CASE SUMMARIES

ZESPRI

Key Strategic Issues

There are various issues that should have a dedicated focus as they are critical
for the company's future:
Growth in demand: The key strategic issue for Zespri is how it will manage to
increase the demand of kiwifruit in a global scale.
Increase in Competition and model copying: How will Zespri be able to
maintain the union model they have with growers with the increase in
competition like the opening of the kiwifruit division of Turners & Growers in
NZ.
QA for Processes and products: With the increase of global sourcing to keep
growing worldwide, how will Zespri keep the high standards in the processes
and in the quality of the fruits grown by different growers in more different
areas/countries to keep its 12 months supply.
All the previous issues account as barriers for Zespri to achieve its goal of
having $3 billion worth of sales by year 2025.
Recommendations
How to address the issue
2

To increase the demand Zespri will need to increment the product mix with
fruits like the red kiwifruit and modify current ones to attract a major market as
in example making the green kiwifruit more sweeter thus providing products
that would better fulfills the customer's tastes. Also Zespri could engage the
business of tertiary products derived or connected to it's core products like
kiwifruit chips or kiwi juice. By diversifying it's product portfolio at a minimum
risk the company could achieve a market share growth as well as to expand to
new markets . Zespri flag products as the gold and green kiwifruit being wellselling premium items could help in increasing the profits even more by having
them expanded to in a way that provides a higher level of person choice for the
consumer thus increasing the demand. A true premium brand has many
product variations to satisfy a vast majority of the customers, but still retains
its high quality that made it popular in the first place.

CASE SUMMARIES
To increase revenue Zespri could increase the sales of Golden kiwifruit and the
Gold kiwifruit also they could plan to supply more sweeter Gold and regular
Gold kiwi. Also Zespri should lower the production of regular Green kiwi in favor
of the sweeter Green kiwi. According to the financial report of previous years,
the sweeter kiwi will generate more 30% profit than regular kiwi. From
redistributing the amounts of production and sales of the different products the
company could reach a higher profit that the one being achieved by
maintaining the current numbers. Increasing the production of sweeter
varieties for both sweeter Gold and Green kiwi seems as a logical approach as
the market for those products had been labeled to have no potential risks.
3

Key Takeaways

Zespri investments in marketing of bout 6% of its revenues really made a

difference of creating a brand from a commodity good. This kind of goods are
affordable for consumers but have low margin to producers but Zespri by
building a strategy to build a brand based on its products was able to
differentiate them from regular kiwi and enabled them to generate higher
profits. A strong brand offers higher margins and that translates into extra
profits. As Taste and health were the main reason for clients to buy Zespri
again, the company was successful in niche advertising these properties in the
different markets they are present. But the key to this product differentiation
was not only marketing but also a comprehensive strategy to foster
downstream innovation, upstream effectiveness, as growing techniques or
worldwide optimal logistics. The premium quality of the fruits allowed Zespri to
ask for premium prices.
1

LEGO

Key strategic issues

Uncontrolled Expansion: In 2000 began a period of explosive growth due to
licensing products and intellectual properties. The company faced a big
expansion that included not only new product lines but computer games,
clothing, amusement parks (LEGOLAND), movies (Star Wars & Harry Potter),
series (Bionicle) and their website. For increasing innovation, the company
hired many designers, whose ideas were beyond traditional bricks, which
affected the cost structure.
Increasing competition: The toy industry reduced costs by outsourcing the
manufacturing to Asia countries and the Danish Krone devaluated against the
US Dollar, so LEGO faced a pressure in prices because the competition offered
lower prices and was faster than LEGO bringing products to the market. The
retail sector was consolidating into mega stores which had an increasing large
share of total toy sales. In 2003-2004 Lego Group saw its biggest losses ever
and the new CEO, recognized, that the company lost its way.

CASE SUMMARIES
Electronic games: The toy industry was changing dramatically Children about
the age of 8 start losing interest in traditional toys due to multimedia fantasy
worlds. The toys period of use was reduced in 4 years due to this trend, what
affected the companys market share. The expansion in the range of offerings
not only affected the identity of the LEGO Group but also altered its cost
structure because every new product line had to have its own mold, production
method, and inventory, which added to the fixed cost of the company. The
identity of the company was affected because they had so many product lines
and projects that they lost their focus.
Recommendations
How to address the issue
4

Jorgen Vig Knudstorp and his team came with the Shared Vision plan:
Stabilize for survival: (Reducing costs, Eliminating debt, Returning
profitability) Profit from the core: Revitalizing the core product lines and
transforming them. Achieving vision: Developing innovative new play
experiences.
Phase 1 was achieved by outsourcing majority of plastic brick manufacturing
and moving manufacture to cheaper countries, reducing the workforce by 50%,
selling 70% share of the Legoland parks and reducing the inventory of Lego
components by as much as 50%.
Phase 2 was going to the core, the Brick, the Building system, the emotionally
appealing brand and the unusually devoted Lego community. They decided that
the new product family of the company had to be true to its identity, a new
play experience should be obviously LEGO, but never seen before. The first
product line to be revitalized was Lego City by developing more realistic
products with convincing detail for limited number of products with which
children has direct experience.
5

Key Takeaways

Managing sustainable growth is about managing a balanced business system

and Complexity is something you need to watch very closely.
We saw how an unmeasured growth mixed with overly exaggerated innovation
and other factors almost brought LEGO group to a bankruptcy.
Controlling complexity, clarifying the core of its business, and engaging the
larger community helped save the LEGO Group. In deed there was a need for
LEGO to reconnect with the community of loyal LEGO fans, one of the most
powerful assets the company had and that was a huge part of the return of
LEGO. User driven innovation is one of the key things that provided LEGO a
second breath in times when they were lost. By tapping into the knowledge
and enthusiasm of thousands of longtime users of its products, LEGO has been
able to enhance its product offerings without increasing long-term fixed costs.
1

NINTENDO

CASE SUMMARIES
Key strategic issues
Uncontrolled Expansion: In 2000 began a period of explosive growth due to
licensing products and intellectual properties. The company faced a big
expansion that included not only new product lines but computer games,
clothing, amusement parks (LEGOLAND), movies (Star Wars & Harry Potter),
series (Bionicle) and their website. For increasing innovation, the company
hired many designers, whose ideas were beyond traditional bricks, which
affected the cost structure.
Increasing competition: The toy industry reduced costs by outsourcing the
manufacturing to Asia countries and the Danish Krone devaluated against the
US Dollar, so LEGO faced a pressure in prices because the competition offered
lower prices and was faster than LEGO bringing products to the market. The
retail sector was consolidating into mega stores which had an increasing large
share of total toy sales. In 2003-2004 Lego Group saw its biggest losses ever
and the new CEO, recognized, that the company lost its way.
Electronic games: The toy industry was changing dramatically Children about
the age of 8 start losing interest in traditional toys due to multimedia fantasy
worlds. The toys period of use was reduced in 4 years due to this trend, what
affected the companys market share. The expansion in the range of offerings
not only affected the identity of the LEGO Group but also altered its cost
structure because every new product line had to have its own mold, production
method, and inventory, which added to the fixed cost of the company. The
identity of the company was affected because they had so many product lines
and projects that they lost their focus.
Recommendations
How to address the issue
6

Jorgen Vig Knudstorp and his team came with the Shared Vision plan:
Stabilize for survival: (Reducing costs, Eliminating debt, Returning
profitability) Profit from the core: Revitalizing the core product lines and
transforming them. Achieving vision: Developing innovative new play
experiences.
Phase 1 was achieved by outsourcing majority of plastic brick manufacturing
and moving manufacture to cheaper countries, reducing the workforce by 50%,
selling 70% share of the Legoland parks and reducing the inventory of Lego
components by as much as 50%.
Phase 2 was going to the core, the Brick, the Building system, the emotionally
appealing brand and the unusually devoted Lego community. They decided that
the new product family of the company had to be true to its identity, a new
play experience should be obviously LEGO, but never seen before. The first
product line to be revitalized was Lego City by developing more realistic
products with convincing detail for limited number of products with which
children has direct experience.
7

Key Takeaways

CASE SUMMARIES
Managing sustainable growth is about managing a balanced business system
and Complexity is something you need to watch very closely.
We saw how an unmeasured growth mixed with overly exaggerated innovation
and other factors almost brought LEGO group to a bankruptcy.
Controlling complexity, clarifying the core of its business, and engaging the
larger community helped save the LEGO Group. In deed there was a need for
LEGO to reconnect with the community of loyal LEGO fans, one of the most
powerful assets the company had and that was a huge part of the return of
LEGO. User driven innovation is one of the key things that provided LEGO a
second breath in times when they were lost. By tapping into the knowledge
and enthusiasm of thousands of longtime users of its products, LEGO has been
able to enhance its product offerings without increasing long-term fixed costs.
1

Dr. Tim

Key strategic issues

Uncontrolled Expansion: In 2000 began a period of explosive growth due to
licensing products and intellectual properties. The company faced a big
expansion that included not only new product lines but computer games,
clothing, amusement parks (LEGOLAND), movies (Star Wars & Harry Potter),
series (Bionicle) and their website. For increasing innovation, the company
hired many designers, whose ideas were beyond traditional bricks, which
affected the cost structure.
Increasing competition: The toy industry reduced costs by outsourcing the
manufacturing to Asia countries and the Danish Krone devaluated against the
US Dollar, so LEGO faced a pressure in prices because the competition offered
lower prices and was faster than LEGO bringing products to the market. The
retail sector was consolidating into mega stores which had an increasing large
share of total toy sales. In 2003-2004 Lego Group saw its biggest losses ever
and the new CEO, recognized, that the company lost its way.
Electronic games: The toy industry was changing dramatically Children about
the age of 8 start losing interest in traditional toys due to multimedia fantasy
worlds. The toys period of use was reduced in 4 years due to this trend, what
affected the companys market share. The expansion in the range of offerings
not only affected the identity of the LEGO Group but also altered its cost
structure because every new product line had to have its own mold, production
method, and inventory, which added to the fixed cost of the company. The
identity of the company was affected because they had so many product lines
and projects that they lost their focus.
Recommendations
How to address the issue
8

Jorgen Vig Knudstorp and his team came with the Shared Vision plan:

CASE SUMMARIES
Stabilize for survival: (Reducing costs, Eliminating debt, Returning
profitability) Profit from the core: Revitalizing the core product lines and
transforming them. Achieving vision: Developing innovative new play
experiences.
Phase 1 was achieved by outsourcing majority of plastic brick manufacturing
and moving manufacture to cheaper countries, reducing the workforce by 50%,
selling 70% share of the Legoland parks and reducing the inventory of Lego
components by as much as 50%.
Phase 2 was going to the core, the Brick, the Building system, the emotionally
appealing brand and the unusually devoted Lego community. They decided that
the new product family of the company had to be true to its identity, a new
play experience should be obviously LEGO, but never seen before. The first
product line to be revitalized was Lego City by developing more realistic
products with convincing detail for limited number of products with which
children has direct experience.
9

Key Takeaways

Managing sustainable growth is about managing a balanced business system

and Complexity is something you need to watch very closely.
We saw how an unmeasured growth mixed with overly exaggerated innovation
and other factors almost brought LEGO group to a bankruptcy.
Controlling complexity, clarifying the core of its business, and engaging the
larger community helped save the LEGO Group. In deed there was a need for
LEGO to reconnect with the community of loyal LEGO fans, one of the most
powerful assets the company had and that was a huge part of the return of
LEGO. User driven innovation is one of the key things that provided LEGO a
second breath in times when they were lost. By tapping into the knowledge
and enthusiasm of thousands of longtime users of its products, LEGO has been
able to enhance its product offerings without increasing long-term fixed costs.
1

NEWELL

Key strategic issues

Uncontrolled Expansion: In 2000 began a period of explosive growth due to
licensing products and intellectual properties. The company faced a big
expansion that included not only new product lines but computer games,
clothing, amusement parks (LEGOLAND), movies (Star Wars & Harry Potter),
series (Bionicle) and their website. For increasing innovation, the company
hired many designers, whose ideas were beyond traditional bricks, which
affected the cost structure.

CASE SUMMARIES
Increasing competition: The toy industry reduced costs by outsourcing the
manufacturing to Asia countries and the Danish Krone devaluated against the
US Dollar, so LEGO faced a pressure in prices because the competition offered
lower prices and was faster than LEGO bringing products to the market. The
retail sector was consolidating into mega stores which had an increasing large
share of total toy sales. In 2003-2004 Lego Group saw its biggest losses ever
and the new CEO, recognized, that the company lost its way.
Electronic games: The toy industry was changing dramatically Children about
the age of 8 start losing interest in traditional toys due to multimedia fantasy
worlds. The toys period of use was reduced in 4 years due to this trend, what
affected the companys market share. The expansion in the range of offerings
not only affected the identity of the LEGO Group but also altered its cost
structure because every new product line had to have its own mold, production
method, and inventory, which added to the fixed cost of the company. The
identity of the company was affected because they had so many product lines
and projects that they lost their focus.
Recommendations
How to address the issue
10

Jorgen Vig Knudstorp and his team came with the Shared Vision plan:
Stabilize for survival: (Reducing costs, Eliminating debt, Returning
profitability) Profit from the core: Revitalizing the core product lines and
transforming them. Achieving vision: Developing innovative new play
experiences.
Phase 1 was achieved by outsourcing majority of plastic brick manufacturing
and moving manufacture to cheaper countries, reducing the workforce by 50%,
selling 70% share of the Legoland parks and reducing the inventory of Lego
components by as much as 50%.
Phase 2 was going to the core, the Brick, the Building system, the emotionally
appealing brand and the unusually devoted Lego community. They decided that
the new product family of the company had to be true to its identity, a new
play experience should be obviously LEGO, but never seen before. The first
product line to be revitalized was Lego City by developing more realistic
products with convincing detail for limited number of products with which
children has direct experience.
11

Key Takeaways

Managing sustainable growth is about managing a balanced business system

and Complexity is something you need to watch very closely.
We saw how an unmeasured growth mixed with overly exaggerated innovation
and other factors almost brought LEGO group to a bankruptcy.

CASE SUMMARIES
Controlling complexity, clarifying the core of its business, and engaging the
larger community helped save the LEGO Group. In deed there was a need for
LEGO to reconnect with the community of loyal LEGO fans, one of the most
powerful assets the company had and that was a huge part of the return of
LEGO. User driven innovation is one of the key things that provided LEGO a
second breath in times when they were lost. By tapping into the knowledge
and enthusiasm of thousands of longtime users of its products, LEGO has been
able to enhance its product offerings without increasing long-term fixed costs.