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Lego's Journey: Rise, Fall, and Revival

Lego, founded in 1932, initially thrived with wooden toys and later revolutionized the toy industry with the modern Lego brick in 1957. However, the company faced significant challenges in the 1980s and 1990s due to competition and operational inefficiencies, leading to its first financial loss in 1998. A turnaround began in 2004 under CEO Jørgen Vig Knudstorp, focusing on core products, leveraging popular franchises, and engaging customers through digital platforms.

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20 views8 pages

Lego's Journey: Rise, Fall, and Revival

Lego, founded in 1932, initially thrived with wooden toys and later revolutionized the toy industry with the modern Lego brick in 1957. However, the company faced significant challenges in the 1980s and 1990s due to competition and operational inefficiencies, leading to its first financial loss in 1998. A turnaround began in 2004 under CEO Jørgen Vig Knudstorp, focusing on core products, leveraging popular franchises, and engaging customers through digital platforms.

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Unknown 1
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Lego: The Rise, Fall, and Rise

Again
The Rise of Lego
• - Founded in 1932 by Ole Kirk Christiansen
• - Early focus on wooden toys, transitioned to
plastic
• - 'Lego' means 'Play Well' in Danish
• - 1957: Invention of the modern Lego brick
• - Global expansion through the 1960s and
1970s
Early Business Strategy
• - Lego System of Play: Modular, expandable
sets
• - Focus on all age groups (3-16 years and
beyond)
• - Licensed North American operations to
Samsonite
• - Themes: Town, Space, Pirates
(Interconnectivity)
The Fall of Lego
• - 1980s: Patent expiration led to competitors
(e.g., Tyco)
• - 1990s: Rising competition from Hasbro,
Mattel, and video games
• - Increased costs due to product diversification
• - Failed product lines (e.g., Galidor)
• - First financial loss in 1998, cutting 1,000+
jobs
Key Challenges Faced
• - Chinese imitators producing cheaper
alternatives
• - Video games reducing physical toy demand
• - Over-expansion: Theme parks, video games,
and apparel
• - Operational inefficiencies with 12,000+ parts
The Rise Again
• - 2004: Jørgen Vig Knudstorp became CEO
• - Cut workforce and outsourced operations
• - Refocused on core product (reduced parts to
6,000)
• - Successful movie strategy: 'The Lego Movie'
(2014)
• - Crowdsourcing platform for new ideas
Strategic Changes Under Knudstorp
• - Focus on core Lego sets, divested non-core
businesses
• - Leveraged popular franchises (e.g., Star
Wars, Harry Potter)
• - Innovation through trial-and-error approach
• - Digital engagement with online platforms
and video content
Conclusion: Lessons from Lego
• - Adaptability is key in changing markets
• - Balancing innovation with core strengths
• - Customer engagement fuels long-term
success
• - What’s next? Can Lego maintain its market
dominance?

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