Type: Definition Essays
Sample donated: Christina Santos
Last updated: December 31, 2019
Michael Au-YeungDiscussion Questions1. How did the information systems and theorganization design changes implemented by Knudstorp align with the changes inbusiness strategy? The changes Knudstorp achieved is toadvance the information systems capabilities and the organizations internalchanges. The business strategy, according to Jay Barnum, is the actionsimplemented to meet the business goals (Strategic Factor Markets: Expectations,Luck, and Business Strategy). The changes align within the strategy for theinformation system to support management and support in operations, data, and othertypes of management in the organization. The improvement of technology fromvendors are SAP, a software company and IBM, a computer manufacturing company. Thechanges within the organizational chain of employees affects the incentives ideasinnovation and creativity that many individuals will display to stay with thecompany when Knudstorp informed all employees that there would be employmentcut(Lego.
com). Other business strategies that is achieved is the targeting ofmore than one customer base from both boys and girls and into the virtual worldof video games and film. 2. Whichof 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 focusgeneric strategy where they target on specific segments of people. Theiroriginal concern was the focus on prioritizing innovation of products alongwith the profits for mainly boys. They then moved into a different segment ofthe virtual word in film and video games. It also allowed for the creation oftoys for girls too.
Legos is also in the cost leadership strategy. According tothe Economic Times, cost leadership is where a company has manufacturingprovider to create a product with reduced costs compared to other competitors (EconomicTimes). Legos maximizes profits with low production costs and materials bybeing in the segment for so many years. They found production companies indifferent locations for lower costs as well as reusing molds for efficiency andthose are the reasons why I think Legos is the leader in the cost strategy. 3.
Are thechanges implemented by Knudstorp an indication of hypercompetition? Defend yourposition. I think the changes knudstorpimplemented are a form of hypercompetition. The textbook states thathypercompetition is the aggressiveness and speed of all the moves andcountermoves 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 changeswere needed as Legos was losing a lot of money daily. The first move was tocreate a well-established working environment and culture, it being that thecreation and innovation of products must not over take the organization’sprofit. According to Jena McGregor, Knudstorp made tough decisions to cut thestaff, but he was honest with his decisions that by being innovative, you wouldn’tbe cut (The Washington Post).
The next move was to innovate a new set ofproducts that targeted more than one sector of customers. It targeted anyoneusing movies, websites, and popular trends at the time. Not only did it targetboys, 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 succeedyear after year. Lastly the move to cut down costs and time drasticallyimproved the efficiency of the company.
Legos before Knudstorp’s transition tothe CEO of Legos, was failing in supply and demand. To improve the productiontime of parts, he decided to reuse parts and molds that saved time and money. Thesereasons of aggressive yet successful strategic decisions, helped shape thecompany. According to Peter Keen from the MIS Quarterly Journal, Knudstorp’sdecision was supported by himself and even though his strategies were notsupported by others, he eventually made the company successful (Value Analysis:Justifying Decision Support Systems). 4. What advice would you give Knudstorp to keepLego competitive, growing, and relevant?Lego has been staying competitive andmy advice is to continue to stay that way. Knudstorp laid the foundation forthe company’s values and that is enough for Lego to continue to re-inventitself with new products and ideas. A way to keep the company relevant is tofollow the company’s mission statement and vision where the Lego Brand statesthat its vision is to “Inspire and develop the builders of tomorrow”(LEGO.
COM). With that statement, Legos should continue to create new fun toysto build the characteristics of the want to learn, inspiration, and the developmentof achievement. ReferencesBarney, 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: JustifyingDecision 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 whorebuilt the house of Lego shares his leadership secrets.” The Washington Post, WP Company, 8 Dec.2016.