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MT 460 MT460 MT/460 Unit 7 LEGO Group - An Outsourcing Journey Case Study Analysis

MT 460 MT460 MT/460 Unit 7 LEGO Group – An Outsourcing Journey Case Study Analysis

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MT 460 MT460 MT/460 Unit 7 LEGO Group – An Outsourcing Journey Case Study Analysis

Unit 7 LEGO Group: An Outsourcing Journey Case Study Analysis Kaplan University School of Business MT 460 Management Policy and Strategy Author: Kristy D. Besant Professor: Dr. Ernest Norris Date: April 12, 2014

LEGO Group is a Denmark toy company founded in 1932 by Ole Kirk Christiansen
LEGO Group: An Outsourcing Journey
Introduction
Ole Kirk Christiansen founded the LEGO Group in 1932 .
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Description

MT 460 MT460 MT/460 Unit 7 LEGO Group – An Outsourcing Journey Case Study Analysis

Unit 7 LEGO Group: An Outsourcing Journey Case Study Analysis Kaplan University School of Business MT 460 Management Policy and Strategy Author: Kristy D. Besant Professor: Dr. Ernest Norris Date: April 12, 2014

LEGO Group is a Denmark toy company founded in 1932 by Ole Kirk Christiansen
LEGO Group: An Outsourcing Journey
Introduction
Ole Kirk Christiansen founded the LEGO Group in 1932 . They are located in Billund, Denmark. The name ‘LEGO’ came from the abbreviation of two Danish words which are “leg godt”, which means “play well”. In 1958 the brick in its present form was launched.
Since then the company has been passed down from father to son and is now owned by oneof the grandchildren named Kjeld Kirk Christiansen (Froberg-Mortensen, 2012).LEGO has come a long way since they were founded almost 80 years ago.
They went from a small workshop to a global enterprise which is the fourth largest toy manufacturer. Their most important product that they have is the LEGO brick and through winning “Toy of the Century” twice along with their extensive development that they have undergone the foundation still remains the original LEGO brick (Froberg-Mortensen, 2012).
Synopsis of the Situation
LEGO’s financial performance drastically declined over a 10 year period from the 1990’s to the early 2000’s. In 2004 the LEGO Group announced the results from 2003 which was a huge deficit. That is when Jorgen Vig Knudstorp was appointed as the companies CEO. 2004 ended in another huge deficit due to the heavy amounts of write-downs.
This is when the LEGO Group and Ferrari launched an agreement to make LEGO sets based on the iconic race cars. This is when the DUPLO trade mark was launched as a result of the requests from their consumers (Froberg-Mortensen, 2012).
Key Issues
A few issues that the LEGO GROUP has to iron out are a part of the strategy for the organization. Before the LEGO Group were hit with its crisis, the organization owned and operated decided to outsource to Flextronics, its main production plants were extremely overpriced and stationed in Denmark and Switzerland.
This led them to outsourcing to Flextronics, where only three years after the contracts were signed LEGO management announced that it would phase out the sourcing collaborations with Flextronics (Pearce & Robinson 2011).
The logistics of outsourcing put a strain on the relationship with DHL,LEGO’s logistics partner. When they won the contract bid, it made revenue calculations that were based on existing customer service requirements. Thiswas a problem because the number of deliveries now was much lower than the amount that they forecasted. (Cordon, Seifert & Wellian, 2010)
The LEGO Group had a very ineffective and inflexible supply chain which way a key problem in creating a sound business platform. The degree

MT 460 MT460 MT/460 Unit 7 LEGO Group – An Outsourcing Journey Case Study Analysis

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