1. BUSINESS STRATEGY
S Lioukas
Strategic Business Decisions- 2015

2. The Brand More than simply the familiar logo
Expectations that people have of the company.
A guarantee of quality and originality.

3. Only the best is good enough !
The Vision ,the Mission and The Values
Vision : ‘Inventing the future of play’
Mission : ‘Inspire and develop the builders of tomorrow’
The LEGO® Brand values :
Imagination
Creativity
Fun
Learning
Caring
Quality
Only the best is good enough !

4. Some History Clues..
Founded in 1932 by Danish Ole Kirk Kristiansen. Initially it manufactured stepladders, ironing boards, stools and wooden toys.
Established brand name in 1934 : LEGO, formed from the Danish words "LEg GOdt" ("play well").
First toy (wooden duck )
The brick in its present form was launched in 1958.
During that 80 years : from a small carpenter’s workshop to a modern, global enterprise that is now one of the world’s largest manufacturer of toys.

5. Employees

6. Location

7. Production
Primary concept and development work takes place at the Billund headquarters, where the company employs approximately 120 designers
Smaller design offices in the UK, Spain, Germany, and Japan which are tasked with developing products aimed specifically at these markets.
Manufacturing of Lego bricks occurs at a number of locations around the world: Moulding is done in Denmark ,Hungary and Mexico. Brick decorations and packaging is done at plants in Denmark, Hungary, Mexico and recently in the Czech Republic as well
36 billion per year, or about 1140 elements per second
The Lego Group estimates that in the course of five decades it has produced some 400 billion Lego blocks

8. Products Pre School Products Focus on Safety and Quality
Creative Building
Ready Made Toys consisting of Lego bricks and other parts
Play Themes
Products with thematic parts
Licensed Products
Products licensed and related to famous movies like Star Wars™ & Harry Potter

9. Products & Services Robotic Themes Mindstorms etc Theme Parks
Six Legoland Amusement parks (Denmark,England,Germany,California,Florida,Malaysia )
Ten Legoland Discovery Centers around the world
Retail Stores
92 retail stores (68 in US )
Business consultancy
LEGO® SERIOUS PLAY
Innovative process designed to enhance innovation and business performance.

10. LEGO® & Development Strategy
1959
First
Steps
1969
New
Products
1979
New
Thematic
Series
1989
New
Markets
1995
Focus in
Technology
2003
Alliances ,Joint
Strategies &
Retail
Back to basics
(products &
Values )
Product Development
Innovation
Market Development
‘Shared Vision’
Searching for
Alliances & partnerships

11. LEGO® & Development Strategies
Major 10-years Objectives ( )
‘Shared Vision ’ (2003-…)

12. LEGO® & Alliances
Lego has actively sought partners to extend its position beyond its struggling Lego building bricks.
Partnerships with Microsoft, Nestlé, Miramax, and Nike,...
Why ?
Lack of experience on info technology games
Significant R&D resources required
Successful companies (eg Star Wars, Harry Potter) could expand production lines of LEGO
When ?

13. “Major 10-years Objectives” Partnerships Ι
Clothing / Footwear
1994: Kabooki
2001: Nike
PC Games
2001 Microsoft – XBoX
2002 NBA και Hockey League, Lucas Arts & F1 Team Williams (LEGO Racers)
Publications
1995: Publisher in USA & UK for Duplo

14. “Major 10-years Objectives” Partnerships ΙΙ
Entertainment
2000: Partnerships with Disney, Warner Bros
2000: LEGO Studios establishment in collaboration with Steven Spielberg
2001: Universal Music International – Bionicle
2001: Universal Studios (Jurassic Park III products)
2002: Miramax Films & LEGO Company (LEGO's Bionicle line movie)
Tecnhology
1998: MIT for Mindstorms
2000: Acquisition of ZOWIE Entertainment

15. Strategic Decisions 1994-2003 that are hard to copy
Networks and Alliances
that are hard to copy
Competitive Advantage that is
based in Cutting Edge Technology
Strong Differentiation from other Products
Control of the Distribution Network
High Investment Risk
High Production Cost
Organizational Difficulties
Legal Issues

16. LEGO® at 90’s Patents expire “Major 10-years Objectives” - Kjeld:
- New markets
- Extension Trademark
% sales increase
- Establishment 3-4 Legoland Parks
Diversification & turn into new markets and products:
- Investments in watches, children's clothes , pc games
- Popular products such as Duplo characterized old fashioned and abandoned.
Results: Huge losses in 2004.
Verge of bankruptcy
Net loss of €

17. LEGO® in 2003
The strategy during led the company to a declining course
2000: deficit of 1 bil DKK
.. end of 2003: a larger than 1bil DKK deficit.
New major capital investment was required  high amounts of risk
Need of correct handling in order to achieve new Alliances / lack of experience
Global decline of Toys Industry equal to 1-2% per annum.
For the past 7 years, LEGO has not been included in the top 20 of relevant companies in the US.

18. LEGO® & Differentiation Risk
(New Markets /Products)
Products
Existing
New + --
+ +
Existing
Markets
+ +
+ + +
New

20. LEGO® & “Shared Vision’’
Manager Jørgen Vig Knudstorp and his conservative idea:
«If a company has an iconic product such as the Lego brick in its portfolio, it shouldn’t have anything other than this product in the centre of its Commercial agenda“
The company then immediately stops dealing with whatever product did not have to do with the brick.
«Lego does not sell only Bricks, it also sells stories that can be constructed from these bricks»
ex . Ninjago

21. Jørgen Vig Knudstorp
Prof Robertson from Wharton, says Mr Knudstorp’s main skill is getting the best from his team by giving them the proper support and resources.
Some of what he did was straight out of the consultant’s textbook:
jobs were cut and assets were sold, including its theme park and
computer games businesses.
“In some ways, I think he’s a better model for innovation than Steve Jobs”
- David Robertson, a professor at the Wharton School and an author of ‘Brick by Brick’ about Lego

22. LEGO® & the 00’s+ 1) Partial Selling of Legolands
2) Divestment: Watches, Pullovers and PC Games found their way out of the company’s portfolio.
3) Duplo again in the portfolio.
pause of production had cost the company about 50mil.
4) Limitation of Bricks  Limitation in different Casts  Decrease in Expenses
« Whoever invents a new model will have to use current Bricks to achieve that»
5) Focus in ready to use theme models based on Cinema and TV hits.
e.g. Lego Star Wars and Harry Potter series are two of the main revenue sources today.
6) Target Group widening
Lego Friends for Girls
In the Mindstorms series, one out of the three consumers is not a kid.
7) Redesigning and Optimization of the Supply Chain.

23. LEGO® & “Shared Vision” Revenues Increase

24. Financial Results of the “Shared Vision” strategy I
* 1 Danish Krone equals 0.13 Euro today (07/10/2015)

25. Financial Results of the “Shared Vision” strategy II
* 1 Danish Krone equals 0.13 Euro today (07/10/2015)
Increase of the Global Market share to >5%.

26. “Shared Vision” in 2015
“Sales jump secures Lego’s crown as world’s biggest toymaker”
In the first half, Lego’s sales increased 23 per cent to DKr14.1bn ($2.1bn), compared with a 5 per cent fall at Mattel to $1.9bn and a 0.2 per cent increase to $1.5bn at Hasbro, maker of Transformers, Monopoly and My Little Pony.
Operating profit at Lego jumped 27 per cent to DKr4.6bn ($700m) compared with a loss of $54m at Mattel and a profit of $130m at Hasbro.
“The results underscore the global relevance and appeal of the Lego portfolio,” John Goodwin, chief financial officer

27. “Shared Vision” Partnerships I
NASA
Promotion of the interest for science, technology, mechanical engineering
and math.
Design Competition
13 Lego packages in ISS
Autodesk
Assembly instructions through an App
Belkin
iPhone and iPod cases

28. “Shared Vision” Partnerships II
Google
buildwithchrome.com
Shell
2012: Singapore Grand Prix - Asian Market expansion
Volvo
L350F – the largest high tech excavator

29. “Shared Vision” Partnerships III
Marvel Entertainment
Theme series LEGO® SUPER HEROES
“Our partnership with Marvel helps us continue to deliver some of the best and most constructible Super Hero stories of all time”, Jill Wilfert, vice president
Twentieth Century Fox
Theme series The Simpsons
Special LEGO episode of The Simpsons at FOX channel
Warner Bros
Extremely successful LEGΟ video games (up to 50 m. sales )
"LEGO Star Wars", "LEGO Batman: The Videogame" και "LEGO Indiana Jones: The Original Adventures ".
The LEGO® Movie

30. LEGO® & Fans
~ active fans publish many pages for models in the net or hack the source code of Lego Robots in order to make them faster.
The director of Marketing named his Adult customer segment as the “fastest growing market segment”
Long before Crowsourcing was a trending topic, Lego had already used its customers to take part in the design process of the company.
Cuusoo online platform
- Anyone can publish his blueprints and introduce a new Lego design
- Lego brings the best to the market and awards the designer by making her/him a partner in the product’s success (profit sharing).

31. LEGO® &WWF 2013 Partner of WWF Climate Savers
Extensive minimization of the environmental footprint throughout the value chain both for the company itself and its suppliers.
The first cooperation in the Toys industry of its kind.
Goals up until the end of 2016
Energy consumption for the production of a ton of LEEGO to be reduced by 10% compared to 2012
Stabilization of direct and indirect CO2 emissions with the use of RES.
From June 2014, smaller boxes, certified by the FSC.
Boxes production uses about 14% less paper and supports the responsible and certified forest management.

32. LEGO® &WWF
"We have experienced strong growth for eight consecutive years and, as we grow, we are becoming increasingly aware of the impact we leave on the planet.
Partnering with WWF is an important step in our efforts to get the best out of our sustainability initiatives. We are proud to contribute to WWF’s overall vision of 100% renewable energy by 2050 and already now they have played a part in the targets we have set – and how we can achieve them.”

33. LEGO®&Αrt Nathan Sawaya Large Scale Sculptures, with only Lego Bricks
as structural materials.
Lego-mania
Top designers, such as Donatella Versace,
Marc Jacobs, Alber Elbaz and Karl Lagerfeld
were inspired by the iconic Lego bricks.

34. LEGO® & Your opinion ..
Bad Collaborations or
Bad Strategies?