Example Of Case Study On Lego Friends
In Billund, a Danish carpenter named Kirk Kristiansen started selling wooden toys of high quality for the children in 1932. After two years he gave name to the company, Lego that was the combination of two words of Danish language that meant PLAY WELL. Later he learned that it meant as Put Together in Latin.
Before reaching to the theme based kits, Kristiansen was from the very beginning was very committed to the quality of the manufactured “wooden toys”. His son tried to cut down the cost of the toys and shipping them by coating with merely two coats rather than three of the varnish that was specified by his father. Infuriated father ordered his son to seize the shipment of the toys and complete his job accurately. Lego in 1949, after making the purchase in Denmark of its first plastic molding machine, it started manufacturing building bricks made up of plastic that were based on the British design that was patented, also incorporated knobs that were now-iconic. In order to enhance the clutch/holding power of the bricks, Kristiansen improved design by adding up the tubes to underneath, when tee bricks shattered together. In 1958, Denmark, his design and this edition of brick was patented and that is still used till 2012. This re-engineered bricks became the base of Lego Play System that was a standard design which makes sure all the bricks and the elements of Lego linked up together, from the bricks that produced in 1958 along with the elements that were produced by 2012.
Traditional” resources and capabilities of Lego
The free-form building play was considered to be the original perception of Lego brick. By 1967, beyond the basic brick formed originally, the product line of the company had extended in order to include further two hundred elements for interlocking that included the wheels, doors, windows, roof tiles, flags and trees. These additional elements that were added facilitated children in order to build more practical creations; however, there were just few photographs were present on the box for guiding the children during building process.
Resources and capabilities necessary to transition into theme-based kits
In 1978 it stated to introduce sets with were having themes that included general designs of the bricks and the parts, requiring further resources as well as capabilities for it. Over the next 30 years, Dozens of the themes were being introduced and phased out, near the beginning themes that were introduced like Town, Castle, Space and Pirates covered quite a few decades and generated interrelated subthemes, however afterward themes that were introduced, produced merely just for 1 to 3 years.
In 1978, three sets of theme that was the now-iconic mini figure was launched i.e. Castle, Space and Town. The very first diminutive figure was having the painted face with the moveable legs and arms in toy industry building. These Mini figures been not permitted to hold guns or some other type of modern armaments, because of the anti-violence policy of the company related to family friendliness. However, an exemption was made in order to permit knights and some other historical based themed figures in order to hold swords and other types of historically perfect weapons. Even though these themed sets supported restricted role-playing and also provided the motivation through the pictures and the images on packaging, that were designed in order to offer children with chances of unobstructed building play. By 2006 sets of free-form building produced fewer than 20 % of the company’s profits. As subsidiary of US observed that this is the thing that parents wants to purchase but not the thing what children desires to.
Till 1999 TLG was considered to be unique among all the key toy manufacturers in staying away from licensing names and the likeness of the branded lettering for the products. This was considered to be the biggest business in toy industry, for approximately accounted to be twenty five percent of all the toys that were sold. In 1998 after an unsuccessful year, TLG urged its US subsidiary to begin Star Wars product in combination with release of 4th installment in admired movie franchise. It took about 6 months in Billund for the executives in order to agree with the agreement; it takes long time because it not merely represented new approach of doing the business although it also used word i.e. war and the addition of armaments also violated the anti-violence policy of the company. The antagonism was so strapping that TLG agreed barely when the grandson of the Kristiansen himself individually supported the project. TLG launched 14 kits of Lego Star Wars in 1999, which marked sales of 2 billion.
The company was having augmented dependence on the licensed products that led to higher licensing fixed cost. The company has to see to these increased expenses to remain profitable. In 2004 products that were licensed accounted for fifteen to twenty percent of the sales of the company, and its profits from the themed sets and the licensed kits reached to seventy percent by 2006. While triumphant at generating the sales, licensing changed the risk profile of the company. As one analyst of the toy industry revealed that present hit can swiftly twist into the tomorrow's failure, adding instability that Lego have not at all faced in past.
Precise design skills were been required by those Licensed kits in order to decode the wide-ranging characters and the settings, well recognized from the movies into Lego design of the elements and the minute figures. The fantasy settings required specific pieces in order to make them pragmatic, which requisite new molds, methods of production as well as inventory. The victory of these kits inveterate that stories and pragmatism were tempting, however preformed pieces restricted that possibly would be built with kits that came with more detailed directions in order to guarantee the exact building of what considered being more a delicate model than vigorous plaything.
In order to reduce the fixed costs of licensed stories, in 2001 TLG launched Bionicle that was row of story-based toys, consisted of 17 innovative figures that were robot-like, built with plastic not with the Lego blocks that were snapped together. The company shored up the intricate story line of the Bionicle with movies, websites, video games, books and cartoons, hence introduced the new characters and perspectives. It was a hit, however contrasting to the previous story-based products of the company, not any of figures were having a meaning autonomous of their own story.
The key decisions made by the new CEO
The board of TLG appointed its first CEO Knudstorp, outside the naissance family in 2004. He make number of major decision in order to make the company more successful. He was 35 years old, an ex- consultant at McKinsey & Company, developed three-phase approach that paying attention to the company's preliminary efforts on guaranteeing its survival.
His first primary decision was to stridently reduce the expenditures by reducing 2000 jobs along with the negotiations with workers' union in order to plan cut down more jobs. He raised the cash by selling the company’s office properties all around the globe, which had constantly owned rather than been leased out. In order to improve the liquidity, TLG left theme park business through selling the Lego land for 800 million dollars to Blackstone in the year 2005. The new appointed CEO stopped up in-house development of the video games in support of the licensing contract and eradicated company's software division. Company also outsourced its Information technology to IBM.
Knudstorp insistently wanted to balance design of the Lego kits with the cost of its manufacturing. He paid attention on plummeting number of exclusive elements that were used in company's designs; about half of these were abolished very speedily, and there left merely 4000 by 2011. The chief designer of the team of Lego Harry Potter explained the modification in the designing process i.e. Models go in the course of numerous evolutions of their development prior to their completion. At times it's the case of refinement of the elements in order to physically molded them to Lego bricks; sometimes it may be the case of tumbling amount of the new elements that are involved, i.e. the fire of orange color in kits of Lego Harry Potter became as water when it was molded in blue color; brown clubs that were used by Beaters in the Quid ditch were been molded it to orange that were used like carrots in some other kits. The quantity of colors that were used, reduced by fifty percent; costs of resin were cut to half; cycles of production were streamlined in order to reduce the changeovers; the figure of the suppliers was compacted by eighty percent and fixed cost reduced from seventy five percent to thirty three percent. His main focus of major decisions was also the company’s supply chain. Knudstorp considered the supply chain to be the circulation system of company. And he considered it be fixed to kept the blood flowing of the company.
The company’s providers of 26 logistics were merged to 4 and a distinct new center of distribution that was directed by the DHL Solutions by a contract of outsourcing that was constructed outside the Prague, in order to substitute 5 centers in Germany, Denmark along with France. After its completion in 2006, it reported 30 percent costs lower than its operations that were carried out in 2005.
TLG made an announcement in 2006 that it would shut down the company’s Swiss factories along with the outsource, a large amount of manufacturing to the Flextronics that was a company of an electronics manufacturing, which previously produced the products of Lego Duplo. The quantity of the company’s employees crashed to 5300 in the year 2006 from 7300 in the year 2004; however when plan of outsourcing was completely executed in 2010, the count was probable to drop down to approximately three thousand. The outsourcing predicted to decreased share of the company’s products that were manufactured internally from 95 % to 20 %. However in 2008, company made a decision to again take back it’s the majority of production and go again to manufacturing the majority of products internally. Even though it had originally finished to that point that manufacturing to commoditized process, TLG found that it might do that at lesser cost for the reason that Flextronics have no better technology or improved access to raw material, only having lesser salary for its workers. When the company’s executives took interview from their top 20 clientele, they established with the point that their retailers had no need to get daily or the next-day delivery of the products that company been providing. So to change it to weekly delivery that enhanced the rate of on-time delivery to 92 % in the year 2008 from 62 % in the year 2005.
Lego Friends Line
As the anthropologists had experimentally reveals that the girls are different from boys in their preferences along with the manners of play, they not merely want colors that are friendlier but also wants plenty of the details, and the girls took numerous breaks throughout building to start on storytelling as well as rearranging. On other hand Boys are inclined to more linear as well as they construct quickly in order to get end results swiftly. Boys also inclined to intermingle with the figures in third person while the girls predicted themselves on figures they used to play with. In 2011, consequently, the blocky Lego minute figures were not became popular with the girls i.e. honestly girls hatred him that was revealed by Mads Nipper. As result of it TLG had practically surrendered the marketplace for the girl toys to the rival products like Mattel's Barbie, American Girl dolls, Disney's princesses etc.
Lego Friends was company's 6th product that were intended for girls: Scala that was launched in 1979 was line of the kits that were containing tiny plastic parts intended for assembling the necklaces and the bracelets; in 1979, Fabuland was introduced that enclosed mini figures having the heads and bodies of animals and clothes of humans; Paradisa in 1992 was introduced that included bricks with pastel along with the mini figures; Belville in 1994 was introduced that included the larger expressed figures and the elements that were pastel-colored; and then in 2003, Clikits was introduced that was considered to be an arts and a crafts system designed for creating the necklaces and the bracelets. Scala and Clikits were unsuccessful because there was no integration of brick products of the company, and the other product lines had not properly dealt with gender distinctions in play patterns of the children.
Lego Friends launched 29 pragmatic female tiny doll figures, which not merely having back stories although having thousands of combinations of customizable hair as well as fashion. In kits of the Lego Friends, bricks were companionable with all of the further Lego bricks; however these bricks were molded in fresh pastel colors in order to appeal the girls.
In view of all these details and past experience of Lego in this regard, my prediction regarding the Lego Friend line is that it may become the successful line for the company and will possibly yield higher profits, because the features of this line are far better than the lines that were introduced before in the girls’ toy. It has introduced the figures with multiple variations that are tempting for the girls, and have used the colors that attract them. In my view point Lego have hit on the very right formula in order to develop its market to fully include girls, as now in this line it focuses on more on the bricks compatibility that were not there before in hose lines that were previously launched for girls. Further this line is fully in accordance to the interests of the girls and had properly dealt with the gender differences. And it is expected to yield higher profits for the company.
Recommendations for continuous success of Lego
A number of factors were recommended for the Lego to continue its success. It must lower its fixed cost of licensing that it already done by introducing Bionicle; it must further lower its cost by outsourcing and taking its manufacturing units/ factories to the areas with lower labor costs. It must should kept in mind its competitors like Mega Bloks that are producing the similar products as of Lego even at lower costs and formulate the strategies in order to remain successful in the market.
Start providing the delivery services on weekly basis to its retailers rather than on daily basis to reduce its cost. It is also recommended that they should use their website and other blogs for new ideas rather than spending large developmental costs in generating new ideas, it could be served as a cheapest and tremendous source of new and innovative ideas that may leads to increased sales and doubled profits.
It is an area of rapid changes all around the world, customers’ expectations and demands are constantly changing, so Lego should have to develop new products in order to meet the emerging expectations of its customers, to remain competitive among the rivals and keep up the market share in its industry. But here, Lego in ray of new development should not forget its pet products that found its basis of success i.e. Lego bricks. And the new developments must be made in accordance of the interests of the targeted customers.
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