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Mindstorms 1999 Strategy


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Mindstorms 1999 Strategy

  1. 1. Corporate Strategy 1999
  2. 2. <ul><li>Founded in Denmark, 1932 </li></ul><ul><li>Worlds 5th largest toy manufacturer </li></ul><ul><li>Manufactures, distributes and retails plastic building block kits - LEGO Primo, LEGO Duplo, LEGO System and LEGO Technic </li></ul><ul><li>Employees 10 000 people </li></ul><ul><li>Revenue US$1.1 billion </li></ul><ul><li>CEO, Kjeld Kirk Kristiansen </li></ul><ul><li>New businesses - LEGOland, LEGO Lifestyle, LEGO Media, LEGO Mindstroms </li></ul>LEGO Group
  3. 3. <ul><li>1984 Early R+D </li></ul><ul><li>1986 Launched computerized building set for schools; deemed premature </li></ul><ul><li>1993 Strategic business unit created after the successful trial of a programmable brick </li></ul><ul><li>1995 Home PC ownership and Internet usage is sky-rocketing. Market dominated by game-oriented ‘edutainment’ products </li></ul><ul><li>1996 Target market identified: Conscious, Caring and Capable parents, (CCC), 20% of US households </li></ul><ul><li>1997 LEGO Mindstorms launches </li></ul>LEGO Mindstorms
  4. 4. Integrate or continue unabated?
  5. 5. Macro Environmental Analysis
  6. 6. Political Instability in the developing world; WTO free-trade negotiations breakdown; and European Parliament elections.
  7. 7. Economic Euro introduced as Denmark abolishes the Krone; changes to the Danish taxation system; and the Internet boom is still aiding economic growth
  8. 8. Sociological Changing attitudes to early childhood development; away from instructional methods; and leisure time is evolving from outdoor activities.
  9. 9. Technological Speed of information technology increasing; communication networks impacting on society; and internet and PC games impacting the toy market.
  10. 10. Legal Labour market reforms in Denmark; and potential changes to intellectual property laws.
  11. 11. Environmental Increasing global concern for the environment; over consumption and over population; governments intervening
  12. 12. Industry Analysis
  13. 13. Industry Rivalry
  14. 14. <ul><li>Flexibility Adaptation; speed to market; pricing; and distribution. </li></ul><ul><li>Innovation In products; services; support; and technology features. </li></ul><ul><li>R+D Continual new and exciting products </li></ul><ul><li>Brand awareness Market appeal </li></ul><ul><li>Economies of scale Vital for profit margin </li></ul><ul><li>Business Synergies Across LEGO group </li></ul>Critical Success Factors
  15. 15. SWOT Analysis
  16. 16. Strengths <ul><li>LEGO </li></ul><ul><li>Resolved vision; </li></ul><ul><li>Outstanding reputation; </li></ul><ul><li>Extensive distribution network; </li></ul><ul><li>Success in addressing org. mindset problems; and </li></ul><ul><li>High brand awareness amongst target market. </li></ul><ul><li>Mindstorms </li></ul><ul><li>Astute marketing; </li></ul><ul><li>Flexible, timely operations; </li></ul><ul><li>Global vision; </li></ul><ul><li>Products reflect LEGO’s foundation; and </li></ul><ul><li>Strong launch and initial sales. </li></ul>
  17. 17. Weaknesses <ul><li>LEGO </li></ul><ul><li>‘ Instructionism’ products; </li></ul><ul><li>Poor sales growth in recent years; and </li></ul><ul><li>Viewed as ‘ entertainment ’ rather than ‘ education’ company. </li></ul><ul><li>Mindstorms </li></ul><ul><li>Partnership conflicts. </li></ul><ul><li>Staff that lack LEGO knowledge </li></ul>
  18. 18. Opportunities <ul><li>LEGO </li></ul><ul><li>New alliances with major players, i.e. Lucas Films and Star Wars brand; and </li></ul><ul><li>Economies of scale opportunities through integration with Mindstorms . </li></ul><ul><li>Mindstorms </li></ul><ul><li>Further market penetration; and </li></ul><ul><li>Establish new target market with schools. </li></ul>
  19. 19. Threats <ul><li>LEGO </li></ul><ul><li>Declining profitability; </li></ul><ul><li>New competitors; and </li></ul><ul><li>Increased internal conflicts; </li></ul><ul><li>Mindstorms </li></ul><ul><li>Unfamiliar substantive competitors, i.e. Sony, Microsoft, Nintendo and Sega. </li></ul>
  20. 20. Company Analysis
  21. 21. Corporate Strategy Perspectives
  22. 22. LEGO’S Current Corporate Strategy Since the early 90’s senior management have been working towards an integrated organisation perspective; CEO was preaching a universal approach revolving around ideas, exuberance and values; and Merging activities and processes to become more efficient, realizing synergies ahead of retaining responsiveness.
  23. 23. LEGO’S Current Corporate Strategy Formally structured core business; Strategy was focused on planning, forecasting trends, and product programming. The fitness program , involves reducing organisational layers and staff, clearer lines of responsibilities and a greater customer focus. Predictable product lifecycles; Continuous marginal improvement;
  24. 24. Business Strategy Perspectives
  25. 25. LEGO’S Current Business Strategy Variance in business strategies across the SBU’s; New business units have an outside-in perspective; Core business has an inside-out perspective; but Recent core activities project a change towards a market focused strategy (outside-in strategy).
  26. 26. Functional Analysis
  27. 27. Mindstorms Capabilities HR Experienced early challenges; hired externally; global recruitment; seeking fast paced innovative employees. Marketing Decentralised from LEGO core. Pricing For price leadership. Distribution Hybrid non-traditional channeling created conflict with the core distribution. Promotion Outsourced PR/advertising focused only on the US market.
  28. 28. Mindstorms Performance Financial Sales are 1% of LEGO; goal to increase growth rapidly; high cash needs; and financial losses in 1998 resulted in 1000 job losses. Customer Creating awareness; online communities are attracting adults; competitive robotic events are attracting children. Internal Build strong supply chains; operational efficiency; economies of scale. Growth Synergies aligned with constructionist values and core competencies; responsiveness to market through innovative.
  29. 29. Recommendations
  30. 30. Hybrid Corporate Perspective
  31. 31. Manufacturing and Production Sharing value-added activities; Lean manufacturing; Parallel production processes; and Economies of scale.
  32. 32. Suppliers and Channel Partners Aligning positions to improve competitiveness; Channel partner synergies; and Strengthening existing relationships
  33. 33. Internal Cultural Challenges Remain innovative; via The creation of a Mindstorms Champion Group.
  34. 34. Finance Leveraging resources; Reduced operating costs; Sustainable growth; and Increased Profit margins.
  35. 35. <ul><li>References </li></ul>De Wit, B and Meyer, R 2004, Strategy:process, content, context. International Thomson, Singapore Ireland R D., Hoskisson R E. & Hitt M A., 2008, Understanding Business Strategy, Concepts & Cases 2 nd Ed. Cengage Learning, Hubbard, G 1990, Analysing a Case, in Cases of Strategic Management: Australia and New Zealand, G Lewis, A Morkel, G Hubbard, G Stockoprt, and S Davenport (eds), 2 nd ed, pp. viii-xvi, Prentice Hall Sydney Porter, M, (1998) Competitive Strategy: Techniques for analyzing industries and competitors , Free Press 1999 Statistics, Denmark viewed on August 10, 2009 < > Environmental Issues – Global Issues viewed on August 10, 2009 < http://www. globalissues .org/issue/168/environmental-issues > Lego Financial Accounts 2001 viewed on August 20, 2009 < http://cache.LEGO ョョ. com/downloads/aboutus/accounts2001eng. pdf > Lego Mindstorms – What went wrong? Viewed on August 20, 2009 < http://www. techuser .net/LEGO ョ. html > Lego Pressroom Archives displaying historic financials viewed on August 20, 2009 < http://www1.LEGO ョ. com/eng/info/default.asp? page=pressdetail & contentid=99 & countrycode=2057 & yearcode=2000 & oldXML=true &archive=true > Effects of Overconsumption and Increasing Populations viewed on August 10, 2009 < http://www. globalissues .org/article/216/effects-of-over-consumption-and-increasing-populations > BCG Growth-Share Matrix viewed on August 20, 2009 < http://www. netmba . com/strategy/matrix/bcg/ > Historic Exchange rates viewed on 10 August, 2009 <>
  36. 36. <ul><li>Image References </li></ul>Slide 1 - net/r ?12 2 - http://www. viajejet . com/wp-content/viajes/fotos-de-uno-de-los-parque-de-legoland .jpg 3 - http: //perfectgift . exteen .com/images/toys/LEGO_Mindstorms_NXT_2.jpg 4 - http://www. robotoys .com/LOGO_PIXEL_01.gif 5 - http://www. dep .org. uk/downloads/personalglobaldiagram .gif 6 - http://image63. webshots .com/63/3/19/6/453531906Rnpyvp_fs.jpg 7 - http://www. digitalbirmingham 8 - http: //thundafunda .com/3993/images/1600_1200/children-pictures/cute-boy-playing-video-games-computer.jpg 9- http://www. digitalbirmingham 10 - http://www. unisa . edu . au/crma/images/criminal_justice_jurisprudence .jpg 11 12 - http://www. geovista . psu .edu/images/img5-1_industry_analysis_NEW2.jpg 14 - http://farm1.static. flickr .com/24/99387355_9ef08fe070.jpg? v=1154158149 15 - http://lams. epfl .ch/course/marketing2008/mktg2008_week3_wegmann_2_swot_1.jpg 16 - http: //legomyphoto .files. wordpress .com/2008/09/imgp4895.jpg 17 - http: //legomyphoto .files. wordpress .com/2008/09/day113.jpg 18- http: //legomyphoto .files. wordpress .com/2008/09/day117.jpg 19 - http://saber-scorpion. com/lego/images/Halo/army_mareenz .jpg 20 - 22 & 23 - http://www. a-jenterprises . com/Bios/lego %20people.jpg 25 - http: //legomyphoto .files. wordpress .com/2009/03/day283.jpg? w=500 & h=334 26 - unlv .edu/Undergraduate/coursenotes/egg102/9794-parts.jpg 27 - http://engk12. ece . missouri . edu/LegoCamp/pictures/NXT %20Robots/LEGO%20NXT%20Brick.jpg 28 - http: //blogs png 29 - http://www. lego .com/info/images/pho102x170dkMindstorms.jpg 31 - 32 - http://images. doublebrick .ru/sets/sl/lego-7734-1.jpg 33 -