Lego Case Study: Financial Recovery

This assignment involves analyzing a case study about LEGO's financial struggles in the early 2000s and their subsequent turnaround. Students must explain the core issues faced by the company, linking them to relevant management theories and strategies. The analysis should focus on LEGO's implementation of focused differentiation and cost strategies to regain profitability within eight years. Submissions are limited to 300 words and must be uploaded via the course website.

3112IBA-WORKSHOP CASE ANALYSIS PREPARATION FORM
Please be aware that this aspect of the assessment task is about PREPARATION for the workshop discussions, late submissions will
NOT be accepted for the workshop submissions.
Your submissions should total and not exceed 300 words per case analysis preparation. You will answer the specific questions outlined
for each case. The case analysis preparation must be submitted via the course site. No emailed submissions will be marked.
Name:……………………………Student No:……………………Workshop No:……………..… Case Study:……………………………....
Briefly explain what is the case
about?
(you can use bullet points for this
question)
 The case is about the financial crisis which the Danish Toy manufacturing company Lego
faced in 2001 and 2003 and the steps it took to recover the difficlut start to make Lego a
profitable conpany in 2014.Revenues of LEGO trippled within 8 years.
 The company incurred a loss of 2.5 billion krona in the financial years 2003 and 2004 .
 In 2003 ,the traditional toy market was saturated and there was stiff competition. Retailers
started developing their own private level products and the company made poor sales in
movie tie-in products.The company recovered the financial loss by implementing proper
maangement strategies.
Briefly explain the management
issue(s)?
(you can use bullet points for this
question)
 The management issues faced by LEGO were :
 The companie faced a cash crunch and negative cash flow could lead to break up of the
company.
 The company could not manage its distribution and supply chain efficently.There was too
much capacity and more stock and retailers were not happy with LEGO.
 There was communication gap in the management and senior management was operating
in silos.
 The product profitablity was not analyzed.
 Management did co-ordinate with major customers, marketing and product development
group lacked continuilty planning.
 There was lack of innovation in the company.
Link the management issue to the
model/theory of the week and briefly
explain the connection.
A company should focus on product innovation and create value for customers.A firm faces 5
competitive forces: bargaining power of buyers, bargaining power of suppliers, threat of new
entrants, threat from substitutes and rivalry among competing firms.LEGO used focused
differentiation strategy and focused cost strategy to recover its financial crisis.LEGO took
measures like attacking cost base and better segmenation strategy.

3112IBA-WORKSHOP CASE ANALYSIS PREPARATION FORM