Lego's Business Model Transformation: Smart Connected Products Impact

This case study examines Lego's business model in light of the increasing impact of artificial intelligence and smart connected products. The company, a toy manufacturing giant, faced challenges that required a re-evaluation of its business model. The study highlights Lego's need to adapt to the changing nature of products and the disruption of its value chain due to smart technologies. It notes that Lego's failure to adequately incorporate smart connected accessories into its products led to a decline in sales and workforce reductions. The analysis suggests that product differentiation and development, particularly through the integration of smart connected features, are crucial for Lego to compete effectively in the evolving market. The case references academic sources to support its findings and recommendations, emphasizing the importance of strategic diversification and innovation for business model sustainability.

Business Model of

 The increasing impact of artificial
intelligence and better communication
network, the business models are found to
suffer from a worse situation.
 The toy manufacturing company Lego,
Denmark to re-think about its business
model.
 The increasing impact of the technology
and development of the smart connected
products.
Introduction

 The toy and play set manufacturer, Lego, aims at
providing an innovative and enjoyable experience
through the toys that they manufacture
 Considering the increased demand of the
products, the company decided upon change in
its business model and pursued such paths that
could easily leverage its brand names.
 In fact, it has also been seen that Lego was
associated with various television channels,
theme parks, motion pictures as well as video
games (Lego.com, 2018).
Present business model of
Lego

 Lego has been found to re-build its business
model because the company has been
found to reach near bankruptcy.
 This situation eventually leaded to cutting
of around 1,400 jobs that is almost 8% of
the entire work force of the company
globally.
 The changing nature of the products due to
the advent of the smart connected products
has definitely disrupted the value chain
proposition of the business as well.
Present opportunities and threats
due to smart connected products

 Lego, the toy manufacturer failing at providing
smart connected product has resulted in the
decline of the sales of the product.
 It can be easily recommended that Lego can
easily include the concept of smart connected
accessories in its products.
 Product differentiation and product
development is the only means of fighting
against the increased competition in the
market.
Conclusion

 Aversa, P., & Haefliger, S. (2016). Building Business Model
Portfolios: Implications for Strategic Diversification.
 Lego.com (2018) About Us Retrieved from:
https://www.lego.com/en-us/aboutus [Accessed on: 23-4-
2018]
 Zhang, Z. K., Cho, M. C. Y., Wang, C. W., Hsu, C. W., Chen,
C. K., & Shieh, S. (2014, November). IoT security: ongoing
challenges and research opportunities. In Service-
Oriented Computing and Applications (SOCA), 2014 IEEE
7th International Conference on (pp. 230-234). IEEE.
 Zott, C., Amit, R., & Massa, L. (2011). The business model:
Recent developments and future research. Journal of
Management : JOM, 37(4), 1019-1042.
References

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