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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 notable changes Knudstorp achieved
was 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
business strategy in that the information system was improved to support data
and product management, operational support, and other types of management
inside the organization. The improvement of technology from vendors are SAP, a
software company and IBM, a computer manufacturing company. The changes within
the organization to promote incentives for innovation and creativity aspired
many individuals to stay with the company when Knudstorp informed all employees
that there would be employment cuts. Other business strategies that were met
are 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 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.

 

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’s changes include revamping the company’s organizational structure,
the innovation of new products, and overall costs and efficiency. The changes
were needed as Legos was failing fast. The first move was to set the tone of
the 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
and transparent with his decisions that valuable and innovative employees
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 Hollywood 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 harsh, relentless, aggressive yet successful
strategic decisions, helped shape how the company is today. 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 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 learning, inspiration, and development of young
minds.

 

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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