This report discusses the role of effective leadership in improving the profits of Lego Group and implementing changes in the company. It explores the changes made in Lego Group since 2004, Jorgen Vig Knudstorp's leadership, and provides recommendations for sustaining success in the market.
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Leadership and Change
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Table of Contents Introduction......................................................................................................................................3 Main Body.......................................................................................................................................3 Q1) Changes made in Lego group since 2004 by using theories................................................3 Q2) Jorgen Vig Knudstorp’s leadership of the Lego Group.......................................................6 Q3) Recommendations for the Lego Group................................................................................7 Conclusion.......................................................................................................................................9 References......................................................................................................................................10
Introduction In order to survive sustainably in the market it is important that the leaders and managers of an organisation continuously analyse the condition of business in market so that effective changes can be brought which can help in increasing the productivity and profitability of company. The employees must be highly empowered and engaged so that they can accept changes effectively and use their skills and abilities in improving the profits of company(Oreg and Berson,2019). Leadership plays an important role in minimising the resistance and encouraging implementation of change in the company so that the business processes and operations can be made effective along with enhancing sales. In this report the role of effective leadership in improving the profits of Lego A/S which is a Danish toy production company based in Billund will be done. The company is renowned for its Lego-brand toys which are mostly interlocking plastic bricks and has also built various amusement parks along with having retail stores. In this report the leadership and change management theories will be discussed which helped it in improving its position in market. Also recommendations will be given so that the company can remain successful in the market and accept changes in an efficient manner. Main Body Q1) Changes made in Lego group since 2004 by using theories Lego Group is a company based in Billund, Denmark which manufacture plastic construction toys which consist of interlocking plastic bricks through which children can construct various structures which also help in their learning. The company was established by Ole Kirk Christiansen in the year 1935 and since then the company has become highly renowned its toys across the world. In the year 2003 and 2004 the company however faced losses of over $400 million on annual sales of just $1 billion as the company struggled with providing the customers with the products they desired along with ineffective management of costs of production(Adserias, Charleston and Jackson, 2017). In order to help in the survival of the company its CEO Jorgen Vig Knudstrop introduced various changes in the company so that the operations could be effectively manages and cost of production could be controlled. There were several steps taken by the CEO like cutting thousands of jobs, cutting the number of bricks produced in half, developing the products as per the specifications of customers and increasing innovation, sourcing etc. All these changes helped the company in controlling its costs and
improving its production processes so that the productivity of company can be increased. With the help of effective leadership skills Knudstrop was able to implement changes in the company along with improving the efficiency with which the employees accepted change. This also helped in improving the efficiency and performance of employees so that high value creation in company can be done so that better customer satisfaction can be achieved. With the help of strategic leadership style Knudstrop was able to efficiently involve employees in decision making process so that their ideas and view points can be considered and innovations can be brought in the company products(Gliddon, and Rothwell, 2018). This leadership style also helped in improving employee engagement in the company which increased their commitment towards the company and also helped in increasing their acceptance of changes. Also this style help the company in achieving its vision on time along with remaining competitive in the changing economic and technological climate. With the help of this leadership style Knudstrop was able to encourage the employees in accepting changes in organisation so that they can enhance their productivity so that waste or errors can be reduced thereby improving the quality and efficiency of the products manufactured by company. This style helped in introducingchangeseffectivelyincompanylikemaking theproductionprocesseshighly efficient so that high quality products can be produced along with reducing the cost of production, rapid innovation, streamlining operations etc. With the help of increased employee engagement the company was effectively able to implement changes in an efficient manner. Knudstrop used McKinsey 7S model so as to bring rapid change in the organisation's culture which can help in bringing transformation in the company in an effective manner along with increasing the engagement of all the employees in effectively implementing change in company(Ceil, , 2016). This also help in improving the quality and cost effectiveness of products which are produced by company so that high value can be created for customers. After facing huge losses in 2004 it was important for Lego to introduce effective changes in company so that it can successfully survive in the market and increase its profits. As per this model it is important that the internal factors of the company are changed effectively so that with the help of overall changes in the 7S of company effective changes can be brought in the company. The 7S involved in this model are:Strategy: It is related with changing the strategies of company so that a competitive advantage can be achieved in market which can help in achieving the company's goals
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and mission on time. Knudstrop changed the strategies of Lego so that with the changing tastes and preferences of customers the toys can be innovated so that competitiveness of company can be increased(Lazaridou, 2019).Structure: It is the way in which business divisions and units are organised which affects the way in which work in company takes place along with the workflow. Knudstrop adopted a functional structure so that all the departments can perform their work efficiently and interdependence among departments can help in improving the workflow so that goals can be achieved efficiently.Systems: These are the processes or procedures which affects the way in which activities are carried out in company along with decision making in the company so tat effective decisions can be made. The system in Lego was changed in such a manner that all the departments had to complete their daily activities in an efficient manner so that the overall targets of company can be achieved on time(Hunt,and Chalmers, 2017).Shared values: These are the core values or beliefs in the organisation which affects employee behaviour and the way in which they preform their work so that target can be achieved effectively. In Lego changes in the shared values were made so that the employees could be encouraged to think innovatively which an help in completing tasks in an efficient manner.Style:Itisthemannerinwhichchangesandleadershipareimplementedinan organisation so that work can be effectively completed and changes can be accepeted by employees. Knudstrop adapted strategic leadership style which helped in increasing employee engagement so that changes can be effectively brought in company along with encouraging change implementation in company.Staff: This refers to the capabilities of staff of company which was improved in Lego by involving them in decision making so that their views and opinions can be valued in company which can help them in feelingvalued. Thishelped in increasingtheir commitment towards company which helped them in efficiently accepting changes so that their productivity can also be enhanced(Dumas and Beinecke, 2018). Skills: These are related with the competencies of employees of company which help theminacceptingchangeseffectivelyandimprovingtheirabilitiessothathigh productivity can be achieved.
Q2)Jorgen Vig Knudstorp’s leadership of the Lego Group Lego is a renowned brand known for its plastic toys which help the children in using their imagination so that they can form structures and can learn while having fun which has helped the company in growing in market. Effective leadership is important in an organisation as it help in directing the skills and abilities of employees towards achieving common goals of company along with accepting changes so that they can be efficiently implemented in company. Lego faced huge losses in the year 2004 which required the company to bring changes in its processes and operations so that effective changes can be implemented in company so that it can remain competitive in market(Kirton,2017). Knudostrop used strategic leadership style which helped in effectively implementing changes in the company so that competitive advantage can be achieved by changing the processes and operations in company with changing economic and technological environment. With the help of this leadership style Knudostrop was able to gain the support of employees by involving them in decision making so that the employee engagement in company can be increased which is important in implementing changes efficiently in company. The leader of Lego followed on following central element so that highly effective growth can take place in company: Setting clear direction so that the employees can be encouraged to work towards achieving goals set by the leaders in an efficient manner. Restoring competitiveness by focusing on customer's likes and dislikes so that they can be offered with products which can create high value for them. Reducing the level of risk by right sizing activities, cost base and assets to a lower revenue base so that the production costs can be reduced along with lowering the risks involved in production of toys. With the help of effective leadership skill, Knudostrop was able to make decisions like improving the liquidity and financial base of the company by selling off Legoland theme parks, focusing on its core competencies, reducing cost related with manufacturing of products etc. All these decisions helped the company in improving its position in the market by reducing the costs of production so that highly effective results can be achieved.Jorgen Vig Knudstorp’s leadership helped the company in recovering its losses so that it became 5thlargest toy producer in the world by applying effective leadership style so that employees can be encouraged in accepting and implementing changes in company effectively. This leadership helped in empowering the
employeesso that they could make effective decisionswhich helped in improving their productivity and quality of work. Also the loyalty of customers towards company helped it in serving to multiple generations of families so that the sales of company can increase along with enhancing their confidence in its products which can help in increasing its profitability. It can thus be said that the leadership skills of Knudstorp has been highly effective which helped it in improving its position in market along with reducing its manufacturing cost. Also with the help of flexible working hours the employee engagement towards company increased which improved their performance so that the goals and objectives of company can be achieved on time(Chang,Chen and Chou, 2017). The positive impact of using the strategic leadership style byKnudstorp is that it helped in implementing changes in Lego Group in an efficient manner so that the effectiveness of company in the market can be increased. Further this also increased commitment of employees towards company thereby enhancing innovations in the company so that the changing needs and wants of customers can be efficiently satisfied. However the negative impacts of this style is that the framework of decision making in this style is not flexible which can impact the decision making process in different situations. Also as the future conditions are unpredictable this can create an impact on the ability of making decisions by leaders for long term. Thus with the help of this leadership style the company has also been able to bring agile transformation in its corporate digital departments in early 2018 which has helped in introducing new digital operating model in company. This has helped in improving the efficiency of company operations so that the time taken and the number of errors and wastage has reduced thereby improving the quality and efficiency of company. Also with the help of this style digital transformation has been possible in the toys of company helping it ion dealing with the changing requirements of customers in market(Sterrett and Richardson, 2019). Thus with the effective implementation of leadership theory a company can improve its position in market by improving the efficiency and effectiveness of employees along with enhancing their productivity so that high quality products can be produced and competitive advantage can be achieved. Q3) Recommendations for the Lego Group From the above discussion it can be said that leadership plays an important role in bringing changes in the company along with encouraging the employees to accept the changes so that thy can be effectively implemented in company. This can help in improving the condition of
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company in the market by increasing innovation in its products through increased participation of employees in making decisions and improving employee engagement. Bringing continuous change in the company can help it in evolving with the changing economic and technological changes so that productivity can be improved. It is essential that such leadership style is adopted in the company so that all the employees can be involved in making decisions so that innovations can be improved and new ideas can be encouraged in the company. In order to sustainably survive in the market it is important that change and innovation are continuously brought in the company which can help it in gaining a competitive edge in market. Following are the recommendations which can be followed by Lego so that it can survive successfully in the future:Streamlined product line: It is important that the product line is streamlined so that certain products can be focused which can help in improving the quality of products so produced and also in reducing the cost of production of company. The core competencies of company must be focused so that effective products can be formed along with improving innovation in them(Haake, Rantatalo and Lindberg, 2017).Innovation within reason: It is important that innovations which are brought in the products must be in accordance with the needs of customers so that toys which can help in improving customer satisfaction can be produced. The products which are less risky must be developed by the way of new ideas so that competitive edge can be gained.Small number of suppliers: Lego can reduce the number of suppliers so that prices can be stabilised so that effective supply chain management can be produced which can help in reducing waste and cost of supply so that high profits can be generated in company.Open innovation: It is important that innovative and new ideas are encouraged in the company which can help in encouraging the employees in coming up with better ideas so that products of company can be improved and competitiveness of company can be improved. Focus on large retailers: It is important that distribution is cut out to small retailers as this can help in effectively forecasting the demand in market, managing the inventory efficientlyandcustomizationofproductssothattheneedsofcustomerscanbe effectively fulfilled.
The company can use the above recommendations which can help it in acquiring the opportunities in market so that innovation can be brought in its products which can help in improving the market share of company in market. The company can also make use of digital technology so that improvement can be made in the products which can help in improving the quality of its products. Also the toys can help the children in finding alternatives to video games and can also help in their learning through building various structures so that their creativity can increase. 3D models can also be used in Lego so that deeper insights can be produced regarding the ways in which work must be completed along with improving the performance of the employees. Lego can diversify its growth by expanding in various other products through rapid innovation so that better products can be provided top customers whichcan help in enhancing their experience along with improving the brand image of company in market. Conclusion From the above report it can be concluded that effective leadership plays an important role in the sustainability of company as it help in motivating the workers to use their skills and abilities in an efficient manner. Leaders also encourage implementation of change as it is important to exist in the rapidly changing market so that innovative products can be made available to customers thereby enhancing their experience. Also it help in increasing employee engagement which is important in effective implementation of change in processes of company.
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