The Lego Group Case Essay

3396 Words Oct 23rd, 2011 14 Pages
Introduction
Founded in 1932, the LEGO Group is a privately held company headquartered in Billund, Denmark. The vision of Lego Group is to “inspire children to explore and challenge their own creative potential”[1] Lego now ranks 4th in the world as a toy manufacturer. The Lego Group employs nearly 9,000 workers and its own product, Lego Brick can be found in over 130 countries. The financial performance of Lego declined drastically through the 1990’s and early 2000’s. In 2004, the company accumulated losses of DKK1.9 billion.[2] Therefore, Lego tried to implement some changes in order to cut the production cost and reverse the poor situation. In the last step of the process of restructuring Lego’s supply chain, the Group tried to close
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Some competitors have entered the market and left too but some are quite fierce and are not afraid to initiate court proceedings against LEGO patents. The toy company Tyco Toys produced such bricks for a time. Other competitors include Mega Bloks, Best-Lock and Coko. These competitor products are typically compatible with LEGO bricks, and are marketed at a lower cost than LEGO sets.
Best-Lock and Mega Bloks are two of the major competitors that eagerly fight for market shares on the toy construction market. Mega Bloks started making toys for pre-school children and in the early 80s it began to produce toy building bricks for small children. The bricks were very successful in Canada. Mega Bloks began to market smaller bricks for older children in 1989. Mega Bloks has grown from the Bertrands’ small business to become a publicly-traded company that manufactures in Canada and exports its toys to over 100 countries. It is the largest Canadian toymaker in terms of employees (over 1000) and is ranked in the top ten toy manufacturers in North America[3].
Tyco Toys, a division of Mattel, has been fighting against LEGO in several court actions. While the LEGO Group was the fourth-largest toy manufacturer in terms of sales in 2004 Mattel was the largest toy manufacturer in the same year, which permits Mattel to have developed a large line of toys in the world, many of them are very similar to the LEGO sets[4].
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