How LEGO Changed the Game with its Innovative Business Strategy
In today’s fast-paced business world, companies need to be innovative to stay ahead of the competition. LEGO, a Danish toy company, is a prime example of this. LEGO has been around for almost 90 years, and during this time, it has developed a business strategy that has transformed the toy industry. In this article, we will explore how LEGO changed the game with its innovative business strategy.
Introduction
LEGO is a household name in the toy industry. The company’s iconic brick design has been the foundation of children’s play for generations. However, LEGO’s success wasn’t always guaranteed. In the early 2000s, LEGO was facing financial difficulties, and its toys were not selling as well as they used to. In response, LEGO developed a new business strategy that has since revolutionized the toy industry.
The LEGO Group’s Business Strategy
LEGO’s new business strategy focused on three key areas: product innovation, cost-cutting, and diversification.
Product Innovation
LEGO’s product innovation was twofold: creating new product lines and refreshing existing ones. LEGO began expanding into new markets, such as video games and movies. They partnered with companies such as Warner Bros. to bring LEGO-branded movies to the big screen.
At the same time, LEGO recognized the need to update its existing products to stay relevant. They introduced new themes, such as LEGO Friends, which was targeted towards girls, and LEGO Technic, which was aimed at older children and adults.
Cost-Cutting
To cut costs, LEGO scaled back its production and streamlined its manufacturing processes. LEGO also moved its production facilities from high-cost countries to lower-cost countries such as China, Mexico, and Hungary.
Additionally, LEGO reduced its product packaging, which not only cut costs but also reduced its environmental impact.
Diversification
Along with expanding into new markets, LEGO diversified its product offerings. The company began collaborating with other brands such as Star Wars, Harry Potter, and Marvel to create licensed toys. This not only expanded the LEGO brand but also brought in new audiences.
Results of LEGO’s Business Strategy
LEGO’s innovative business strategy was a huge success. The company went from a loss of $300 million in 2003 to a profit of $1 billion in 2014. LEGO’s revenue also grew steadily, from $1.3 billion in 2003 to $4.8 billion in 2014.
LEGO’s new products, such as LEGO Friends, were a hit with audiences, particularly girls. The company’s licensed products also brought in new audiences, such as Star Wars fans. Additionally, LEGO’s cost-cutting measures enabled the company to reduce expenses and become more profitable.
Conclusion
LEGO’s innovative business strategy has transformed the toy industry. By focusing on product innovation, cost-cutting, and diversification, LEGO was able to turn its fortunes around and become one of the most successful toy companies in the world. This proves that innovation is key to success, even for long-established companies. LEGO’s success story serves as a reminder that companies cannot afford to become complacent and must continue to innovate to stay ahead.
