Nov 12, 2010 outsourcing strategy supply chain management. Lego outsourcing journey enterprise resource planning. In 1934, his company came to be called lego, from the danish phrase leg good, which means play well. An outsourcing journey case solution, the company, after facing crisis, changed the ceo of the company in the year 2004. An outsourcing journey found in the cases section of. Outsourcing to external producers might lead to an increase in production process complexity, which did happen in legos outsourcing case with no prior largescale outsourcing experience, decision to carry out such an extensive project wasnt. An outsourcing journey 822012 introduction 2004 began an especially difficult period for the lego group, which entered into a financial crisis resulting in a deficit of 1. Legos outsourcing journey strategic decision making coursera.
An outsourcing journey prepare a case study analysis of case 12. An outsourcing journey harvard case study solution and hbr and hbs case analysis. The lego group began in the workshop of ole kirk christiansen, a carpenter from billund, denmark, who began making wooden toys in 1932. Lego bricks are core products preschool creative building play themes licensed products. Over the past 70 years, the lego brand has successfully built a toy dynasty and worked their way into the hearts of. The plan was to cut the workforce in billund from 1200 to 300, and outsource the jobs to their partner flextronics in kladno czech republic. The lego group is a danish toy production company based in billund. Besides the direct quality and production costs, imagine the number of meetings, the hours of engineering and executive time, and the loss of employee morale that was sunk into this fiasco.
The lego bricks are all part of the lego system, which essentially means that they can easily be combined in innumerable ways and just as easily be. What did the lego group learn about outsourcing from the. An outsourcing journey case study solution, analysis the company, in the year 2004, faced financial crises and decided to outsource most of its products manufacturing to the company flextronics. The lego group is now part of a global reality with continued change of production, ownership and sites. Its motto, only the best is good enough, had stuck with company since 1932 when ole kirk christiansen, a danish carpenter, established the company in the small town of billund in jutland, denmark, to manufacture his wooden toy designs. The name lego came from the abbreviation of two danish words which are leg godt, which means play well. Building strategy case study analysis, subjects covered business growth competitive strategy licensing productivity recognition by darren meister, paul bigus source. Our most wellknown product to do so is the lego brick an amazing play system for both kids and adults. Lego outsourcing journey free download as powerpoint presentation. Mt 460 unit 6 case study analysis the lego group by. The lego group is a privately held company marketing essay.
Olga grishko, willie macatee, fallon murphy lego company overview. Lego group to begin outsourcing lego group to outsource major parts of its production to flextronics earlier today, lego employees were notified that the greater part of the companys production will be outsourced to an electronics manufacturing services company. This outsourcing relationship between lego and flextronics is of special interest to us because evidently something went wrong so that lego backsourced the. Danish company lego outsourced most of its manufacturing activity. The lego group employs nearly 9,000 workers and its own product, lego brick can be found in over countries. Mar 01, 2014 lego group an outsourcing journey presented by. It should be kept in mind here that this is a symbiotic relationship, benefiting both the parties on a consistent basis. The lego group, is a toy manufacturer based in denmark and is perhaps best know for the lego brick, which has been voted the toy of the century on several occasions. Legos outsourcing journey strategic decision making.
The lego groups quality journey in the years to come quality management is a key for the continued success of the lego group. This research is being carried out to discuss the competitive environment of the toy industry, and how it relates to legos strategic choice. Nov 19, 2008 the parties jointly decided that the lego group will take over lego production from juarez, mexico and nyiregyhaza, hungary. It is best known for the manufacture of legobrand toys, consisting mostly of interlocking plastic bricks. An outsourcing journey found in the cases section of your digital book. Building strategy free download as powerpoint presentation.
In 1958 the brick in its present form was launched. Download file to see previous pages the paper tells that unlike in the past century when the competitiveness of business environment was defined on the basis of the assets that firms owned, competitiveness in the present century is defined by intangible capabilities. The first brick we made over 60 years ago is as culturally relevant today as it always was and still fits too. Please utilize this template format for this assignment. Ole kirk christiansen, danish carpenter manufacture his wooden toy designs good play enriches a childs life. Lego is one of the worlds leading brands, and is therefore meticulously protected. The one with flextronics an american company providing electronic manufacturing services. The lego group, famously ran into financial difficulties at the beginning of this century and much of this could be attributed to organisational inefficiencies larsen et al. The last years rather adventurous journey from 2004 to 2009 had taught the fifthlargest toymaker in the world the lego group the importance of managing the global supply chain effectively. In order to survive the largest internal financial crisis in its roughly 70 years of existence, the management had, among many initiatives, decided to. This outsourcing relationship between lego and flextronics is of. This is consistent with the first step in developing strategic risk management in an organization. Explain how the development of strategy at the lego group reflect the key characteristics of strategic management outlined in section 1.
Financial analyst before joining trader media group. The lego group has also built several amusement parks around the world, each known as legoland, and operates numerous retail stores the company was founded on 10 august 1932 by ole kirk christiansen. Mar 04, 2010 it turns out that one of my mostread posts over this past year contained this example of a customer journey map from lego. An outsourcing journey case solution, the latest travel adventures years 20042009 had taught the fifth largest toy manufacturer in the world lego group the importance of effective manageme. Lego group an outsourcing journey case analysis free essays. Lego group to begin outsourcing raving toy maniac the. The lego group is now part of a global reality with. A supply chain transformalon helped put the beloved toymaker back together again. What were legos main expectations and learnings from the relationship with flextronics. It then appeared one of the final chapters of legos. The outsourcing process can be defined as the process of establishing and managing a contractual relationship with an external supplier for the provision of capacity that has previously been provided inhouse.
To understand strategic risk management at the lego group, you need to understand the companys strategy. On 1 january 2012, the lego group announced a major new initiative to improve market penetration in asia. Third, this article looks into recent attempts by the lego company to bring the. Lego bricks are core products preschool creative building play themes. This sudden change in its sourcing strategy posed lego management with a number of caveats. This is when the lego group and ferrari launched an agreement to make lego sets based on the iconic race cars.
Later in the year, a crossfunctional group of executives gathered at the companys headquarters to discuss the status of the asian initiative and the associated risks. The last years rather adventurous journey from 2004 to 2009 had taught the fifthlargest toymaker in the world the lego group. Achintya arun avishek manish pankaj prashant slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The vision of lego group is to inspire children to explore and challenge their own creative potential lego now ranks 4th in the world as a toy manufacturer. In exhibit a, i used the porters five forces model. The lego groups quality journey in the years to come. Shift to offshore outsourcing problem of bottle necks large stocks of many different components need for an urgent transformation in all major. Case 5 case 5 lego group an outsourcing journey 1 what. A presentation on the growth of lego in the face of competition and takeovers. An outsourcing journey case solution, the latest travel adventures years 20042009 had taught the fifth largest toy manufacturer in the world lego group. Global brand, local knowledge, schneider electric global account management semiconductor manufacturing international company in 2011 walmart china. The lego group is a privately held company based in billund, denmark.
At the lego group, our mission is to inspire and develop the builders of tomorrow. Despite the bright forecasts, the collaboration did not fulfill the. An outsourcing journey introduction ole kirk christiansen founded the lego group in 1932. Lego corporations large scale outsourcing has created so many problems that there will not be any downsizing of jobs in danish factories in 2007. Just like other industries, toy industry has witnessed changes in its competitive environment. Case 5 case 5 lego group an outsourcing journey 1 what were. In exhibit a, i used the porters five forces model to help identify and label the threats, demands. There are over 915 million ways to combine six lego bricks. An outsourcing journey the end cdt malcom brown cdt xander bo kim cdt paul song lego group. Multinational corporation founded in 1932 in jutland, denmark 7000 employees worldwide by 2009, 5th largest manufacturer of toys by sales volume products sold in more than countries products. Building the first family business constitution in china. The instruction from the professor was to scan the recent press, to select a news message and prepare a written analysis and interpretation of what had happened. Lego group to begin outsourcing lego group to outsource major parts of its production to flextronics earlier today, lego employees were notified that the greater part of the companys production will be outsourced to an electronics manufacturing services company, flextronics, over the coming threeyear period. How could the company use this knowledge constructively in the future.
Building a global marketing and communication company in china. In addition to defining the process for creating these customer journey maps, the research also identified three areas that are critical for making them valuable. By 2003, sales had dropped by 26 per cent and in 2004 by a further 20 per cent. The 18cs model for a successful longterm outsourcing. Outsourcing vs insourcing for this post, i am sharing with you the individual paper that i wrote for my global operations and supply chain management class in ie business school. In this project we will analyse one specific outsourcing agreement that lego made. It turns out that one of my mostread posts over this past year contained this example of a customer journey map from lego. It has also been seen that the developed nations are more than happy to outsource their work and set up offshore avenues in order to earn revenues and make the most out of their business. Warehousing strategy at volkswagen group canada inc. An outsourcing journey case solution, the lego group the importance of managing the global supply chain effectively the last few years rather adventurous journey from 2004 to. For almost 70 years, lego experienced steady growth. The lego group has also built several amusement parks around the world, each known as legoland, and operates numerous retail stores. An outsourcing journey case study solution, in recent years, and an adventurous journey from 2004 to 2009 he taught the fifthlargest toy maker in the world the company lego group the importance. Summary of the case the lego groups vision was to inspire children to explore and challenge their own creative potential.
Apr 10, 2012 the lego group turned its 50 year old strategy of high. An outsourcing journey jorgen vig knudstorp was appointed as the companies ceo. Securing sustainable sourcing via fsc certification. Founded in 1932, the lego group is a privately held company headquartered in billund, denmark. The lego group, is a toy manufacturer based in denmark and is perhaps best.
Over the last couple of years the company has reported record revenue and profit number. The most drastic change made by lego group to turn around the business was outsourcing to flextronics, a leading multinational electronics manufacturing services provider. Assistant professor, strategic management and globalization. It is best known for the manufacture of lego brand toys, consisting mostly of interlocking plastic bricks. Intereslng facts the lego group made over 31 billion lego elements in 2010, or legos. Business process outsourcing to india coloplast as organizational. In order to survive the largest internal financial crisis in its roughly 70 years of existence, the management had, among many initiatives, decided to offshore and outsource a major chunk of its production to flextronics. An outsourcing journey case study solution, in recent years, and an adventurous journey from 2004 to 2009 he taught the fifthlargest toy maker in the world the company lego group. Once you finished the case analysis, time line of the events and other critical details. The company is still owned by the kirk kristiansen family who founded it in 1932. Top management set the overall tone and philosophy of the com. In fact, on any list of the most beloved brands in the world, lego would place near the top.
Closely adhere to the attached case study analysis template. An outsourcing journey case solution, the lego group the importance of managing the global supply chain effectively the last few years rather adventurous journey from 2004 to 2009 had taught. Closely adhere to the case study analysis template by clicking on the hyperlink. Lego group s outsourcing contract with flextronics was a leap of faith that perhaps a highly organized contract manufacturer could help sort out the supply chain issues that plagued the company. You must be logged in to view this material casecent.
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