group c question 2

MIST500 2020_Case study work group-LEGO - Word Tell me what you want to do... AaBbCcDc AaBbCcDc AaBbci AaBbccc 1 Normal 1 No Spac... Heading 1 Heading 2 AaBbcc AaBbccdi AaBbCcDE Subtitle Subtle Em... Emphasis Title Styles MIST360: IS Strategy, Management, and Acquisition Spring 2020: Case study Group work (C, D) Case 2: LEGO LEGO Lego has long been an industry leader in children's toys with its simple, yet unique building block- style products. The privately held company was founded in 1932 by a Danish carpenter whose family still owns Lego today. But by 2004, the company found itself close to extinction, losing Sl million a day. A new CEO was brought in, and five years later, sales were strong profits were up, and naysayers who felt the new strategy was going to fail were proved wrong. With the advent of high-tech forms of entertainment such as the iPod and PlayStation, Lego *** found itself more antique than cutting edge in the toy world. When new CEO Jorgen Vig Knudstorp, a father and former McKinsey consultant, took over, the company struggled with poor performance, missed deadlines, long development times, and poor delivery record. The most popular toys would run out and Lego was unable to ship enough products or manage production of its more complicated sets. Retail stores were frustrated, and that translated into reduced shell space and ultimately to business losses. Knudstorp changed all of that. 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. Since each component's mold could cost up to 50.000 euros on average to create, this reduction saved significant expense. Lego was known for their traditional blocks and components that would allow children to build just about anything their imaginntion could create. The new strategy broadened the products, targeting new customer segments. Lego managers created products based on themes of populan DALL MIST360 2020_Case study work group-LEGO - Word Tell me what you want to do... ** AL AaBbCcDc AaBbCcDc AaBbc AaBbcc AaB AaBbccc AaBbCcDe AaBbCcDe 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles movies such as Star Wars and Indiana Jones. They moved into video games, which featured animated Lego characters sometimes based on Hollywood movies. They created a product strategy for adults and engaged the communities who had already set up thousands of websites and blogs featuring Lego creations. They embraced the community who thought of Lego as a way to create art, rather than simply a building toy. And they designed a line of Legos aimed at girls, since the majority of their products had primarily targeted boys. "The culture of Lego changed to one where nonperformance was unacceptable. The company's past showed a tendency to focus on innovation and creativity, often at the expense of profits. But that changed. "Knudstorp made it clear that results, not simply feeling good about making the best toys, wonld be essential if Lego was to succeed. . . Its business may still be fun and games, but working here isn't,"describes the current culture at Lego. Some of the most drastic changes came from within Lego's organizational structure. After racking up massive losses in 2004, Lego switched its employee pay structure, offering incentives for appropriate product innovation and sales. Key Performance Indicators encouraged product innovation that catalyzed sales while decreasing costs. Development time dropped by 50% and some manufacturing and distribution functions were moved to less expensive locations, but the focus on quality remained. The creation of reusable parts alleviated some of the strain on Lego's supply chain, which in turn helped its bottom line. Lego also expanded into the virtual world, extending into video gaming and virtual- interaction games on the Internet. Thinking outside their previous product concepts cut costs while encouraging real-time feedback from customers across a global market. Additionally, Lego created brand ambassadors who organized conventions across the world to discuss product innovation and building communities of fellow customers. With increased revenue, Lego managers considered entering the movie-making businessa risky proposition for a toy company. However, Lego's success with Hollywood-type action figures fueled its interest in a movie-making endeavor. The growth put strains on the information systems supporting the business. Order management and fulfillment were particularly affected, resulting in the inability to meet customer demands. Employee management systems were stretched as new employees were added to support the growth and additional locations. Product design and development, especially the virtual and video games, required new technology, too. To solve some of these problems, Lego managers used the same approach they used for their blocks. They created a modularized and standardized architecture for their information systens, 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 manager ment, 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. One manager at Lego summed it up nicely: "The toy world moves onwards constantly, and Lego needs to re-invent itself continuously. Significant corporate re-shaping introduced new energy to the company. He went on to say that simplifying Lego's IT systems and implementing an efficient product development process that was able to maintain quality and cost favorably positioned Lego to respond to the fast changing pace of the toy industry. DELL MIST360 2020_Case study work group-LEGO - Word Tell me what you want to do... | bccDe AaBbct bccc bCCD 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles Lego needs to re-invent itself continuously. Significant corporate re-shaping introduced new energy to the company." He went on to say that simplifying Lego's IT systoms and implementing an efficient product development process that was able to maintain quality and cost favorably positioned Lego to respond to the fast changing pace of the toy industry. Questions Group C 1. Provide an overall summary of the case study 2. How did the information systems and organisation design changes implemented by Kundstorp align with the changes in the business strategy Group D 1. Provide an overall summary of the case study 2. How does information technology/systems add value to LEGO? DOL MIST500 2020_Case study work group-LEGO - Word Tell me what you want to do... AaBbCcDc AaBbCcDc AaBbci AaBbccc 1 Normal 1 No Spac... Heading 1 Heading 2 AaBbcc AaBbccdi AaBbCcDE Subtitle Subtle Em... Emphasis Title Styles MIST360: IS Strategy, Management, and Acquisition Spring 2020: Case study Group work (C, D) Case 2: LEGO LEGO Lego has long been an industry leader in children's toys with its simple, yet unique building block- style products. The privately held company was founded in 1932 by a Danish carpenter whose family still owns Lego today. But by 2004, the company found itself close to extinction, losing Sl million a day. A new CEO was brought in, and five years later, sales were strong profits were up, and naysayers who felt the new strategy was going to fail were proved wrong. With the advent of high-tech forms of entertainment such as the iPod and PlayStation, Lego *** found itself more antique than cutting edge in the toy world. When new CEO Jorgen Vig Knudstorp, a father and former McKinsey consultant, took over, the company struggled with poor performance, missed deadlines, long development times, and poor delivery record. The most popular toys would run out and Lego was unable to ship enough products or manage production of its more complicated sets. Retail stores were frustrated, and that translated into reduced shell space and ultimately to business losses. Knudstorp changed all of that. 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. Since each component's mold could cost up to 50.000 euros on average to create, this reduction saved significant expense. Lego was known for their traditional blocks and components that would allow children to build just about anything their imaginntion could create. The new strategy broadened the products, targeting new customer segments. Lego managers created products based on themes of populan DALL MIST360 2020_Case study work group-LEGO - Word Tell me what you want to do... ** AL AaBbCcDc AaBbCcDc AaBbc AaBbcc AaB AaBbccc AaBbCcDe AaBbCcDe 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles movies such as Star Wars and Indiana Jones. They moved into video games, which featured animated Lego characters sometimes based on Hollywood movies. They created a product strategy for adults and engaged the communities who had already set up thousands of websites and blogs featuring Lego creations. They embraced the community who thought of Lego as a way to create art, rather than simply a building toy. And they designed a line of Legos aimed at girls, since the majority of their products had primarily targeted boys. "The culture of Lego changed to one where nonperformance was unacceptable. The company's past showed a tendency to focus on innovation and creativity, often at the expense of profits. But that changed. "Knudstorp made it clear that results, not simply feeling good about making the best toys, wonld be essential if Lego was to succeed. . . Its business may still be fun and games, but working here isn't,"describes the current culture at Lego. Some of the most drastic changes came from within Lego's organizational structure. After racking up massive losses in 2004, Lego switched its employee pay structure, offering incentives for appropriate product innovation and sales. Key Performance Indicators encouraged product innovation that catalyzed sales while decreasing costs. Development time dropped by 50% and some manufacturing and distribution functions were moved to less expensive locations, but the focus on quality remained. The creation of reusable parts alleviated some of the strain on Lego's supply chain, which in turn helped its bottom line. Lego also expanded into the virtual world, extending into video gaming and virtual- interaction games on the Internet. Thinking outside their previous product concepts cut costs while encouraging real-time feedback from customers across a global market. Additionally, Lego created brand ambassadors who organized conventions across the world to discuss product innovation and building communities of fellow customers. With increased revenue, Lego managers considered entering the movie-making businessa risky proposition for a toy company. However, Lego's success with Hollywood-type action figures fueled its interest in a movie-making endeavor. The growth put strains on the information systems supporting the business. Order management and fulfillment were particularly affected, resulting in the inability to meet customer demands. Employee management systems were stretched as new employees were added to support the growth and additional locations. Product design and development, especially the virtual and video games, required new technology, too. To solve some of these problems, Lego managers used the same approach they used for their blocks. They created a modularized and standardized architecture for their information systens, 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 manager ment, 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. One manager at Lego summed it up nicely: "The toy world moves onwards constantly, and Lego needs to re-invent itself continuously. Significant corporate re-shaping introduced new energy to the company. He went on to say that simplifying Lego's IT systems and implementing an efficient product development process that was able to maintain quality and cost favorably positioned Lego to respond to the fast changing pace of the toy industry. DELL MIST360 2020_Case study work group-LEGO - Word Tell me what you want to do... | bccDe AaBbct bccc bCCD 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles Lego needs to re-invent itself continuously. Significant corporate re-shaping introduced new energy to the company." He went on to say that simplifying Lego's IT systoms and implementing an efficient product development process that was able to maintain quality and cost favorably positioned Lego to respond to the fast changing pace of the toy industry. Questions Group C 1. Provide an overall summary of the case study 2. How did the information systems and organisation design changes implemented by Kundstorp align with the changes in the business strategy Group D 1. Provide an overall summary of the case study 2. How does information technology/systems add value to LEGO? DOL