Michael Au-YeungDiscussion Questions1. How did the information systems and theorganization design changes implemented by Knudstorp align with the changes inbusiness strategy? The implementations Knudstorp achievedis to advance the information systems capabilities and the organizationsinternal changes. The business strategy, according to Jay Barnum, is theactions implemented to meet the business goals (Strategic Factor Markets:Expectations, Luck, and Business Strategy). The changes align within the strategyfor the IS to support management and support in operations, data, and othertypes of management in the organization. The improvement of technology fromvendors such as SAP, a software company and IBM, a computer manufacturingcompany.
The changes within the organizational chain of employees affects theincentives ideas innovation and creativity that many individuals will display tostay with the company when Knudstorp informed all employees that there would beemployment cut(Lego.com). Other business strategies that is achieved is thetargeting of more than one customer base from both boys and girls and into thevirtual world of video games and film. 2. Whichof the generic strategies does Lego appear to be using based on this case?Provide support for your choice. In my opinion, I think Legos is following a focus strategywhere they only target on specific ages or groups of people.
Their originalconcern was the focus on prioritizing innovation of products along with theprofits for mainly boys. They then moved into a different segment of thevirtual word in film and video games. It also allowed for the creation of toysfor girls too. Legos is also in the cost leadership strategy. According to theEconomic Times, cost leadership is where a company has a manufacturing providerto create a product with reduced costs compared to other competitors (EconomicTimes).
Legos maximizes profits with low production costs and materials bybeing in the segment for so many years. They found production companies indifferent locations for lower costs as well as reusing molds for efficiency andthose are the reasons why I think Legos is the leader in the cost strategy. 3. Are thechanges implemented by Knudstorp an indication of hypercompetition? Defend yourposition. 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 ‘strategies include changing the company’s organizational structure,the ideas of new products, and the overall costs and efficiency. The changeswere needed as Legos lost a ton of money. The first move was to create a well-establishedworking environment and culture, it being that the creation and innovation ofproducts must not over take the organization’s profit. According to JenaMcGregor, Knudstorp made tough decisions to cut the staff, but he was honestwith his decisions that by being innovative, you wouldn’t be cut (TheWashington Post). The next move was to innovate a new set of products thattargeted 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 italso targeted girls too with a specific line of toy creations.
Legos needed tocontinue to renew its product and ideas to consistently succeed year afteryear. Lastly the move to cut down costs and time drastically improved theefficiency of the company. Legos before Knudstorp’s transition to the CEO ofLegos, was failing in supply and demand. To improve the production time ofparts, 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). 4. What advice would you give Knudstorp to keepLego competitive, growing, and relevant?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 vision is to “Inspireand develop the builders of tomorrow” (LEGO.COM).
With that statement, Legos shouldcontinue to create new fun toys to build the characteristics of the want tolearn, inspiration, and the development of achievement. ReferencesBarney, Jay B. Strategic Factor Markets:Expectations, Luck, and Business Strategy. 10th ed., vol. 32, University of California, 1986.”Definition of Cost Leadership | What is Cost Leadership?Cost Leadership Meaning.” The Economic Times, economictimes.
indiatimes.com/definition/cost-leadership.Keen, Peter. Value Analysis: JustifyingDecision Support Systems. Vol. 5, MIS Quarterly, 1981.
LEGO.com Mission and vision,www.lego.com/en-us/legohistory/mission-and-vision.
McGregor, Jena. “Brick by brick: The man whorebuilt the house of Lego shares his leadership secrets.” The Washington Post, WP Company, 8 Dec.2016.