Kelompok 8
2301923092 – Fikri Marwan Wardhana
2301921111 – D.Raka Agung Bagaskara
2301914705 – Nyoman Ananta Sabda Iswara
2301931705 – Montela Livanto
2301903866 – Satrio Abiafnan Pranowo
Case Study: Lego
1. How did the information systems and the organization design changes implemented by Knudstorp
align with the changes in business strategy?
The information systems and the organization design change help solving the problem Lego had. The
problem Lego company was struggling poor performance, missed deadlines, long development times,
and a poor delivery record. The most popular toys frequently would be out of stock, and the company
was unable to ship enough products or manage the production of its more complicated sets. Retail
stores were frustrated, and that translated into reduced shelf space and ultimately to business losses.
The changes Knudstorp made are He reached out to top retailers, cut costs, and added missing links to
the supply chain. For example, prior to the new strategy, 90% of the components were used in just
one design. Designers were encouraged to reuse components in their new products, which resulted in
a reduction from about 13,000 different Lego components to 7,000. Because each component’s mold
could cost up to 50,000 euros on average to create, this reduction saved significant expense. They
created a modularized and standardized architecture for their IS, making it possible to expand more
quickly and add capacity and functionality as it was needed. They implemented an integrated
enterprise system that gave them new applications for human capital management, operations
support, product life cycle management, and data management. The new systems and services,
purchased from vendors such as SAP and IBM, simplified the IT architecture and the management
processes needed to oversee the IS.
Knudstorp changes make the company to survive from dying, and within five years sales were strong,
profits were up, sales, revenues and profits continued to be strong. Revenues grew from 16 billion
Danish krone (DKK) in 2010 to over 28 billion DKK in 2014, and in the same period, profit almost
doubled from 3.7 billion DKK to 7 billion DKK.
2. Which of the generic strategies does Lego appear to be using based on this case? Provide support for
your choice.
From what we can see, the strategies that Lego take are The Cost Leadership strategies. The reason
we choose Cost Leadership Strategies are; Lego attempting to cut costs, and added missing links. The
cost reduction that they made make the company reduce the production cost by 90% of the
components were used in just one design. Designers were encouraged to reuse components in their
new products, which resulted in a reduction from about 13,000 different Lego components to 7,000.
Because each component’s mold could cost up to 50,000 euros on average to create.
3. Are the changes implemented by Knudstorp an indication of hyper competition? Defend your
position.
Hypercompetition is a term that refers to a situation in the market at a time when technology or
supplies of the companies are so new that standards and rules of mutual rivalry are still produced,
thus, competitive advantages arise, however they are not sustainable (Kotler, Caslione, 2009).
Hypercompetition is characterized by intense competitive action and rapid innovation, to which the
other competitors must respond quickly. Just so they can create their own competitive advantages and
eliminate the benefits of their rivals. (Management Mania, 2016).
Based on the explanation above, Knudstorp facing hypercompetition in toys market. The other
competitor creating a new innovation by digitalizing toys for the children and affecting the old
tradition and culture of Lego can affect the sales margin due to market environment and technology.
The best way to fix the profit-loss is to create innovation for the demand market about toys in new
era.
4. What advice would you give Knudstorp to keep Lego competitive, growing, and relevant?
Lego is a company moving in toys sector, Knudstorp decision to renew the company culture is the
best way to keep in close on demand market toys. Lego need a new IS to prevent the outdated trend
such as Big Data and Artificial Intelligence to keep an eye about new trending. The information can
help Lego to prepare the new wave of trends and also increasing the margin profit by fulfill the
market demand.
