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 changes 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
information system to support management and support in operations, data, and other
types of management in the organization. The improvement of technology from
vendors are 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 the focus
generic strategy where they target on specific segments 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


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 changing the company’s organizational structure,
the ideas of new products, and the overall costs and efficiency. The changes
were needed as Legos was losing a lot of money daily. 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 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 the want to learn, inspiration, and the development
of achievement.




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