Introduction
Lego has begun its branch more than sixty years ago. Ole and his employees created their
very first products *€“ wooden toys in a small workshop in Denmark. Although in this
early stage, Ole had set his own direction of doing business as his slogan said Only the
best is good enough.
In 1947, Ole realized a huge potential of plastic as a new medium and Lego expanded to
producing plastic toys besides wooden ones. This decision brought Lego up to the next
levels. Oles son, Godtfred Kirk Christiansen, created a new set of simple four and eight
stud building bricks using the new material. Later Godtfred discovered a way to improve
the join ability of bricks. Along with new material and designs, Lego has become
synonymous. (Dibb, 2001, p.67) By 1956, Lego started to sell its product outside the
domestic market to other Eupopean countries, and today, all over the world.
For many people, Lego brand brings back happy childhood memories. (Simoes, 2001). On
Lego official website, The LEGO brand value is declared clearly as imagination, creativity,
fun, learning,*€¦Even though, Lego has a much wider range of products, the creative
imagination stays the same over years. As stated in official Legos website, Legos vision is
inventing the future of play. Its cleared that Lego will continuously seek innovation in
designing its products and services. For example, Lego has opened theme parks in UK and
USA to attract family or let customers to buy products online from their website. (Dibb,
2001)
Today, Lego has covered almost every aspect in childrens playful time. It is from toy,
theme park, video game to book, film, art, television. It is a successful branch.
Legos problem in the 1990s
There was a financial problem which could lead Lego to file bankruptcy. Legos
performance showed a poor result in late 1990s and early 2000s. In 1998, the company
recorded a before-tax loss of DKK 282 million. (Dibb, 2001) In 2003, the revenue fell
around 3 percent, and 6 percent in 2004. (Ekman, 2005) The poor result was caused by
both external environment and internal issues.
The changing in the market environment had huge impacts on the company.
•First problem was the financial problem in Russia and Asia in 1998. According to
the companys report, the retail and distribution sale dropped 40 percents in Russia
and 52 percents in Korea. Estimated loss was about 150 DKK million. (Dibb, 2001)
