LEGO, which means, “I assemble”, was created by a company who is now the fourth largest traditional toymaker in the world. LEGO’s undying commitment towards developing the imaginations of children experienced tremendous growth in the beginning of their business lives. The small plastic pieces that created hours of endless entertainment were an unstoppable hit in the toy industry but in 2004, LEGO was on the brink of failure. Once Jorgen Knudstorp took control, this once successful toymaker was able to re-build itself. In 2004, LEGO’s revenue increased to a whopping 165% and continued showcase outstanding percentages when their return on invested capital reached over 160% in 2010. To gain insight on their success and possibly predict …show more content…
The company realized the steep production costs associated with making each brick component. As a result, LEGO lowered their expansion to a minimum and organized the business into separate units to foster a robust operating system. Decisions were made to move manufacturing back in-house where systems were then developed to measure the costs. The team was also familiarized with scenario development so the potential highs and lows of sales could be captured. Through experiencing this vast amount of change, it was imperative that shifting the motivation and involvement of LEGO’s employees was an extremely important aspect of their overall strategy as well. Employees still enjoyed their autonomy, but with restrictions so that the company would not steer away from their core functions and values. To guarantee the happiness and satisfaction of their employees, a modified incentive system tied management incentives closer to the results of an annual customer satisfaction survey and the sales teams’ incentives were tied to actual sales. By coding results into something numerical, LEGO and its employees were able to fully understand the functionality of the company and maintain their higher quality products and customer …show more content…
To refer back to the Star Wars example, relying on different industries can influence how successful a product is. If there are sub-par reviews or expectations are not met, LEGO will be subject to these effects. The growing pressures to meet technological interests held by consumers pose another threat. It is quite common for children to utilize their time with more after school activities yet the time dedicated toward play is now being spent on more modern entertainment, segmenting away from toys. This usually includes a type of technology such as a computer or game console. Even if it is not online, modern toys are almost always more advanced compared to LEGO’s products. Not only are fad toys complex in nature, they also have a shorter product life cycle. Attempting to launch these products is not really an option for LEGO because their focus tends to surround compatibility and simplicity, not