Michael Au-YeungDiscussion Questions The changes Knudstorp achieved was toadvance the information systems capabilities and the organizations internalchanges. The business strategy, according to Jay Barnum, is the actionsimplemented to meet the business goals (Strategic Factor Markets: Expectations,Luck, and Business Strategy). The changes align within the business strategy inthat the information system was improved to support data and productmanagement, operational support, and other types of management in theorganization. The improvement of technology from vendors are SAP, a softwarecompany and IBM, a computer manufacturing company. The changes within theorganization to promote incentives for innovation and creativity aspired manyindividuals to stay with the company when Knudstorp informed all employees thatthere would be employment cuts(Lego.com).
Other business strategies that is achievedis the targeting of more than one customer base from both boys and girls andinto the virtual world of video games and film. In my opinion, I think Legos is following the focusgeneric strategy where they target on specific segments of people. Theiroriginal concern was the focus on prioritizing creation and innovation ofproducts along with the profits for mainly boys.
They then moved into adifferent segment of the virtual word in film and video games. It also allowedfor the creation of toys for girls too. Legos is also in the cost leadershipstrategy. According to the Economic Times, cost leadership is where a companyhas manufacturing provider to create a product with reduced costs compared toother competitors (Economic Times). Legos maximizes profits with low productioncosts and materials by being in the segment for so many years. They foundproduction companies in different locations for lower costs as well as reusingmolds for efficiency and those are the reasons why I think Legos is the leaderin the cost strategy. I think the changes knudstorpimplemented are a form of hypercompetition. The textbook states thathypercompetition is the aggressiveness and speed of all the moves andcountermoves 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 changeswere needed as Legos was losing a lot of money daily. The first move was tocreate a well-established working environment and culture, it being that thecreation and innovation of products must not over take the organization’sprofit. According to Jena McGregor, Knudstorp made tough decisions to cut thestaff, but he was honest with his decisions that by being innovative, you wouldn’tbe cut (The Washington Post). The next move was to innovate a new set ofproducts that targeted more than one sector of customers. It targeted anyoneusing movies, websites, and popular trends at the time. Not only did it targetboys, 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 succeedyear after year.
Lastly the move to cut down costs and time drasticallyimproved the efficiency of the company. Legos before Knudstorp’s transition tothe CEO of Legos, was failing in supply and demand. To improve the productiontime of parts, he decided to reuse parts and molds that saved time and money. Thesereasons of aggressive yet successful strategic decisions, helped shape thecompany. According to Peter Keen from the MIS Quarterly Journal, Knudstorp’sdecision was supported by himself and even though his strategies were notsupported by others, he eventually made the company successful (Value Analysis:Justifying Decision Support Systems). Lego has been staying competitive andmy advice is to continue to stay that way. Knudstorp laid the foundation forthe company’s values and that is enough for Lego to continue to re-inventitself with new products and ideas.
A way to keep the company relevant is tofollow the company’s mission statement and vision where the Lego Brand statesthat its vision is to “Inspire and develop the builders of tomorrow”(LEGO.COM). With that statement, Legos should continue to create new fun toysto build the characteristics of the want to learn, inspiration, and the developmentof achievement.