Michael focus strategy where they only target on


Michael Au-Yeung

Discussion Questions

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1.      How did the information systems and the
organization design changes implemented by Knudstorp align with the changes in
business strategy?

 

The implementations 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 IS to support management and support in operations, data, and other
types of management in the organization. The improvement of technology from
vendors such as 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. 

 

2.       Which
of 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 strategy
where they only target on specific ages or groups of people. Their original
concern was the focus on prioritizing 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 a 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.

 

3.       Are the
changes implemented by Knudstorp an indication of hypercompetition? Defend your
position.

 

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 ‘strategies include changing the company’s organizational structure,
the ideas of new products, and the overall costs and efficiency. The changes
were needed as Legos lost a ton of money. 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).

 

4.      What advice would you give Knudstorp to keep
Lego competitive, growing, and relevant?

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 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.

References

Barney, 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: Justifying
Decision 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 who
rebuilt the house of Lego shares his leadership secrets.” The             Washington Post, WP Company, 8 Dec.
2016.

 

 

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