LEGO was expand many products lines such as books, TV, watches, etc. cause company get loss around 300 million. - LEGO explosive growth in 2000 due to intellecturual properties and popular movies like Star Wars and Harry Potter. - They created LEGOLAND amusement parks which targeted an older audience in US and Europe. - In 2003, Star Wars and Harry Potter was not poplular no more, LEGO's Star Wars and LEGO's Harry Potter were turning downward as well. Also, LEGOLAND was draining earning, the cost was getting increase. - President of LEGO saw company in deep trobles, they asked Kundstorp, director od strategic, to develop plan in order to save company in Octorber 2004. - Kundstorp come up with "Shared Vision" plan in order to reduce cost, eliminate debt and return profitability to company. -production costs were too high and company was bleeding money

**Urgency/Importance: **
- Regarding nearly bankruptcy situation from loss net income since 2003-2004, LEGO must quickly increase sale and profit while reduce cost and eliminate debt too. - LEGO are important to turn LEGO's traditional toy to LEGO's innovation toy in order to keep company in the toy market in the pressent situation. -This is a very urgent issue because of how much money the company lost in the past years and the sheer amount of competition that is now on the market.

**Decision Criteria: **
<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">- There are many competitors offer cheaper and more varieties toys. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">- Electornic games are evoked. What should LEGO do to compete with this? <span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">- New retailers have their manufacural located in Asia which allows for lower costs than LEGO.

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Alternatives:
<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">-Reduce costs and return the company to profitability, revitalize the core product lines and transform the business platform, and develop new innovative play experiences to profitably grow the company <span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">-Develop new products while staying true to their identity -improve development effectiveness. possibly outsource for cheaper production. -License the LEGO brand to external partners for T-shirts, computer games, etc. -allow the customer to create a toy to their liking -Development new product to fit the demand of adults, such as model.
 * <span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Missing Information: **

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">- LEGO's toys information divided into categories, cost and sale.
<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">- Innovation plan in the past. There are only product innovation one time since 1932 to 2004.

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Assessment of Alternatives:
===1- This is the ideal situation but definitely not the easiest. This will allow the compny to refrain from completely changing its brand and instead focus on the areas in which they have excelled over past years to turn the business profitable again.=== ===2- This is a trickier thing to do, because there is only so many things they can do without getting rid of the bricks. This branches into #5 because it opens up a market for new products by letting the customer design what they want.=== ===3- Asian markets are always cheaper to produce in and if LEGO can trim some of their unnecessary costs, they will be able to reduce debts and this will give them extra capital to possibly explore some of their other alternatives. This could still be difficult because of how cheap the competitors are able to make their products.=== ===4, License the LEGO brand to external partners for T-shirts, computer games, etc. This could create increased production costs because of the special detail they must show towards the personalized products. This will allow LEGO to improve their brand awareness and help to epand their sales market.=== 5, Allow the customer to create a toy to their liking. It will satisfy with various customer needs, but it is difficult to implement the specialized production line and this will increase cost and take more time as the workers become familiar with the new aspects of their jobs. 6, Development new product to fit the demand of adults, such as medol. If we make the adults love our toys, that will improve brand awarement and influence ,which will even inspire them to buy our products for their children.

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Selection of Preferred Alternative:
====Reduce costs and return the company to profatibility. revitalize core product lines and transform the business platform and develop new, innovative play experiences to profitably grow the company. This seems to be what they are doing in the case by a three part plan. The first phase, elimiating debt and returning to profitability, paves the way and is key to the plan being successful. If debt is not eliminated, there will be no profits available for investment of new products and ideas.====

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Assumptions:
====Management and the market stays the same and there is no major changes in any of the production processes. Also, The company stays the course on the 2nd and 3rd phases of the project and goes with thtis strategy to see if it can return the company to profitability. If they change their ideas after the first phase then we will not be able to measure the direct success of the procedures they are implementing right now.====

-Reduce inventory to further lower costs
-Convince employees that dropping the number of components will simplify the business and the manufacturing product. This would save inventory and distribution costs and also prevent inventory from becoming outdated and make it nearly impossible to sell.