hbr lego case study

Innovation Under Constraint: Constructing a Turnaround at Lego

Edited for length and clarity.

Brian Kenny: According to Time magazine, just six Lego blocks can be combined in 103 million ways. The name Lego comes from two Danish words that mean "play well," and so they have —the colorful building blocks have remained a top seller since hitting stores shelves in 1949, flexing and adapting in an ever-changing landscape of toys. Today, we'll hear from Professor Jan Rivkin about his case entitled Lego: The Crisis , co-written with Stefan Thomke and Daniela Beyersdorfer. I'm your host, Brian Kenny, and you're listening to Cold Call .

Professor Rivkin is an expert in business strategy whose teaching and research examines the interactions across functional and product boundaries within a firm, and that sounds perfectly suited to our conversation today. Jan, welcome.

Jan Rivkin: Thank you, Brian. It's a pleasure to be here.

Kenny: I can't imagine there are many people who don't know the name Lego. Probably, most didn't know that it means "play well," which I think is a great little insight that comes from the case. And the Latin translation of that is?

Rivkin: “I assemble.”

Kenny: So, just start us off by telling us how does the case begin? Where do we start?

Rivkin: Sure, as the curtain rises on the case in 2004, Lego stands on the brink of bankruptcy. It looks certain that this iconic toymaker will be taken over by Hasbro, or Mattel, or some other large company, or maybe a private equity shop that will break it down into pieces, and Jorn vig Knudstorp, a fresh-faced 36-year-old has just been given the helm of the company, and he has one last shot to save the company. It is do or die.

Kenny: What prompted you to write this case? You played with Legos as a child, I assume, as many of us did.

Rivkin: I played as a child and I played with my kids, and sometimes I still play with them. Sometimes I share with the kids as well. My co-author on this case is Stefan Thomke and Stefan and I had the opportunity to get to know the Lego executives. We were interested in the company for a while, and they were interested in Harvard Business School, as well. So, we had an exchange with their CEO, and with the head of North America, and one of our alums who works at Lego, and they were interested in perhaps understanding more about what they might learn from Harvard Business School. They invited us out first to their North American headquarters in Connecticut, and then onward to the headquarters in Denmark.

Kenny: What was that like? Did you get to see behind the scenes as they make these, the bricks?

Rivkin: It was magnificent going into the Lego factory. Imagine a half-kilometer-long factory filled with injection molding machines, every few seconds churning out new Lego bricks. It was like going into Willy Wonka's factory. I kept looking for the oompa loompas.

Kenny: That's great. Many people probably don't realize that Lego is part of an enormous, ever-changing toy industry. Can you talk about the landscape that the case takes place in?

Rivkin: Yes, that is one of the first things the students discuss when we teach this case. They're looking at Lego on the brink of bankruptcy and asking, "Is this an industry problem? Is it a problem with the company's position? Is it somehow a change in the industry that has undermined the company's position?” And I don't want to ruin the case discussion, but I will say that not all is well in toyland as the case opens There are changes in the customers. There is a threat of substitution. There are threats of new entry. Kids’ play habits are changing in ways that make the industry as a whole more challenging, but also in ways that particularly undermine the Lego value proposition.

Kenny: Which is?

Rivkin: It’s an interesting question. For Lego, there's a combination of construction and play and education, as well. The company views itself as not simply being a toymaker. They realize, of course, kids love their product and they are making toys, but they also think of themselves in terms of making a difference in the creativity and imagination of children.

Kenny: Can you talk about the origins of the company? It goes way back, 1916, Ole Christiansen.

Rivkin: If ever there were a company with humble origins, it would be Lego. It starts with Ole Christiansen in 1916. He's a carpenter, opens a wood-working shop in rural Denmark. It is not until the 1930's when he actually adds toys. He starts with furniture and household products and his son, Gottfried, is actually the one who gets them in, first into plastic in the late 1940's. Legend has it that he was on a ship traveling with a purchasing agent for department stores and other stores and this agent complained that there was no systematic way of thinking about toys. The toys departments were a mess in stores. That got Gottfried thinking about a system of play which is what led to the Lego system.

Kenny: Break down the system for us.

Rivkin: It all goes back to the brick. Because each brick is interlocking with each other, and because the bricks have been the same sizes since, I believe, the 1950s, each brick can combine with others in many, many ways. As you mentioned at the outset, very quickly, with a handful of bricks, you've got an astronomical number of ways to make a toy.

Kenny: They stuck with their original model for a long time. Change was hard to come by. I loved the insight that it took 15 years to introduce a green brick into the mix.

Rivkin: The family owners were very resistant to any sort of change.

Kenny: Talk about the culture of the company as they grew and expanded and really came into their own.

Rivkin: Going into, say, the 1990s, the company had decades of success. They literally had to limit how quickly they wanted to grow and it was a culture of investment in new products, but really not so much discipline around thinking about how they would react to the future if the market were to change. There was an assumption that they would grow at a pace that they dictated, and the market would buy as many Lego bricks as they could produce. But then, market conditions started to turn in the 1990s, the early 1990s. There was a decline in birth rates in their core markets in Europe and North America. There was a change in the retail situation as mom-and-pop stores gave way to discount retailers who started to charge lower and lower prices for toys, including Legos. The big players like Hasbro and Mattel pushed production to the Far East while Lego was still very much a Danish company. Kids’ play habits changed. Kids had less time for structured play, they were more attracted toward electronic products, their attention spans seemed to have gotten smaller, and all of these things probably made it hard for any traditional toymaker, but particularly for Lego.

Kenny: So, Lego chose to respond in some interesting ways. When they started to face these challenges, they began to extend the brand into different lines of business.

Rivkin: What is really helpful from a teaching perspective about the Lego story is there were actually two efforts to turn around the company prior to the one in 2004. Moreover, each of those efforts, on their face, had some things about it that made sense. The first effort, starting around 1993, was to extend the brand of the products. They looked to other companies with great brands like Disney, and said, "Look, Disney is in so many things. The product line we're currently in seems to have stagnated. What makes sense? Let's take that core asset of the brand and expand into diversity of products." So, they opened amusement parks. They started making video game software, children's clothing, wristwatches. Moreover, in the bricks themselves, they responded to children apparently having less time to play by making it easier to get through the stage of constructing the products and get more quickly to the stage where you play with it. On the surface, these things all made sense. But, in fact, they led to disastrous outcomes. So, a key part of the class discussion is to understand why these things, that on their surface look reasonable, backfired in this context.

The second attempt at a turnaround was bringing in a mister fix-it who did many of the things that you would expect someone to do, right? The restructuring of the organizations bringing in a series of layoffs, streamlining production, producing layers, moving managers around more often, moving design centers out of sleepy old Billund in Denmark into London, Milan, and San Francisco, consolidating the sales force. They start to sell directly to customers. Take that last move, selling directly. It kind of makes sense, right? The retail situation is getting tougher. The mom-and-pop stores are going out of business. You're having to sell through the Walmarts of the world. Surely, it makes sense to go direct to the customer.

Kenny: You've got other brands that have done it. Apple has made that move. Disney has made that move.

Rivkin: Yeah, and once again, this turns deeply, deeply south and so the case discussion centers on why do these things that, on their surface, seem to make some sense, not make sense in this context?

The last part of the case discussion has students struggle to put together a plan to turn the company around. They are put in the position of Jorn, and asked what would they do, and they've got to make decisions about every single function of the company. How will the product line change? How will marketing change? How will sales change? How will they approach their retail partners differently? How might they manufacture differently? To do all that, they'll have to change how they prefer inputs, how they hire people, who they hire, how they train them, and how they manage the company. So, it really is a challenge to come up with an integrated strategic option that will respond to the challenges in the marketplace, will make use of what is unique about Lego, and will avoid the mistakes that the previous two efforts, which seemed sensible, fell into.

Kenny: So, you put the students to work on that. Do you find that there are any students that you have in class who are unfamiliar with Legos?

Rivkin: I cannot remember ever having the student who did not know Lego. Right now, they calculate they serve roughly 80 million children, which is only a small fraction of the world's population of children. But I think among the students, among the children who wind up coming to our business school, we've got a large share who are Lego fans.

Kenny: That's good, so they all feel a connection to the case and so forth.

Rivkin: They do, and we try to reinforce it. Have I shown you the Lego Baker Library?

Kenny: I've seen that; I've seen it in your office. Describe that for our listeners.

Rivkin: The designers at Lego were very, very gracious. Near the end of the case-writing process, they sent to us a Lego model of Baker Library [at Harvard Business School]. It is remarkably detailed. There are features of the library that I had not noticed in walking by the library for two decades until I saw it on the model.

Kenny: We might have to put some pictures of that on the podcast website.

Rivkin: I would be delighted to share my model. At some point, it will be bequeathed to Baker Library itself.

Kenny: Be really careful, I guess. Don't bump into that either; you don't want to take down a wing of the library inadvertently.

Rivkin: So, it turns out that the model is, in fact, glued together.

Kenny: They didn't trust you.

Rivkin: The other thing, you know, I'll share with you, Brian, is (I don't think he'd mind) it turns out that the executives of Lego have unique business cards. They are Lego mini-figures that look like them. And have their names and contact information on the mini-figure itself.

Kenny: That's fabulous. That's great branding, carrying it all the way through.

Rivkin: It is.

Kenny: Can you talk a little bit about the way that Lego, as a culture, manages innovation? People familiar with the toys might just say, “Well these things haven't changed forever. It's the same toy.” You mentioned the system and how it works, but in fact there's a strong innovation engine within Lego.

Rivkin: It is innovation within certain constraints. Each year, roughly 60 percent of Lego sales come from products that are brand new. On the other hand, zero percent of their products, roughly, come from components, or pieces, that are brand new, right, they're the same bricks. And so they need an innovation system that allows them to innovate within the constraints of using the same things. They're also very careful to separate out different types of innovation. They have a very small group that thinks about brand new, out-of-the-box things, but they've got a larger group which thinks about, “Wow, will we create the next Lego brick-based product for our core customer?” They also have engaged in a bit of open innovation. There are large numbers of adult fans of Legos, so called AFOL, adult fans of Lego, who because they love the product, are innovating with the product all the time, and they've got a system by which they reach out to those users of Legos to bring in new innovations. If people are innovating with your products, you know, voluntarily, you'd be nuts not to learn from that innovation.

Kenny: So, the future is bright. They continue to be, by the way, one of the top-selling toys. In fact, on eBay, they were among the top 10 toys that people are reselling consistently.

Rivkin: After the turnaround, their returns skyrocketed quickly, above one 100 percent return invested capital, and they've seen very rapid growth, which continues to this day, so far.

Kenny: You can find this case in the HBS Case Collection at HBR.org. I'm Brian Kenny and you're listening to Cold Call , the official podcast of Harvard Business School.

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LEGO (A): The Crisis

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About The Authors

Jan W. Rivkin

Stefan H. Thomke

Related work.

• January 2014
• Faculty Research

Jørgen Vig Knudstorp: Reflections on LEGO's Transformation

• LEGO (A): The Crisis  By: Jan W. Rivkin and Stefan Thomke
• Jørgen Vig Knudstorp: Reflections on LEGO's Transformation  By: Stefan H. Thomke

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How LEGO® bricks build business innovation at Harvard Business School

Creativity doesn’t always rule the corner office. In the territory of heavy desks and understated colors, executives can seem to favor decisions that match the décor. They might explain that they’re playing it safe or playing the long game. But perhaps they should be playing—period.

“ Think about it: If a company wants to grow, there are really only three ways. The first is to buy other companies. The second is to try to squeeze more out of your existing products. And the third is through new products, services, business models, and ways to reach customers,” says Stefan Thomke, William Barclay Harding Professor of Business Administration at Harvard Business School, making a case for the necessity of innovation .

When Thomke teaches innovation, he plays hard. One might expect raised eyebrows when the faculty chair of the HBS Executive Education Leading Product Innovation program breaks out LEGO® bricks during one of his signature programs. Yet students will soon discover a professor who brings toys into his classroom as a means of illuminating and restructuring business inventiveness brick by brick.

“ When I conducted research for a LEGO Case Study, I learned about a methodology called LEGO Serious Play (LSP). In LSP, specially designed LEGO kits are used to facilitate strategy building, vision setting, and problem-solving sessions for business executives,” Thomke says.

Mastering this kind of play took work. Thomke spent months earning two LSP certifications and adapting the knowledge to his curriculum, all after extended case study research that brought him all the way back to the remote Danish wood shop where LEGO began a century ago. Appropriately enough, the recent LEGO turnaround that Thomke studied only came about after a young CEO dismantled its sagging corporate structure and married the company’s imaginative roots with sustainable, user-centric product development processes.

LEGO bricks aren’t the only unexpected place from which Thomke draws innovation inspiration: “Several years ago, I came upon the realization that magicians can be some of the best innovators ,” Thomke says. “Night after night, they have to come up with new tricks in order to entertain and wow their audience. I had the great fortune to run into Jason Randal … and over the course of many months, we developed a common set of principles that work well for innovation and are inspired by what magicians like Jason do.”

Some may still scoff at toys and tricks in the business classroom. Perhaps they forget that the best, most constructive learning is inherently fun. The lucky among us can remember youthful joys of solving the world’s mysteries. Even luckier are those who still play this pioneering game. The truly fortunate are playing at work.

This article was produced on behalf of Harvard Business School by the Quartz marketing team and not by the Quartz editorial staff. LEGO is a trademark of the LEGO Group of companies, which do not endorse Harvard Business School Executive Education.

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LEGO (A): The Crisis

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Lego (a): the crisis description.

As this case opens, iconic toymaker LEGO stands on the brink of bankruptcy. Jorgen Vig Knudstorp, LEGO's young and newly appointed CEO, must size up changes in the toy industry, learn from the company's recent moves, and craft a strategy that will put LEGO back on track.

Case Description LEGO (A): The Crisis

Strategic managment tools used in case study analysis of lego (a): the crisis, step 1. problem identification in lego (a): the crisis case study, step 2. external environment analysis - pestel / pest / step analysis of lego (a): the crisis case study, step 3. industry specific / porter five forces analysis of lego (a): the crisis case study, step 4. evaluating alternatives / swot analysis of lego (a): the crisis case study, step 5. porter value chain analysis / vrio / vrin analysis lego (a): the crisis case study, step 6. recommendations lego (a): the crisis case study, step 7. basis of recommendations for lego (a): the crisis case study, quality & on time delivery.

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Case Analysis of LEGO (A): The Crisis

LEGO (A): The Crisis is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. LEGO (A): The Crisis is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. LEGO (A): The Crisis case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. LEGO (A): The Crisis will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

LEGO (A): The Crisis case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of LEGO (A): The Crisis, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The LEGO (A): The Crisis case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, LEGO (A): The Crisis case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – LEGO (A): The Crisis

Step 1 – Problem Identification of LEGO (A): The Crisis - Harvard Business School Case Study

The first step to solve HBR LEGO (A): The Crisis case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Lego Jorgen is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Lego Jorgen, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the LEGO (A): The Crisis. The external environment analysis of LEGO (A): The Crisis will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in LEGO (A): The Crisis case study. PESTEL analysis of " LEGO (A): The Crisis" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with LEGO (A): The Crisis macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for LEGO (A): The Crisis

To do comprehensive PESTEL analysis of case study – LEGO (A): The Crisis , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact LEGO (A): The Crisis

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ LEGO (A): The Crisis ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Lego Jorgen is operating, firms are required to store customer data within the premises of the country. Lego Jorgen needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. LEGO (A): The Crisis has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Lego Jorgen in case study LEGO (A): The Crisis" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Lego Jorgen in case study “ LEGO (A): The Crisis ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Lego Jorgen in case study “ LEGO (A): The Crisis ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ LEGO (A): The Crisis ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Lego Jorgen can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at LEGO (A): The Crisis case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Lego Jorgen needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact LEGO (A): The Crisis

Social factors that impact lego (a): the crisis, technological factors that impact lego (a): the crisis, environmental factors that impact lego (a): the crisis, legal factors that impact lego (a): the crisis, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: lego (a): the crisis case study solution.

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LEGO (A): The Crisis Harvard Case Solution & Analysis

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lego (a) the crisis case solution

Question#1:

What has led the LEGO Group to the edge of bankruptcy?

Lego lacks discipline, accountability and has a complex costing procedure. Lego is finding it hard to balance the demand and supply due to the exploding inventory costs. As Lego is not able to meet the demands of the customers due to inventory costs, therefore customers are getting agitated due to non-availability of the brand on the shelves of retailer shops.

 Lego has started to launch new products like Lego Star Wars, which is rising to become 35% of the total revenue of the organization. The company is re positioning its trademark product LEGO DUPLO,which is not communicating the promises of the brands with the consumers and the consumers are finding it hard to relate with LEGO DUPLO as they used to in the past. The sales are weakening with every passing day.

The strategies that are being introduced by top line management are not working. The desired results are not achieved by expanding the product line, in fact these steps have increased the costs and more importantly, some of the new products have demolished core products of the company, which have confused the customers and eroded earnings. The company is continuously getting rid of its employees due to losses one after another. These losses almost led the LEGO group towards bankruptcy.

Question#2:

What is your assessment of management moves during “the growth period that wasn’t”and “the fix that wasn’t”?

The playing trends of children have changed a lot, as in the past, children used to play with toys that lacked electronic additions to it. Nowadays, children prefer playing on a technologically advanced level. Children now have shorter attention spans and are attracted more towards electronic products.

These drastic changes in the toy industry were not according to the strengths of LEGO Group. These elements forced the organization to start focusing on growth and how it can be achieved at any cost . The group perceived that they can stand amongst the top 10 toy manufacturers by extending their product line outside their core products, therefore these changes would also make the company more responsive towards the changing dynamics of the industry. The organization is focusing on creating more themes for their products. The company is branching itself out of its core offerings.

 The successful family park created by the LEGO, name LEGO LAND and the development of the official website of the company, which is initiated with the intentions of developing video games and the children’s wear being introduced by the company, all these introductions were not able to contain the position for the company.

The company is still not able to lower down its costs as they have lost the focus upon their core products. The consumers heavily reliedon the core products of the company and wanted the company to focus on them rather than introducing new products to their portfolio just for the sake of achieving growth.

LEGO is trying too hard to gain higher profits and growth by coming up with several strategies and products, internally and externally both. LEGO missed out a very important factor for achieving growth. Growth cannot be sustained at the cost of customers’ need and expectations neither at the cost of letting go of their hard working employees.

  Question#3:

As Jørgen, what would you do throughout the LEGO Group in order to turn the company around? Be specific.

Jorgen should first of all stop firing people in the organization. This gives a bad impression in the market and the consumers that the company is willing to achieve growth and higher profits at the cost of their people. Jorgen has the advantage of the company’s brand image over the image and how he has been meeting the brand’s promise of making the best toy experiences for the children. People have strong brand attachment with the LEGO products as it has been in the industry for more than 80 years and the people are aware of the brands offerings.

Yes, LEGO should focus one x tending its product line and creating experiences for the children would create strong relations with the brands, how ever LEGO should not lose its focus from its trademarks products such as LEGO DUPLO as people are highly affiliated LEGO due to its core products. If the customers feel that the brand is not able to ful fill its promise for its core products, then the chances of them buying from the extended product line would be low.........................

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LEGO Case Analysis and Case Solution

Posted by Peter Williams on Aug-09-2018

Introduction of LEGO Case Solution

The LEGO case study is a Harvard Business Review case study, which presents a simulated practical experience to the reader allowing them to learn about real life problems in the business world. The LEGO case consisted of a central issue to the organization, which had to be identified, analysed and creative solutions had to be drawn to tackle the issue. This paper presents the solved LEGO case analysis and case solution. The method through which the analysis is done is mentioned, followed by the relevant tools used in finding the solution.

The case solution first identifies the central issue to the LEGO case study, and the relevant stakeholders affected by this issue. This is known as the problem identification stage. After this, the relevant tools and models are used, which help in the case study analysis and case study solution. The tools used in identifying the solution consist of the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis. The solution consists of recommended strategies to overcome this central issue. It is a good idea to also propose alternative case study solutions, because if the main solution is not found feasible, then the alternative solutions could be implemented. Lastly, a good case study solution also includes an implementation plan for the recommendation strategies. This shows how through a step-by-step procedure as to how the central issue can be resolved.

Problem Identification of LEGO Case Solution

Harvard Business Review cases involve a central problem that is being faced by the organization and these problems affect a number of stakeholders. In the problem identification stage, the problem faced by LEGO is identified through reading of the case. This could be mentioned at the start of the reading, the middle or the end. At times in a case analysis, the problem may be clearly evident in the reading of the HBR case. At other times, finding the issue is the job of the person analysing the case. It is also important to understand what stakeholders are affected by the problem and how. The goals of the stakeholders and are the organization are also identified to ensure that the case study analysis are consistent with these.

Analysis of the LEGO HBR Case Study

The objective of the case should be focused on. This is doing the LEGO Case Solution. This analysis can be proceeded in a step-by-step procedure to ensure that effective solutions are found.

• In the first step, a growth path of the company can be formulated that lays down its vision, mission and strategic aims. These can usually be developed using the company history is provided in the case. Company history is helpful in a Business Case study as it helps one understand what the scope of the solutions will be for the case study.
• The next step is of understanding the company; its people, their priorities and the overall culture. This can be done by using company history. It can also be done by looking at anecdotal instances of managers or employees that are usually included in an HBR case study description to give the reader a real feel of the situation.
• Lastly, a timeline of the issues and events in the case needs to be made. Arranging events in a timeline allows one to predict the next few events that are likely to take place. It also helps one in developing the case study solutions. The timeline also helps in understanding the continuous challenges that are being faced by the organisation.

SWOT analysis of LEGO

An important tool that helps in addressing the central issue of the case and coming up with LEGO HBR case solution is the SWOT analysis.

• The SWOT analysis is a strategic management tool that lists down in the form of a matrix, an organisation's internal strengths and weaknesses, and external opportunities and threats. It helps in the strategic analysis of LEGO.
• Once this listing has been done, a clearer picture can be developed in regards to how strategies will be formed to address the main problem. For example, strengths will be used as an advantage in solving the issue.

Therefore, the SWOT analysis is a helpful tool in coming up with the LEGO Case Study answers. One does not need to remain restricted to using the traditional SWOT analysis, but the advanced TOWS matrix or weighted average SWOT analysis can also be used.

Porter Five Forces Analysis for LEGO

Another helpful tool in finding the case solutions is of Porter's Five Forces analysis. This is also a strategic tool that is used to analyse the competitive environment of the industry in which LEGO operates in. Analysis of the industry is important as businesses do not work in isolation in real life, but are affected by the business environment of the industry that they operate in. Harvard Business case studies represent real-life situations, and therefore, an analysis of the industry's competitive environment needs to be carried out to come up with more holistic case study solutions. In Porter's Five Forces analysis, the industry is analysed along 5 dimensions.

• These are the threats that the industry faces due to new entrants.
• It includes the threat of substitute products.
• It includes the bargaining power of buyers in the industry.
• It includes the bargaining power of suppliers in an industry.
• Lastly, the overall rivalry or competition within the industry is analysed.

This tool helps one understand the relative powers of the major players in the industry and its overall competitive dynamics. Actionable and practical solutions can then be developed by keeping these factors into perspective.

PESTEL Analysis of LEGO

Another helpful tool that should be used in finding the case study solutions is the PESTEL analysis. This also looks at the external business environment of the organisation helps in finding case study Analysis to real-life business issues as in HBR cases.

• The PESTEL analysis particularly looks at the macro environmental factors that affect the industry. These are the political, environmental, social, technological, environmental and legal (regulatory) factors affecting the industry.
• Factors within each of these 6 should be listed down, and analysis should be made as to how these affect the organisation under question.
• These factors are also responsible for the future growth and challenges within the industry. Hence, they should be taken into consideration when coming up with the LEGO case solution.

VRIO Analysis of LEGO

This is an analysis carried out to know about the internal strengths and capabilities of LEGO. Under the VRIO analysis, the following steps are carried out:

• The internal resources of LEGO are listed down.
• Each of these resources are assessed in terms of the value it brings to the organization.
• Each resource is assessed in terms of how rare it is. A rare resource is one that is not commonly used by competitors.
• Each resource is assessed whether it could be imitated by competition easily or not.
• Lastly, each resource is assessed in terms of whether the organization can use it to an advantage or not.

The analysis done on the 4 dimensions; Value, Rareness, Imitability, and Organization. If a resource is high on all of these 4, then it brings long-term competitive advantage. If a resource is high on Value, Rareness, and Imitability, then it brings an unused competitive advantage. If a resource is high on Value and Rareness, then it only brings temporary competitive advantage. If a resource is only valuable, then it’s a competitive parity. If it’s none, then it can be regarded as a competitive disadvantage.

Value Chain Analysis of LEGO

The Value chain analysis of LEGO helps in identifying the activities of an organization, and how these add value in terms of cost reduction and differentiation. This tool is used in the case study analysis as follows:

• The firm’s primary and support activities are listed down.
• Identifying the importance of these activities in the cost of the product and the differentiation they produce.
• Lastly, differentiation or cost reduction strategies are to be used for each of these activities to increase the overall value provided by these activities.

Recognizing value creating activities and enhancing the value that they create allow LEGO to increase its competitive advantage.

BCG Matrix of LEGO

The BCG Matrix is an important tool in deciding whether an organization should invest or divest in its strategic business units. The matrix involves placing the strategic business units of a business in one of four categories; question marks, stars, dogs and cash cows. The placement in these categories depends on the relative market share of the organization and the market growth of these strategic business units. The steps to be followed in this analysis is as follows:

• Identify the relative market share of each strategic business unit.
• Identify the market growth of each strategic business unit.
• Place these strategic business units in one of four categories. Question Marks are those strategic business units with high market share and low market growth rate. Stars are those strategic business units with high market share and high market growth rate. Cash Cows are those strategic business units with high market share and low market growth rate. Dogs are those strategic business units with low market share and low growth rate.
• Relevant strategies should be implemented for each strategic business unit depending on its position in the matrix.

The strategies identified from the LEGO BCG matrix and included in the case pdf. These are either to further develop the product, penetrate the market, develop the market, diversification, investing or divesting.

Ansoff Matrix of LEGO

Ansoff Matrix is an important strategic tool to come up with future strategies for LEGO in the case solution. It helps decide whether an organization should pursue future expansion in new markets and products or should it focus on existing markets and products.

• The organization can penetrate into existing markets with its existing products. This is known as market penetration strategy.
• The organization can develop new products for the existing market. This is known as product development strategy.
• The organization can enter new markets with its existing products. This is known as market development strategy.
• The organization can enter into new markets with new products. This is known as a diversification strategy.

The choice of strategy depends on the analysis of the previous tools used and the level of risk the organization is willing to take.

Marketing Mix of LEGO

LEGO needs to bring out certain responses from the market that it targets. To do so, it will need to use the marketing mix, which serves as a tool in helping bring out responses from the market. The 4 elements of the marketing mix are Product, Price, Place and Promotions. The following steps are required to carry out a marketing mix analysis and include this in the case study analysis.

• Analyse the company’s products and devise strategies to improve the product offering of the company.
• Analyse the company’s price points and devise strategies that could be based on competition, value or cost.
• Analyse the company’s promotion mix. This includes the advertisement, public relations, personal selling, sales promotion, and direct marketing. Strategies will be devised which makes use of a few or all of these elements.
• Analyse the company’s distribution and reach. Strategies can be devised to improve the availability of the company’s products.

LEGO Blue Ocean Strategy

The strategies devised and included in the LEGO case memo should have a blue ocean strategy. A blue ocean strategy is a strategy that involves firms seeking uncontested market spaces, which makes the competition of the company irrelevant. It involves coming up with new and unique products or ideas through innovation. This gives the organization a competitive advantage over other firms, unlike a red ocean strategy.

Competitors analysis of LEGO

The PESTEL analysis discussed previously looked at the macro environmental factors affecting business, but not the microenvironmental factors. One of the microenvironmental factors are competitors, which are addressed by a competitor analysis. The Competitors analysis of LEGO looks at the direct and indirect competitors within the industry that it operates in.

• This involves a detailed analysis of their actions and how these would affect the future strategies of LEGO.
• It involves looking at the current market share of the company and its competitors.
• It should compare the marketing mix elements of competitors, their supply chain, human resources, financial strength etc.
• It also should look at the potential opportunities and threats that these competitors pose on the company.

Organisation of the Analysis into LEGO Case Study Solution

Once various tools have been used to analyse the case, the findings of this analysis need to be incorporated into practical and actionable solutions. These solutions will also be the LEGO case answers. These are usually in the form of strategies that the organisation can adopt. The following step-by-step procedure can be used to organise the Harvard Business case solution and recommendations:

• The first step of the solution is to come up with a corporate level strategy for the organisation. This part consists of solutions that address issues faced by the organisation on a strategic level. This could include suggestions, changes or recommendations to the company's vision, mission and its strategic objectives. It can include recommendations on how the organisation can work towards achieving these strategic objectives. Furthermore, it needs to be explained how the stated recommendations will help in solving the main issue mentioned in the case and where the company will stand in the future as a result of these.
• The second step of the solution is to come up with a business level strategy. The HBR case studies may present issues faced by a part of the organisation. For example, the issues may be stated for marketing and the role of a marketing manager needs to be assumed. So, recommendations and suggestions need to address the strategy of the marketing department in this case. Therefore, the strategic objectives of this business unit (Marketing) will be laid down in the solutions and recommendations will be made as to how to achieve these objectives. Similar would be the case for any other business unit or department such as human resources, finance, IT etc. The important thing to note here is that the business level strategy needs to be aligned with the overall corporate strategy of the organisation. For example, if one suggests the organisation to focus on differentiation for competitive advantage as a corporate level strategy, then it can't be recommended for the LEGO Case Study Solution that the business unit should focus on costs.
• The third step is not compulsory but depends from case to case. In some HBR case studies, one may be required to analyse an issue at a department. This issue may be analysed for a manager or employee as well. In these cases, recommendations need to be made for these people. The solution may state that objectives that these people need to achieve and how these objectives would be achieved.

The case study analysis and solution, and LEGO case answers should be written down in the LEGO case memo, clearly identifying which part shows what. The LEGO case should be in a professional format, presenting points clearly that are well understood by the reader.

Alternate solution to the LEGO HBR case study

It is important to have more than one solution to the case study. This is the alternate solution that would be implemented if the original proposed solution is found infeasible or impossible due to a change in circumstances. The alternate solution for LEGO is presented in the same way as the original solution, where it consists of a corporate level strategy, business level strategy and other recommendations.

Implementation of LEGO Case Solution

The case study does not end at just providing recommendations to the issues at hand. One is also required to provide how these recommendations would be implemented. This is shown through a proper implementation framework. A detailed implementation framework helps in distinguishing between an average and an above average case study answer. A good implementation framework shows the proposed plan and how the organisations' resources would be used to achieve the objectives. It also lays down the changes needed to be made as well as the assumptions in the process.

• A proper implementation framework shows that one has clearly understood the case study and the main issue within it.
• It shows that one has been clarified with the HBR fundamentals on the topic.
• It shows that the details provided in the case have been properly analysed.
• It shows that one has developed an ability to prioritise recommendations and how these could be successfully implemented.
• The implementation framework also helps by removing out any recommendations that are not practical or actionable as these could not be implemented. Therefore, the implementation framework ensures that the solution to the LEGO Harvard case is complete and properly answered.

Recommendations and Action Plan for LEGO case analysis

For LEGO, based on the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis, the recommendations and action plan are as follows:

• LEGO should focus on making use of its strengths identified from the VRIO analysis to make the most of the opportunities identified from the PESTEL.
• LEGO should enhance the value creating activities within its value chain.
• LEGO should invest in its stars and cash cows, while getting rid of the dogs identified from the BCG Matrix analysis.
• To achieve its overall corporate and business level objectives, it should make use of the marketing mix tools to obtain desired results from its target market.

Baron, E. (2015). How They Teach the Case Method At Harvard Business School. Retrieved from https://poetsandquants.com/2015/09/29/how-they-teach-the-case-method-at-harvard-business-school/

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Hill, C., & Jones, G. (2010). Strategic Management Theory: An Integrated Approach, Ninth Ed. Mason, OH: South-Western, Cengage Learning.

Hussain, S., Khattak, J., Rizwan, A., & Latif, M. A. (2013). ANSOFF matrix, environment, and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), 196-206.

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Kim, W. C., & Mauborgne, R. (2004). Blue ocean strategy. If you read nothing else on strategy, read thesebest-selling articles., 71.

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Kulkarni, N. (2018). 8 Tips to Help You Prepare for the Case Method. Retrieved from https://www.hbs.edu/mba/blog/post/8-tips-to-help-you-prepare-for-the-case-method

Lin, C., Tsai, H. L., Wu, Y. J., & Kiang, M. (2012). A fuzzy quantitative VRIO-based framework for evaluating organizational activities. Management Decision, 50(8), 1396-1411.

Nixon, J., & Helms, M. M. (2010). Exploring SWOT analysis – where are we now?: A review of academic research from the last decade. Journal of Strategy and Management, 3(3), 215-251.

Panagiotou, G. (2003). Bringing SWOT into Focus. Business Strategy Review, 14(2), 8-10.

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Porter, M.E. (1979, March). Harvard Business Review: Strategic Planning, How Competitive Forces Shape Strategy. Retrieved July 7, 2016, from https://hbr.org/1979/03/how-competitive-forces-shape-strategy

Rastogi, N., & Trivedi, M. K. (2016). PESTLE Technique–a Tool to Identify External Risks in Construction Projects. International Research Journal of Engineering and Technology (IRJET), 3(1), 384-388.

Rauch, P. (2007). SWOT analyses and SWOT strategy formulation for forest owner cooperations in Austria. European Journal of Forest Research, 126(3), 413-420.

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Lego case study analysis & solution, harvard business case studies solutions - assignment help.

LEGO is a Harvard Business (HBR) Case Study on Technology & Operations , Fern Fort University provides HBR case study assignment help for just $11. Our case solution is based on Case Study Method expertise & our global insights.

Technology & Operations Case Study | Authors :: Jan W. Rivkin, Stefan Thomke, Daniela Beyersdorfer

Case study description.

LEGO has emerged as one of the most successful companies in the toy industry. The case describes LEGO's gradual rise, rapid decline, and recent revitalization as it is keeping up with a changing market place. Central to LEGO's management model is the ability to find the right balance among growing through innovation, staying true to its core, and controlling operational complexity.

Competitive strategy, Innovation, Operations management

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[10 Steps] Case Study Analysis & Solution

Step 1 - reading up harvard business review fundamentals on the technology & operations.

Even before you start reading a business case study just make sure that you have brushed up the Harvard Business Review (HBR) fundamentals on the Technology & Operations. Brushing up HBR fundamentals will provide a strong base for investigative reading. Often readers scan through the business case study without having a clear map in mind. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. Reading up the HBR fundamentals helps in sketching out business case study analysis and solution roadmap even before you start reading the case study. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself.

Step 2 - Reading the LEGO HBR Case Study

To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. Begin slowly - underline the details and sketch out the business case study description map. In some cases you will able to find the central problem in the beginning itself while in others it may be in the end in form of questions. Business case study paragraph by paragraph mapping will help you in organizing the information correctly and provide a clear guide to go back to the case study if you need further information. My case study strategy involves -

• Marking out the protagonist and key players in the case study from the very start.
• Drawing a motivation chart of the key players and their priorities from the case study description.
• Refine the central problem the protagonist is facing in the case and how it relates to the HBR fundamentals on the topic.
• Evaluate each detail in the case study in light of the HBR case study analysis core ideas.

Step 3 - LEGO Case Study Analysis

Once you are comfortable with the details and objective of the business case study proceed forward to put some details into the analysis template. You can do business case study analysis by following Fern Fort University step by step instructions -

• Company history is provided in the first half of the case. You can use this history to draw a growth path and illustrate vision, mission and strategic objectives of the organization. Often history is provided in the case not only to provide a background to the problem but also provide the scope of the solution that you can write for the case study.
• HBR case studies provide anecdotal instances from managers and employees in the organization to give a feel of real situation on the ground. Use these instances and opinions to mark out the organization's culture, its people priorities & inhibitions.
• Make a time line of the events and issues in the case study. Time line can provide the clue for the next step in organization's journey. Time line also provides an insight into the progressive challenges the company is facing in the case study.

Step 4 - SWOT Analysis of LEGO

Once you finished the case analysis, time line of the events and other critical details. Focus on the following -

• Zero down on the central problem and two to five related problems in the case study.
• Do the SWOT analysis of the LEGO . SWOT analysis is a strategic tool to map out the strengths, weakness, opportunities and threats that a firm is facing.
• SWOT analysis and SWOT Matrix will help you to clearly mark out - Strengths Weakness Opportunities & Threats that the organization or manager is facing in the LEGO
• SWOT analysis will also provide a priority list of problem to be solved.
• You can also do a weighted SWOT analysis of LEGO HBR case study.

Step 5 - Porter 5 Forces / Strategic Analysis of Industry Analysis LEGO

In our live classes we often come across business managers who pinpoint one problem in the case and build a case study analysis and solution around that singular point. Business environments are often complex and require holistic solutions. You should try to understand not only the organization but also the industry which the business operates in. Porter Five Forces is a strategic analysis tool that will help you in understanding the relative powers of the key players in the business case study and what sort of pragmatic and actionable case study solution is viable in the light of given facts.

Step 6 - PESTEL, PEST / STEP Analysis of LEGO

Another way of understanding the external environment of the firm in LEGO is to do a PESTEL - Political, Economic, Social, Technological, Environmental & Legal analysis of the environment the firm operates in. You should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies.

Step 7 - Organizing & Prioritizing the Analysis into LEGO Case Study Solution

Once you have developed multipronged approach and work out various suggestions based on the strategic tools. The next step is organizing the solution based on the requirement of the case. You can use the following strategy to organize the findings and suggestions.

• Build a corporate level strategy - organizing your findings and recommendations in a way to answer the larger strategic objective of the firm. It include using the analysis to answer the company's vision, mission and key objectives , and how your suggestions will take the company to next level in achieving those goals.
• Business Unit Level Solution - The case study may put you in a position of a marketing manager of a small brand. So instead of providing recommendations for overall company you need to specify the marketing objectives of that particular brand. You have to recommend business unit level recommendations. The scope of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don't directly contradict the company's overall strategy. For example you can recommend a low cost strategy but the company core competency is design differentiation.
• Case study solutions can also provide recommendation for the business manager or leader described in the business case study.

Step 8 -Implementation Framework

The goal of the business case study is not only to identify problems and recommend solutions but also to provide a framework to implement those case study solutions. Implementation framework differentiates good case study solutions from great case study solutions. If you able to provide a detailed implementation framework then you have successfully achieved the following objectives -

• Detailed understanding of the case,
• Clarity of HBR case study fundamentals,
• Analyzed case details based on those fundamentals and
• Developed an ability to prioritize recommendations based on probability of their successful implementation.

Implementation framework helps in weeding out non actionable recommendations, resulting in awesome LEGO case study solution.

Step 9 - Take a Break

Once you finished the case study implementation framework. Take a small break, grab a cup of coffee or whatever you like, go for a walk or just shoot some hoops.

Step 10 - Critically Examine LEGO case study solution

After refreshing your mind, read your case study solution critically. When we are writing case study solution we often have details on our screen as well as in our head. This leads to either missing details or poor sentence structures. Once refreshed go through the case solution again - improve sentence structures and grammar, double check the numbers provided in your analysis and question your recommendations. Be very slow with this process as rushing through it leads to missing key details. Once done it is time to hit the attach button.

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