LEGO is a Danish toy company founded in 1932. It manufactures and distributes plastic building blocks and kits. In the late 1990s, LEGO launched LEGO Mindstorms, a programmable robotics kit for older children and adults. While Mindstorms was initially successful, it struggled to gain widespread adoption in schools and faced competition from other tech companies. The document discusses LEGO's strategy to integrate Mindstorms and leverage synergies between the new and core businesses.
In presenting his report to management in June 2003, Jørgen Vig Knudstorp, then head of strategic development had pulled no punches, “We are on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break up of the company. In 2013, LEGO reported profits of $1.5 bn on sales of $4.5 bn. Quite a turnaround! Here's how.
The Lego case study, the great turnaround 2003 - 2013John Ashcroft
In presenting his report to management in June 2003, Jørgen Vig Knudstorp, then head of strategic development had pulled no punches, “We are on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break up of the company. In 2013, LEGO reported profits of $1.5 bn on sales of $4.5 bn. Quite a turnaround! Here's how.
A professional consulting presentation for a Brandeis University Case Competition on the financial and managerial problems the LEGO company faced in the early 2000's. The presentation focuses on a SWOT Analysis of the company as well as a three point implementation plan to restructure and build the value of the company.
In presenting his report to management in June 2003, Jørgen Vig Knudstorp, then head of strategic development had pulled no punches, “We are on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break up of the company. In 2013, LEGO reported profits of $1.5 bn on sales of $4.5 bn. Quite a turnaround! Here's how.
The Lego case study, the great turnaround 2003 - 2013John Ashcroft
In presenting his report to management in June 2003, Jørgen Vig Knudstorp, then head of strategic development had pulled no punches, “We are on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break up of the company. In 2013, LEGO reported profits of $1.5 bn on sales of $4.5 bn. Quite a turnaround! Here's how.
A professional consulting presentation for a Brandeis University Case Competition on the financial and managerial problems the LEGO company faced in the early 2000's. The presentation focuses on a SWOT Analysis of the company as well as a three point implementation plan to restructure and build the value of the company.
Sabine Müller - Innovation driven by qualitative insigthsAarhus BSS
Even in a world of big data, being close to the consumer and understanding his or her needs are vital to foster innovation. Digitalisation and the use of social media offer new opportunities to get close to your consumer on their premises and investigate their likes, dislikes, wishes and needs on the platforms that they use. In this presentation, Sabine will focus on how digitalisation offers new ways of collecting and analysing consumer data and how qualitative consumer insights drive innovation efforts.
Comm. 450 - Advertising & Brand Communication Management
CSUF Spring 2017
Final Project
The purpose of this team project was to apply the knowledge we had acquired and implement it to a real brand. The audit consists of four sections: 1) Background 2) Brand Inventory 3) Brand Exploratory, and 4) Strategic Recommendations.
This is the winning competition deck for the 2012 West Coast Case Competition at UBC. It was created by Ben Cappellacci, Helge Ratvik, and Paul McLaughlin.
Creating the LEGO mood and promoting the LEGO style.
LEGO Group wants to embrace a digital transformation to be more attractive and exciting. To this purpose it must undertake some initiatives to mix harmonically atoms and bits and create a new kind of experience for its stakeholders, the builders of tomorrow.
This document provides an overview of some issues I have noticed from outside and offers some suggestions. It does not mean to be a comprehensive solution, but just a poke to undertake some changes.
Sabine Müller - Innovation driven by qualitative insigthsAarhus BSS
Even in a world of big data, being close to the consumer and understanding his or her needs are vital to foster innovation. Digitalisation and the use of social media offer new opportunities to get close to your consumer on their premises and investigate their likes, dislikes, wishes and needs on the platforms that they use. In this presentation, Sabine will focus on how digitalisation offers new ways of collecting and analysing consumer data and how qualitative consumer insights drive innovation efforts.
Comm. 450 - Advertising & Brand Communication Management
CSUF Spring 2017
Final Project
The purpose of this team project was to apply the knowledge we had acquired and implement it to a real brand. The audit consists of four sections: 1) Background 2) Brand Inventory 3) Brand Exploratory, and 4) Strategic Recommendations.
This is the winning competition deck for the 2012 West Coast Case Competition at UBC. It was created by Ben Cappellacci, Helge Ratvik, and Paul McLaughlin.
Creating the LEGO mood and promoting the LEGO style.
LEGO Group wants to embrace a digital transformation to be more attractive and exciting. To this purpose it must undertake some initiatives to mix harmonically atoms and bits and create a new kind of experience for its stakeholders, the builders of tomorrow.
This document provides an overview of some issues I have noticed from outside and offers some suggestions. It does not mean to be a comprehensive solution, but just a poke to undertake some changes.
1 Outline for Completing the Marketing Plan Assignment .docxfelicidaddinwoodie
1
Outline for Completing the Marketing Plan Assignment
MKT501– Strategic Marketing
Use this format to plan your research and complete the SLP assignments. Your final paper in
module 4 SLP should follow this outline. Note that the letters “a, b, c…” and the numbers “i, ii,
iii, iv…” in the outline below are used to show the major issues you need to include in your
paper and you should not use these letters and numbers to organize your paper.
Cover Page (1 page)
a. Marketing plan title
b. Course title and number
c. Your name and date
d. Name of Instructor
e. Executive Summary (2 pages maximum)
f. Summary of what plan is designed to achieve
g. Summary of key elements of internal environment and external environment
analysis (only points that are relevant to understanding the action plan, only the
point, not the analysis)
h. Summary of prescribed goals and strategic approach to achieving them.
i. Summary of key actions that are outlined.
Table of Contents (as many pages as needed)
I. Product Statement (2 pages maximum)
j. Describe the company/organization
k. Provide brief background of the organization
l. Describe charge you have for this marketing plan
m. Provide a brief overview of what issue you are studying, and how a marketing
perspective can help address the issue.
II. Situation Analysis (3‐6 pages)
NOTE: only include sections which are relevant to your charge. The relevance of
each section of analysis should be clear to the reader.
a. External Environment Analysis
i. Context Analysis
Industry forces that might impact success of any actions taken
ii. Competitor Analysis
Any organization or message which may prevent any actions
taken from being successful
iii. Technological and Economical situation Analysis
iv. Political, legal and cultural Analysis
2
b. Customer Environment Analysis
i. Customer Analysis
ii. Collaborator Analysis
c. Internal Environment Analysis
i. Company Analysis
III. SWOT Analysis (3‐6 pages)
a. Strengths and Weaknesses(Internal)
i. Strengths
ii. Weaknesses
b. Opportunities and Threats (External)
i. Opportunities
ii. Threats
c. SWOT Table
IV. Issues Analysis (2 pages maximum)
a. Given your complete marketing analysis, what are the key issues which the
company/organization must understand in order to address the charge that is
being considered?
i. NOTE: This section concisely identifies the most important issues and
decisions that the organization is likely to face when trying to promote
the product in your charge
Bullet points (or numbered statements) are acceptable.
V. Goals and Objectives (2 pages maximum)
a. The goals and objectives should be stated clearly and concisely
i. (Think S.M.A.R.T.).
b. Do not “Discuss” the goals/objectives. Just present them.
i. Each goal/objective should be easily understood given your ...
Technology Impact on Secular Industries Duetsche Bank Leveraged Finance Confe...Ted Stenger
The Impact of Technology on Secular Trends. Examining the impact of technology on secular industries including media, publishing, retail and consumer products. Business model pitfalls
Entrepreneurship Mishaps
For an entrepreneurial idea to remain relevant in society, and maintain market value, constant innovation to improve and enhance the idea is a must. Innovation involves adding some new features to the already existing business model. Change is inevitable, therefore, entrepreneurs have to adjust to the changes that occur in markets, and plan in anticipation of changes to come in the near future. Failure to adjust to the changes in the markets could be detrimental to the success of any brand or entrepreneurial venture. Many business organizations have crashed out of the market due to their failure to constantly innovate and add new features to match the new market demands. Also, technology has advanced so much in the current world. Any organization that forfeits an opportunity to embrace technology will probably fade out of business in the near future. Some of the great entrepreneurial giants that have failed due to lack of innovation include; Polaroid, Blackberry, Nokia, Blockbusters, and Kodak.
Kodak, a giant in the photography industry, and was established in the 1880s. Kodak was the leading company in photography for many decades with its sales records surpassing ten billion dollars in 1981. However, the name has faded away from the industry with the company filing for bankruptcy in 2012. The failure of this giant can be attributed to a lack of innovation that matches the digital world demands. Despite Kodak’s management being aware of the need to embrace digital photography, they failed to capitalize on the opportunity. Fuji, a Japanese firm, introduced a colored camera which was cheaper than Kodak's cameras. Fuji also incorporated digital features in its devices hence attracting more customers. Kodak’s sales started dropping gradually as the market shifted from analog to digital. Due to the slow initiative to embrace digital photography Kodak finally went out of business, (Yuzawa, 2018).
Blockbuster was a leading movie and film store, a giant in the entertainment industry. The company had successfully survived the shift from VHS to DVD. That was one good strategy that kept the company ahead in the film entertainment industry. More innovations such as the introduction of internet services provided an avenue through which film entertainment could be scaled up to a notch higher. Blockbuster was, however, not much embracing of internet innovation. The company turned down a partnership deal with Netflix, in which Blockbusters would promote Netflix in its stores and Netflix would air Blockbuster’s content on the internet platforms, (Ciccone, 2017). Currently, Netflix is the leading film entertainment organization on Livestream media via the internet while Blockbusters is history.
Both Kodak and Blockbusters were the leading organizations in the film photography and entertainment industries respectively. The two giants failed to capitalize on the opportunity available to advance their market leadership. Kodak was not s ...
DAN Brand Accelerator: Client Pitch KeynoteJason Newport
Here is the Brand Accelerator pitch deck I began using to pitch current clients more than two years ago. I refined as we advanced through each phase once clients had signed on and we adjusted as necessary. I pitched this to more than twenty clients, all household brand names -- an converted each of them. Not a single brand declined to move forward.
Part B Your Marketing PlanPatrick FrostMKT 500 Dr.docxherbertwilson5999
Part B: Your Marketing Plan
Patrick Frost
MKT 500
Dr. Adina Scruggs
February 15, 2015
Strayer University
Running head: PART B: YOUR MARKETING PLAN
1
PART B: YOUR MARKETING PLAN
5
Google Market Plan
Google is irrefutably one of the most popular and successful companies globally. This is one of the fastest growing companies as from when it was founded in 1998, it has grown into a multibillion dollar company. Google’s mission over the years has been to “organize the world's information and make it universally accessible and useful” (Google, 2010). In order to do this the company has implemented a very effective branding strategy that has enabled it to emerge the better amongst the companies that offer related services. Google as a company has played a major role in the promotion of globalization. For any company to be successful, the marketing process has to be implemented flawlessly in order to ensure the company has an upper hand over the competitors. Google as a company has at the forefront in ensuring that their branding strategy guarantees the company is well placed and positioned in the market.
Google’s corporate identity is one of the most profound brands in the world today. Just like any other companies, Google has to work towards promoting its identity through spreading the company believes and services which creates a collective sum of what the organization stands for. Differentiation has been one of the major strategies that have propelled Google towards becoming better than the competitors. Google has been at the fore front in trying new things hence having a better platform in ensuring consumer satisfaction. Branding for any of Google’s products has been very important especially in positioning of the company (Levi, 2007). One of the major Google products over the years has been the mobile phones and mobile software. Google although having entered into a very competitive market several years ago has managed to become one of the major mobile phone makers.
Google as a brand in the mobile phone industry needs improvement as none of the products can compete effectively with the other products provided by the competitors in the market. The product this case is a state of the art smart phone as a new brand. The name is “Google Smart”. The Google smart series of phone will include a very flashy look and simplified software interphase so as to ensure it has got the upper hand when compared with the other products in the market today. The product slogan will be “the life partner” as with the different support programs for the day to day use the phone will offer support for most of the activities surrounding ones activities. The phone will be releases in phases according to different regions as different regions have different specifications. The different specifications require different product specification settings and hence the difference the launch for the regions globally.
The product design and the production of.
Eastman Kodak Company
Haley Duell
5/12/2016
BUS/475
Eastman Kodak Company
The consumer electronic field is a great and also equally competitive business area. Different companies usually design different techniques to and outsmart their fellow business counterparts. They do this via developing various business promotional methods and marketing designs. Companies normally review their marketing strategies from time to time in order to ensure that they make maximum profits in their businesses, the do this due to changing internal and external factors of their business enterprises that they view as factors that slow their advancement. Most of the marketing departments have the likelihood of considering their consumers wants, they have a tendency to make or design products that are very much appealing and motivating to their customers. They do this to ensure customer satisfaction and ultimately they do this to ensure that their company makes maximum profit. Most of the marketing departments try to understand consumer feedback concerning their products therefore they have set up forums to ensure that they get the consumer feedback in order to think of even more interesting strategies that will ensure the companies maximum profit and sustainability in the market. To increase its competitiveness in the industry, the company should produce a new middle range smart phone in the market,
1.1 Brief Description of the company
Eastman Kodak is part of one of the growing largest multi-billion dollar corporations in the world. In 2007 it exceeded the $100bn mark in annual sales for the first time in its history. This makes it one of the world's top three companies in the electronics industry where only two other companies, Siemens and Hewlett-Packard, have posted larger revenues. The name Eastman Kodak literally means grow Group’s dominance in two further sectors: Eastman Kodak Heavy Industries and Eastman Kodak Engineering and Construction. If you are talking innovation in Eastman Kodak walks the walk and is now the established leader in consumer electronics, providing a range of leading-edge premium products and, in their own words, ‘leading the digital convergence revolution’. In so doing Eastman Kodak has made a remarkable transformation from copy-cat manufacturer to become Asia's most valuable technology company.
1.2 Organizational Structure
As of 2013, Eastman Kodak Electronics has established 15 regional headquarters, 54 global sales offices, 38 global production facilities and 34 global R&D centers.
Eastman Kodak consists of three main divisions: Consumer Electronics, IT & Mobile Communications and Device
Solution
s. Each division consists of several subsidiary divisions.
1.3The product being offered
To increase its competitiveness in the market, the company should introduce a new mid-range smart phone, Blast, targeting the middle class consumers and the teenage population in third countries who are the largest consumers of mobile ...
6. Political Instability in the developing world; WTO free-trade negotiations breakdown; and European Parliament elections.
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. Sociological Changing attitudes to early childhood development; away from instructional methods; and leisure time is evolving from outdoor activities.
9. Technological Speed of information technology increasing; communication networks impacting on society; and internet and PC games impacting the toy market.
10. Legal Labour market reforms in Denmark; and potential changes to intellectual property laws.
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. 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;
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).
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. 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.
CLARE LEGO founded in Billund, Denmark, 1932, is the worlds 5th largest toy manufacturer Famous for its interlocking plastic building blocks Which are sold under 4 age related brands - LEGO Primo, LEGO Duplo, LEGO System and LEGO Technic. Employing almost 10 000 people across the globe Revenue just short of US$1.1billion Traditionally, the business is organised into various strategic business units in Europe, the Americas, Asia-Pacific and Japan and business units focused on the global supply chain. CEO, K Kristensen, (founders grandson) wishes LEGO to become ‘ th e most powerful brand in the world among families with children by 2005’. To aid this goal, LEGO begun adding new business lines in the 1990s – LEGOland Theme Parks - Windsor, UK (1996); California, US (1999); and Gunzberg, Germany (2003 completion) LEGO Lifestyle (1991) - consumer products such as clothing, footwear, bags, watches and puzzles LEGO Media (1996) - children's software, music, video and books LEGO Dacta - school use AND………LEGO Mindstorms
CLARE Mindstorms R+D began in the 80’s In 1986 LEGO Launched an early school version but was deemed premature for the consumer marker due to low PC ownership Development continued through the late 80’s And in 1993 after LEGO successfully tested a programmable brick a new strategic unit was created. As PC ownership and internet usage increased. Lego saw a emerging market, The new products were to target CCC parents, approx. 20% of US households. March 1997 Mindstorms launches
CLARE The introduction of Mindstorms was a radical change for Lego Group. It was separated from the core business from Research & Development to production and marketing. It even created its own channel partners and supply chains. This has created various advantages such as increased responsiveness and market agility, but its operating style has been viewed by core Lego management as against the norm, thus creating a conundrum for Kristiansen regarding future directions – whether to integrate the new business or allow it to continue unabated This analysis will put forward recommendations to the Lego group in regards to the best strategy for the Mindstorms business that will maintain the Lego brand, benefit customers globally and drive economies of scale within the core business. In order to present these recommendations, an extensive internal and external environmental analysis has been undertaken, along with identification of the critical success factors, current capabilities and performance
SANDEEP For those of us, that are to old to remember or to young to know, lets take a broad look at what 1999 was like and the factors that may have been influencing LEGO’s operations.
SANDEEP Political instability in some regions of the developing world (i.e Balkans); World Trade Organisation December negotiations in Seattle breakdown due to contrasts between USA, European Union and developing nations proposals on free trade; European Parliament Elections, may see a shift in policies
SANDEEP Common European Currency, euro announced. Denmark officially abolishes krone; Denmark announces more uniform taxation system to be introduced; The internet bubble is bigger than ever and still ‘bubbling’
SANDEEP Changing attitudes to early childhood development, away from instructional methods The use of leisure-time by young children is evolving away from traditional past-times, such as outdoor activities
SANDEEP Speed of information technology rapidly changing, Increase societal impacts of communication and networks Widespread use of internet and advanced video/PC games impacts the global toy market
SANDEEP Denmark announce labour market reforms in relation to unemployment schemes. Rapid changes in technology especially in the internet impacted world legal bodies to consider updating the intellectual property law
SANDEEP Concerns that the global economy could be seriously effected by over consumption and increasing populations; Governments intervention such the EU ban tobacco advertising and smoking in public places.
CLARE How were these environmental factors affecting the toy industry?
CLARE Threat of new entrants High: risk of existing competitors (e.g. K'Nex) entering the computerised building block market Medium: risk of competitors outside the toy industry (Sony, EA), who have existing brand relationships with the target market through games and software. Buying power of suppliers High: Heavy reliance on partnerships in order to keep the unit lean Threat of substitutes High: due to the plethora of education and entertainment options available Buying power of customers Low: in the consumer market, due to size and fragmentation. High : in the schools market where many decisions are centralised Competitive rivalry High: heavy competition from entrenched competitors and new entrants to the market
SANDEEP For the LEGO Mindstorms business to survive within the highly competitive global toy industry the Critical Success Factors are: Flexibility to adapt to market requirements including product design, speed to market, pricing, proper distribution channels and service and support from core business management and staff. Innovation in products, so that the target market does not become bored and move to a more exciting product. Consumers in this market also expect more and more in terms of service, support, technological features Research & Development investment to ensure that new, exciting and relevant products are brought to market ahead of the competition Brand awareness and appeal to the target markets. Economies of scale for production is essential due to the high cost of R&D, marketing and distribution Multi-Business synergy across the LEGO group
PHILLIP Given that the dilemma is to whether Majgaard integrates Mindstorms into the LEGO core or not. We have chosen to address the SWOT analysis as a comparison of the two bodies - Lego Core and Mindstorms Business unit.
PHILLIP LEGO Resolved vision, outstanding reputation and extensive brand awareness Extensive distribution network, well-established buyer relationships Proven success in addressing organisational and mindset problems i.e. 1994 Compass Management program, 1999 Fitness Program High brand awareness amongst the target market MINDSTORMS Astute marketing Flexible, timely operations Global vision Products reflect LEGO’s‘constructionism’ foundation Strong launch and initial sales
PHILLIP LEGO Products tending towards ‘instructionism’ Poor sales growth in the late 1990's Viewed as an "entertainment", rather than an "education" company MINDSTORMS Partnership conflicts Staff that lack LEGO insider knowledge
PHILLIP LEGO New alliances with major players, i.e. Lucasfilms – Stars Wars brand Economies of scale opportunities with integration of Mindstorms MINDSTORMS Further penetration into the existing target market Establish new target market with schools
PHILLIP LEGO Declining profitability New competitors Increased Internal conflicts MINDSTORMS Unfamiliar substantial competitors i.e. Microsoft, Sony, Nintendo, Sega
PHILLIP Lets take a closer look at the current strategies, capabilities and performance of Mindstorms and the Lego Core.
PHILLIP Majgaard’s dilemma reflects the diametric poles of corporate level strategy perspectives. The portfolio organisation perspective - Is a business conglomerate where individual business responsiveness is emphasised. And The integrated organisation perspective - Is where synergy is fundamental throughout the entire group of businesses. (De Wit and Meyer 2004)
PHILLIP Since the early 1990’s senior management at LEGO had been working towards an integrated organisation perspective. Kristiansen was preaching a universal approach revolving around the LEGO ideas, exuberance and values. This translated to merging activities and processes to become more efficient by realising synergies ahead of retaining responsiveness.
PHILLIP The formally structured core business was successful in dealing with predictable product lifecycles and achieving continuous marginal improvement. The corporate level strategy was focused on planning, forecasting trends, and product programming. The latest strategic approach, the Fitness Program, involved reducing organisational layers and staff and establishing clearer lines of responsibilities, thereby creating a greater customer focus.
PHILLIP Majgaard’s solution not only had to address the corporate level strategy. It had to address the business level strategies of the core and the various SBU. Typically, a business can have either of these perspectives. An outside-in perspective - where emphasis is on markets over resources and the business is opportunity driven. Or An inside-out perspective - where the internal strengths are utelised and resources assist in attaining a distinctive position. (De Wit and Meyer 2004)
PHILLIP The Strategic Business Units had varied business level strategies. The four new business units, (Mindstorms, Legoland, Media, Lifestyle, Dacta) had a greater outside-in perspective emphasising markets over resources. They were opportunity driven, based on market demand, environmental adaptation and focused on attaining an advantageous strategic position for LEGO. In contrast, the core SBU’s (including the new products team) displayed a greater inside-out perspective concentrating on internal recourses over external markets. However, recent joint ventures such as the new Star Wars LEGO with Lucas Films indicate that Kristensen’s integrated corporate strategy may have influenced the traditional SBU approach.
CLARE In 1999, the LEGO Mindstorms team was responsible for their own functional departments; separate to the core LEGO business. This allowed flexibility with regards to adapting their functions to fit the unique product offering of Mindstorms and was not dictated to by the traditional processes of the LEGO core group. This separation however, meant that the team did not take advantage of economies of scale or leverage the existing capabilities and knowledge of LEGO Group staff. This structure, whilst causing issues within the LEGO group allowed Mindstorms to develop and launch to market a highly innovative, successful new product.
CLARE HR The Mindstorms team experienced initial challenges in recruiting staff from within the company, as the over-riding attitude was that ‘h ey didn’t want to be too closely associated with Mindstorms in case it failed ’ . Due to this hurdle, the Mindstorms team had to seek expertise outside the core group. This resulted in a support services team that was partially located in the U.S to be closer to the target market and hiring people who had specific industry knowledge, yet lacked company knowledge. This geographic diversity meant that the Mindstorms business was truly positioned to think globally. The culture of the people they hired and the innovative nature of the team meant that it was managed and led very differently than the core group. They operated in a fast-paced, informal environment where employees worked in partnerships with their external stakeholders, with caused friction with the LEGO group. Marketing As this was an innovative product offering, with a completely different marketing message than the traditional LEGO products, Marketing was decentralized and controlled by Mindstorms. Pricing In stark contrast to the LEGO ‘ma gic number ’ of not selling anything for more than $39.99, the Mindstorms marketing team employed a strategy of price leadership, due to the uniqueness of their offering and sold their products for between $200 - $219. Distribution Mindstorms forged LEGO’s traditional distribution channels and utilised electronics stores, direct sales through LEGO and CCC companies to get their product to market. This caused friction because developing these channels were unprofitable and had the potential to damage relationships with long-term distributors, which they still relied on for the remainder of the LEGO business Promotion Because of the strategy to build a lean team, it meant Mindstorms had to seek expertise outside of the LEGOGroup. They outsourced their PR and advertising. As these agencies were located in the U.S it allowed Mindstorms to develop meaningful messages to their largest target market although it did not allow for local adaptation of messages as was the case with the LEGO group with marketing functions in local markets.
SANDEEP The purpose is to link various key indicators to larger scale objectives of LEGO including vision and strategy. The focus is to have a measure of various performance based metrics based on the Balanced Scorecard, which includes; financial outcomes, customer, internal business processes and learning and growth. Financial: launched to the global market in January 1998 and sold approximately 100,000 units in its first year. This translates to approximately 154 million DKK, or 2% of LEGO Group sales in 1998. Considering this was a new product, LEGO strategy is to increase growth rapidly at 20% per year compared to average sales growth of 3% between 1995-1998. As the cash needs of the Mindstorms business would be high, the strategy would be to invest heavily to increase market share and create cash inflow or divest/no further investment in Mindstorms. This is especially important because in 1998, high investments in new products led to cash outflow almost DKK 1500 Mill, resulting in an earnings loss of almost DKK 200 Mill. Almost 1000 employees have been let go in 1998 (www1.LEGO ョ .com) Customer : Whilst there is a strong market need to create high consumer awareness, this needs to be achieved without expensive marketing campaigns and assume a dynamic, price leadership position. Online communities such as LEGO Mindstorms learning centres attracted adults, additionally LEGO robotic events to attract 9-16 year olds especially in the US helped to capture attention of the new products. Internal Business Processes : As Mindstorms is a separate SBU, research and development and sales were not part of the core LEGO group. The purpose is to build strong supply chains, lean manufacturing methods and economies of scale. Learning & Growth : To ensure alignment and synergies with core constructionist values and continue to be innovative and responsive to market needs. Measures that can be introduced include Employee Satisfaction surveys and completing gap analysis between Mindstorms and LEGO Group for core competencies based on performance
PHILLIP Based on the analysis undertaken and the strategic vision of the core LEGO group, it is recommended that LEGO Mindstorms be integrated into the core group with components of a portfolio approach.
CLARE Thereby undertaking a hybrid corporate strategy that takes advantage of and captitalising on synergies whilst remaining responsive in key areas. What will the hybrid approach look like?
SANDEEP Manufacturing and Production (sharing valued-added activities) Lean manufacturing and parallel production processes would be implemented into core manufacturing methods to enhance value and increase reliability and flow. The economies of scale created by this centralised production would assist in driving a more aligned pricing strategy and reap benefits to customers.
PHILLIP Supplier and strategic channel partnerships (aligning positions to improve competitiveness) Channel partner synergies would be monitored for leveraging value creation versus disturbing existing relationships which are important for the LEGO core business.
CLARE Internal cultural challenges (remaining innovative) A Mindstorms Champion Group will be created, with members who represent each functional area of the core LEGO group. These members would promote the benefits of Mindstorms and have the political clout to break through bureaucratic barriers yet have the ability to create consensus and direction.
SANDEEP Financial (leveraging resources) Projections show that Mindstorms will contribute increasingly to LEGO Group sales as operating margins are high at 20% and there is sustained growth from integrating some of the functions. Integrating Mindstorms into the LEGO group will actually reduce operating costs due to lean optimization in the whole organization. This will improve dramatically the overall profit margin by an additional 4% per every year.