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Michael Au-Yeung

Discussion Questions

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The changes Knudstorp achieved is to
advance the information systems capabilities and the organizations internal
changes. The business strategy, according to Jay Barnum, is the actions
implemented to meet the business goals (Strategic Factor Markets: Expectations,
Luck, and Business Strategy). The changes align within the strategy for the
information system to ultimately support management and support in operations,
data, and other types of management in the organization. The improvement of
technology from vendors are SAP, a software company and IBM, a computer
manufacturing company. The changes within the organizational chain of employees
affects the incentives ideas innovation and creativity that many individuals will
display to stay with the company when Knudstorp informed all employees that
there would be employment cut(Lego.com). Other business strategies that is achieved
is the targeting of more than one customer base from both boys and girls and
into the virtual world of video games and film. 

  

In my opinion, I think Legos is following the focus
generic strategy where they target on specific segments of people. Their
original concern was the focus on prioritizing creation and innovation of
products along with the profits for mainly boys. They then moved into a
different segment of the virtual word in film and video games. It also allowed
for the creation of toys for girls too. Legos is also in the cost leadership
strategy. According to the Economic Times, cost leadership is where a company
has manufacturing provider to create a product with reduced costs compared to
other competitors (Economic Times). Legos maximizes profits with low production
costs and materials by being in the segment for so many years. They found
production companies in different locations for lower costs as well as reusing
molds for efficiency and those are the reasons why I think Legos is the leader
in the cost strategy.

  

I think the changes knudstorp
implemented are a form of hypercompetition. The textbook states that
hypercompetition is the aggressiveness and speed of all the moves and
countermoves that a company uses in a highly competitive environment or market.
Knudstorp’s changes include changing the company’s organizational structure,
the ideas of new products, and the overall costs and efficiency. The changes
were needed as Legos was losing a lot of money daily. The first move was to
create a well-established working environment and culture, it being that the
creation and innovation of products must not over take the organization’s
profit. According to Jena McGregor, Knudstorp made tough decisions to cut the
staff, but he was honest with his decisions that by being innovative, you wouldn’t
be cut (The Washington Post). The next move was to innovate a new set of
products that targeted more than one sector of customers. It targeted anyone
using movies, websites, and popular trends at the time. Not only did it target
boys, but it also targeted girls too with a specific line of toy creations.
Legos needed to continue to renew its product and ideas to consistently succeed
year after year. Lastly the move to cut down costs and time drastically
improved the efficiency of the company. Legos before Knudstorp’s transition to
the CEO of Legos, was failing in supply and demand. To improve the production
time of parts, he decided to reuse parts and molds that saved time and money. These
reasons of aggressive yet successful strategic decisions, helped shape the
company. According to Peter Keen from the MIS Quarterly Journal, Knudstorp’s
decision was supported by himself and even though his strategies were not
supported by others, he eventually made the company successful (Value Analysis:
Justifying Decision Support Systems).

 

Lego has been staying competitive and
my advice is to continue to stay that way. Knudstorp laid the foundation for
the company’s values and that is enough for Lego to continue to re-invent
itself with new products and ideas. A way to keep the company relevant is to
follow the company’s mission statement and vision where the Lego Brand states
that its vision is to “Inspire and develop the builders of tomorrow”
(LEGO.COM). With that statement, Legos should continue to create new fun toys
to build the characteristics of the want to learn, inspiration, and the development
of achievement.

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