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Shiromani Gurudwara Parbandhak Committees

GURU NANAK KHALSA COLLEGE


Of Arts, Science and Commerce Matunga # 400019

REPORT ON
Internal Assignment of Public Relations
COURSE TITLE: (Public Relation)

TYBMS SEM (VI)

Submitted by
(Chinmay Patil)
ROLL NO. 60/ UID NO.2239

Submitted To
(PROF. YOGESH KOLHATKAR)

Academic Year: 2016-17


DECLARATION

I CHINMAY PATIL of GURU NANAK COLLEGE OF ARTS, SCIENCE & COMMERCE


pursuing TYBMS, ROLL NO (60) UID (2239) hereby declare that I have completed the
Internal Assignment of Public Relations in the academic year 2016-17 for the Semester
VI under the Course BMS.

The information submitted is true and original to the best of my knowledge.

Signature of the Learner


(CHINMAY PATIL)
Date- 14th February, 2017.

CERTIFICATE

This is to certify that the Internal Assignment of Ethics and Governance is satisfyingly
done by CHINMAY PATIL, TYBMS, SEM VI, Roll no 60, UID 2239, in the academic year
2016-17.

Signature of the Faculty/Evaluator


Date- 29th September, 2016
LEGO

The History of LEGO goes as far back as the 1916 where it began its production in a carpentry
workshop of Ole Kirk Christiansen, in Billund, Denmark. In 1916 Ole Kirk bought a
woodworking shop which had been in the business since 1895. The shop mostly helped construct
houses and furniture, and had a small staff of apprentices. The workshop burned down in 1924
when a fire ignited some wood shavings. Ole Kirk constructed a larger workshop, and worked
towards expanding his business even further. When the Great Depression hit, Ole Kirk had fewer
customers and had to focus on smaller projects. But sadly that same year his wife died leading to
Ole taking responsibilities of his sons. So he thought of making wooden toys in the year 1932.
He began producing miniature versions of his products as design aids. It was these miniature
models of stepladders and ironing boards that inspired him to begin producing toys. In 1932, Ole
Kirks shop started making wooden toys such as piggy banks, pull toys (eg, Duck), cars, trucks
and houses. The business was not so profitable because of The Great Depression. Not losing
hope he still continued producing toys and selling them. Ole Kirk continued producing practical
furniture in addition to toys to stay in business. Eventually word began to spread that wooden
toys of finest quality was being made in the little workshop in the village. One fine day a man
drove into town, a man who would change Oles future. He was a wholesaler from Denmark.
The wholesaler was very impressed by looking at the toys Ole made and while leaving made a
huge order for his toys. He started making his toys and was just about to send it to him while he
received a letter stating that the wholesaler had declared Bankruptcy. He had been devastated
thinking that there were so many toys in his shop. He then sold all of those toys by going various
shops and people. During this time Ole himself went to various shops to sell his toys and with a
lot of efforts he did. Farmers in the areas sometimes traded food in exchange for his toys. He had
collected more amount of vegetables rather than money. This continued till the mid 1930s until
the Yo-Yo toy fad gave him a brief period of increased activity until it suddenly collapsed. In
1934, Ole Kirk held a contest among his staff to name the company, offering a bottle of
homemade wine as a prize. Christiansen was considering two names himself, "Legio" (with the
implication of a "Legion of toys") and "Lego", a self-made contraction from the Danish phrase
leg godt, meaning "play well." Later the Lego Group discovered that "Lego" can be loosely
interpreted as "I put together" or "I assemble" in Latin. Ole Kirk selected his own name, Lego,
and the company began using it on their products. The name LEGO was well received by many
people and they started purchasing the wooden toys from him. This led the company to move
forward and increase their sales and increase profits indeed. They had got 3000 pounds of Money
order that had made them excited and happy about their future. Then at 3000 pounds there was a
machine available. One of the first modular toys to be produced was a truck that could be taken
apart and re-assembled by the machine. He saw that the toys that were made with the help of this
machine was better and that they were being built faster. Then his son colored the ducks and was
trying to sell them but this idea was not approved by Ole and he had said to stop coloring and
make them plain instead because he believed that he didnt want to make cheesy statements to
the customers. And then he explained to his son that every detail matters to the customer and
hence he chose to keep it plain and simple. Oles son then realized that only the best is good
enough for the customers and also the company. In the late 1930s LEGO was making profits
even in the Second World War and it was still on their feets. After a few years during a stormy
night in 1942 there was a fire that broke out in the companys workshop leading to the
destruction of his workshop. All the designs all the models were lost in the burning workshop.
Ole had lost all hope but the responsibilities of his sons and workers made him to work again
and inspire himself and in months time a new large workshop was built and then LEGO had
fought its way back into the market after all this hard times. Then the company was gradually
moving forward and in the year 1946 in Copegnhan, he purchased a machine called as plastic
injection molding machine. In 1947, Ole Kirk and Godtfred obtained samples of interlocking
plastic bricks produced by the company Kiddicraft. These "Kiddicraft Self-Locking Building
Bricks" were designed by Hilary Page. In 1939, Page had applied for a patent on hollow plastic
cubes with four studs on top (British Patent N. 529,580) that allowed their positioning atop one
another without lateral movement. In 1944, Page applied an "Improvement to Toy Building
Blocks" as an addition to the previous patent, in which he describes a building system based on
rectangular hollow blocks with 2X4 studs on top enabling the construction of walls with
staggered rows and window openings. The addition was granted in 1947 as British Patent N
587,206. In 1949, the Lego Group began producing similar bricks, calling them "Automatic
Binding Bricks." Lego bricks, then manufactured from cellulose acetate, were developed in the
spirit of traditional wooden blocks that could be stacked upon one another but could be "locked"
together. They had several round "studs" on top, and a hollow rectangular bottom. They would
stick together, but not so tightly that they could not be pulled apart. In 1953, the bricks were
given a new name: Lego Mursten, or "Lego Bricks." Ole started making small plastic teddy bears
and cars by the help of this machine but Plastic products were not well received by customers
initially, who preferred wooden or metal toys. Many of Lego's shipments were returned,
following poor sales but the sales for its wooden toys were on a high due to the production of
new tractors and farming equipments. But there was something interesting for Ole in those
plastic made by the machine in Copenhagn and he started to give a serious thought to those
plastic toys. But his son was determined to sell all those remaining toys and went out with his
wife to sell the rest of them and he indeed made a profit. In 1954, Godtfred had become the
junior managing director of the Lego Group. Godtfred's conversation with an overseas buyer
struck the idea of a toy "system", with many toys in a line of related products. Godtfred
evaluated their available products, and saw the plastic bricks as the best candidate for such a
"system". In 1955, Lego released the "Town Plan" as such a system, using the building bricks.
This new system was then sold in many countries and they made a huge profit out of it. The
building bricks were moderately received but had some problems from a technical standpoint:
their "locking" ability was limited, and they were not versatile. In 1958 the bricks were improved
with hollow tubes in the underside of the brick. This added support in the base, enabling much
better locking ability and improved versatility. The company patented the new design, as well as
several similar designs to avoid competition. Ole Kirk Christiansen died that same year, and
Godtfred inherited leadership of the company.

Change to plastic bricks, 19601969

Lego Duplo

Another warehouse fire struck the Lego Group in


1960, consuming most of the company's inventory
of wooden toys. Godtfred decided that the plastic
line was strong enough to abandon production of
wooden toys. As a result, Godtfred's brothers
Gerhardt (then head of wooden toys) and Karl
Georg left the Lego company and began a separate
company "Bilofix". By the end of the year, the Lego
Group was employing more than 450 people.

In 1961, Lego wished to expand sales to North


America, but did not have the logistical capabilities
to do so. Lego made an arrangement allowing Samsonite to begin producing and selling Lego
products in the United States and Canada.

1961 and 1962 saw the introduction of the first Lego wheels, an addition that expanded the
potential for building cars, trucks, buses and other vehicles from Lego bricks. Also during this
time, the Lego Group introduced toys specifically targeted towards the pre-school market.

In 1964, cellulose acetate, the material used to create Lego bricks, was replaced by the more
stable acrylonitrile butadiene styrene (ABS plastic), which is still used today. ABS is non-toxic,
is less prone to discoloration and warping, and is more resistant to heat, acids, salt, and other
chemicals. Samsonite manufacturing in North America did not switch at the same time, and still
used some degree of cellulose acetate in its Lego products.

1964 was the first year that instruction manuals were included in Lego sets.

Then in 1965 Godfret started to think and wanted to make his company known worldwide so he
got an idea of making an airport and like his father he put his thoughts into action in very little
time and an airport was made for visitors who could visit the toy factory. Eventually it was
getting very crowded and the workers could not work in adequate space. So to overcome this
problem Legoland was built.
On 7 June 1968, the first Legoland Park was opened in Billund. This theme park featured
elaborate models of miniature towns built entirely from Lego bricks. The three-acre (12,000 m)
park attracted 625,000 visitors in its first year alone. During the next 20 years, the park grew to
more than eight times its original size, and eventually averaged close to a million paying visitors
per year. More than eighteen million Lego sets were sold in 1968.

One of the Lego Group's most successful series, the Lego train system, was released in 1966.
The original train sets included a 4.5-volt motor, battery box and rails; two years later, a 12-volt
motor was introduced.

In 1969, the Duplo system went on sale. Duplo bricks are much larger than Lego bricks, making
them safer for young children, but the two systems are compatible: Lego bricks can be fitted
neatly onto Duplo bricks, enabling the transition to the Lego system to be easily made as
children outgrow their Duplo bricks. The name Duplo comes from the Latin word duplus, which
translates literally as double, meaning that a Duplo brick is exactly twice the dimension of a
Lego building brick (2 height by 2 width by 2 depth = 8 the volume of a brick).

Expansion, 19701991
During the last three decades of the 20th century Lego expanded into new areas of toy making
and marketing. In 1971, Lego began to target girls by introducing furniture pieces and
dollhouses. In 1972, Lego added boat and ship sets, with floating hull pieces.

During this same period, Godtfred Kirk Christiansen's son, Kjeld Kirk Kristiansen, joined the
managerial staff, after earning business degrees in Switzerland and Denmark. One of Kjeld's first
achievements with the company was the foundation of manufacturing facilities, as well as a
research and development department that would be responsible for keeping the company's
manufacturing methods up to date. Human figures with posable arms made an appearance in
1974 in "Lego family" sets, which went on to become the biggest sellers at the time; in the same
year, an early version of the "minifigure" miniature Lego person was introduced, but it was not
posable and had no face printed on its head. A Lego production plant was opened in Enfield,
Connecticut in the United States.

In 1975, "Expert Series" sets were introduced, geared towards older, more experienced Lego
builders followed by the "Expert Builder" sets in 1977. The technical sets featured moving parts
such as gears, differentials, cogs, levers, axles and universal joints, and permitted the
construction of realistic models such as automobiles, with functional rack and pinion steering
and lifelike engine movements. In 1978 the Lego "minifigure" was added. These small Lego
people have posable arms and legs, and a smile. The figure was used in many varieties of Lego
sets, allowing construction of towns populated with the smiling minifigure Lego citizens.

In 1979, Lego expanded into space with the creation of Lego Space sets with astronaut
minifigures, rockets, lunar rovers and spaceships and the Scala series, featuring jewelry elements
marketed towards young girls. Kjeld Kirk Kristiansen became the president of Lego in this year.
Since the 1960s, educators had seen Lego bricks' constructive potential as being an invaluable
asset in helping children to develop creativity and problem-solving abilities. Teachers had been
using Lego bricks in the classroom for a variety of reasons. In 1980, the Lego Group established
the Educational Products Department (eventually renamed Lego Dacta, in 1989), to expand the
educational possibilities of their toys. A packing and assembly factory opened in Switzerland,
followed by another in Jutland, Denmark that manufactured Lego tires.

Between the 1960s and '90s Lego worked with Royal Dutch Shell in allowing Shell branding on
certain items.

In 1981, the second generation of Lego trains appeared. As before, these were available in either
4.5 V (battery powered) or 12 V (mains powered), but with a much wider variety of accessories,
including working lights, remote-controlled points and signals, and decouplers.

The "Expert Builder" series matured in 1982, becoming the "Technic" series. 13 August of that
year marked the Lego Group's 50th anniversary; the book 50 Years of Play was published to
commemorate the occasion. In the following year, the Duplo system was expanded to include
sets for even younger audiences, particularly infants; new sets included baby rattles and figures
with adjustable limbs. The year after, Lego minifigure citizens gained a realm of knights and
horses, with the introduction of the first Castle sets. Light & Sound sets made their appearance in
1985; these sets included a battery pack with electrical lights, buzzers, and other accessories to
add another dimension of realism to Lego creations. Also that year, the Lego Group's educational
division produced the Technic Computer Control, which was an educational system whereby
Technic robots, trucks, and other motorized models could be controlled with a computer.
Manaus, Brazil gained a Lego factory in this year, as well.

In 1984, the Technic line was expanded with the addition of pneumatic components.

This Lego model of a composite of London, including a motorized model of a London


Underground train controlled by computers, can be seen in Legoland Windsor.

In August 1988, 38 children from 17 different countries took part in the first Lego World Cup
building contest, held in Billund. That same year, Lego Canada was established. The Lego line
grew again in 1989 with the release of the Lego Pirates series, which featured a variety of pirate
ships, desert islands and treasure; the series was also the first to depart from the standard
minifigure smiling face to create an array of piratical characters. The Lego Group's Educational
Products Department was renamed Lego Dakta in this year; the name is derived from the Greek
word "didactic", which roughly means "the study of the learning process." MIT's Dr. Seymour
Papert, from the Laboratory of Computer Learning, was named "Lego Professor of Learning
Research," after his ongoing work in linking the Logo programming language with Lego
products.

Until 1989, Lego minifigures only came in a yellow skin color with standard smiling face,
though early prototypes had a variety of skin colors and facial expressions. Lego Pirates in 1989
expanded the array of facial expressions with beards and eye patches, followed by sun glasses,
lipstick, eyelashes, and so on. However, many older collectors resented the new look, saying
they looked too "cartoon-ish" or "kiddy", and preferred the simplistic nature of the two eyes and
smile.

In 1990, a new series designed for advanced builders was released. Three Model Team sets,
including a race car and an off-road vehicle, featured a level of detail and realism not previously
seen in any Lego series. Where Technic was mechanically accurate, Model Team was visually
and stylistically accurate. The Lego Group became one of the top 10 toy companies in this year;
it was the only toy company in Europe to be among the top 10. Legoland Billund had more than
one million visitors in this year, for the first time in its history. The first-ever "Lego Professor of
Business Dynamics," Xavier Gilbert, was appointed to an endowed chair at the International
Institute for Management Development in Lausanne, Switzerland. Lego Malaysia was also
established in 1990. In 1991, the Lego Group standardized its electrical components and
systems; the Trains and Technic motors were made 9V to bring the systems into line with the
rest of the Lego range.

In 1992, two Guinness records were set using Lego products: A castle made from 400,000 Lego
bricks, and measuring 4.45 meters by 5.22 meters, was built on Swedish television, and a 545
meters long Lego railway line with three locomotives was constructed. Duplo was augmented
with the addition of the Toolo line featuring a screwdriver, wrench, nuts and bolts; the Paradisa
line, targeted towards girls, brought a variety of new pastel colors into the Lego system and
focused around horses and a beach theme. In 1993 a Duplo train and a parrot-shaped "brickvac"
that could scoop Lego pieces up off the floor were released.
A model of St Paul's Cathedral in London can be seen in Legoland Windsor. It is made of
thousands of Lego bricks. The rotating model of the London Eye in the background is also made
of Lego bricks.
THE CRISIS:

From the year 1993 LEGOs profits started to decline. At that time, LEGO ignored these losses
and thought that it would eventually make profits in vacations and discounts during the time of
vacations. But this didnt happen instead LEGO was continuously facing problems after
problems. People in the factory started to fight over the losses and unpaid salaries were the cause
of their unhappiness too.

In the year 1994 due to the increase in video games large number of childrens and large number
of teenagers were turning their attention to video games and were neglecting the traditional way
of playing in the house. Childrens were more attracted towards the video game companies rather
than LEGO. This had resulted into a loss for LEGO and it was difficult for Lego to comeback.

Every year many employees were leaving their jobs due to the losses suffered by LEGO. The
employees of the firm were unhappy and lost faith in LEGO resulting in unhappiness among the
company itself. Till 1997 LEGO saw declining profits and in the year 1998 LEGO suffered its
first loss throughout their company life cycle.

The company had to lay down cost and hence they also had fired 1000 employees from their
company. This continued for almost 3 years where LEGO had to cut down their number of
employees to reduce their cost and also cut down their expenditure of the company. This was not
proving to be effective as the production of LEGO toys were continuing and that needed to be
controlled too.
Trying to cope with the pressure and
the need for increasing it sales,
Godtfret thought what would a
normal company do and then acted
accordingly as a normal company
would do that is what Godtfred also
decided, he increased the production
of the LEGO toys and was trying to
sell those toys on a discount to the
consumers. But unfortunately it
happened so that this plan backfired
and then there was more than the
estimated stock in the company. As
there were low sales and increasing
loss the company had to do
something innovative.

So they signed deals with Star Wars,


Marvel and Harry Potter in the year
1999 where the losses were covered
up a little with the sales of toys
associated to them. But then too the
company reported losses and were in a state of bankruptcy by the year 2004.

Maybe, suggests Knudstorp, this was one of the reasons it all started to go wrong. Between 1932
and 1998, the company had never made a loss and a culture of complacency had set in.

Indeed, this philosophy was part of company lore. The story goes that in the early days, Ole
Kirk's son Godtfred Kirk proudly announced that he had saved a considerable sum of money. He
had sent a consignment of wooden toys to the railway station for transportation, but had them
painted with only two coats of varnish instead of the company's regulation three coats. Far from
being pleased, his father was livid at this skimping, and sent his son to the station to bring back
the incomplete toys. It was a lesson Godtfred Kirk never forgot. But what was good for the
Christiansen family's souls hurt their bottom line.

As with the global catastrophe of the past couple of years, which was caused by bad credit and
unrealistic ambitions, Lego's problem was that it had overstretched itself. And Knudstorp likens
the effect to that of a heart attack: 'We needed a permanent change in our lifestyle.'

These were the words Mr.Knudstorp had said while giving an interview.

This was the major crisis that LEGO was hit with from the year 1993 that had bought the
company to bankruptcy by the year 2004.
THE COMEBACK:

Building Back

After the financial loss suffered by LEGO it had to cut down many jobs to keep the company
alive for a few months more and hence there was a major step taken wherein the family of Ole
Kirk gave up the CEO post wherein a new CEO was appointed to turn things around and to
lower the costs incurred in the company. The New CEO (Jrgen Vig Knudstorp) was the first
non-family member who took the reins at LEGO and started his work. LEGO started to divert its
money from production to research and development and research on demands of toys that are
needed by the consumers.

One of the first things Knudstorp did was fly to Virginia for BrickFest, the annual convention for
adult fans of Lego (AFOL, as they're known). The AFOL told him Lego is a unique creative
material, easy to put together yet quite hard to pull apart - just what Knudstorp knew already.

Then he consulted old colleagues at the Massachusetts Institute of Technology (where he studied
for a PhD in business and economics), who told him Lego is the ideal way for a child to learn
how to think systematically and creatively - something that was confirmed to him by a cover
story in Time, in which the Google founders said that it was Lego that had shaped their young
minds.

Then it dawned on him: the problem lay not with the product, but with the company's attempts in
the Nineties to make itself more modern and relevant in the age of video games. It had attempted
to broaden its appeal to the young female market; it had tried to become a lifestyle brand with its
own lines of clothes and watches; it had built more theme parks. But in doing so it had neglected
its core business.

So this what LEGO had done to come out of its Financial Crisis in the year 2004.
LEGO in the 1990s: Innovating Inside the Box

Back in the mid-90s, LEGOs sales had flattened, profits were suffering, and the company was
struggling. The market for play was changing kids were turning to video games and sales of
traditional toys were declining. LEGO responded the way many companies respond to threats
and changes it did more of the same. It tripled the number of new toys it brought to market
each year, from 109 in 1994 to 347 in 1998. As a result, complexity in the factories exploded and
costs skyrocketed. But all these new boxes of bricks didnt sway the market there was only so
much demand for LEGO and only so many feet of shelf space in toy stores. Sales stayed flat and
profits dropped, producing the first loss in company history in 1998.

Innovating Outside the Box: Disruptive Innovation

The second way LEGO responded to a changing world was by innovating outside the box, away
from the brick. Beginning in 1999, it produced a stream of diverse new products, some big and
some small, most of which werent brick-based and didnt include construction. It created LEGO
Explore, electronic toys for toddlers, for example. It commissioned TV shows, offered jewelry
and clothing, and spent massive amounts developing a virtual brick-building simulation called
LEGO Digital Designer. It built theme parks and after-school learning centers. And, even when
it made brick-based construction toys, it challenged its designers to try new things. Taking a
direction, it had never pursued before, it produced lines of toys around two blockbuster movie
franchises, Star Wars and Harry Potter.

The result was disaster. Most of the experiments failed. The theme parks, which eventually
became popular, drained cash in their early years. And the Star Wars and Harry Potter toy lines,
because of the volatility of their demand, almost bankrupted LEGO. While the four Star Wars
and Harry Potter movies released between 1999 and 2002 boosted sales of the LEGO toys tied
to those films, there were no new movies from either franchise in 2003 or the first half of 2004.
Sales of movie-related toys dropped dramatically.

It was as if the tide had gone out and exposed a broad expanse of rocky beach. The 1999-2002
surge in sales from movie-related toys had hidden a harsh reality: LEGO had virtually nothing
else to drive sales and profits, despite all the disruptive innovation it had tried. Most of its other
toy lines were generating massive losses. So dire was the situation in 2003 that a LEGO
executive, Jrgen Vig Knudstorp, told his colleagues, Were on a burning platform. Were
running out of cash [and] we likely wont survive.
LEGOs brush with bankruptcy revealed the dark side of disruption, the side its fervent
advocates dont discuss much. No one doubted that radical change had become more common
and that every company constantly had to search for opportunities to change its world. Yet, like
all other innovation, disruption failed more often than it succeeded. For sustaining innovation,
failure usually didnt much matter. But it did for disruptive innovation. Yes, disruptions
potential rewards were great, but so was the risk, and the bigger and more radical the change, the
more dangerous the potential consequences, as LEGO discovered. Disruption was pushing it into
bankruptcy.

Binary thinking about sustaining vs. disruptive innovation can be dangerous. If leaders believe
they have only one real option for dealing with competitive threats or market shifts, theyll feel
compelled to exercise that option in spite of the risk and uncertain consequences that come with
it and, often, in spite of their best judgment as well.

LEGOs success over the past seven years is the result of a third innovation strategy. It is neither
more of the same nor out of the box disruptive thinking. Instead, its a strategy of offering a
family of complementary innovations around a core product. None of those complements are
risky or difficult, but together the total package is irresistible to customers. LEGO is neither the
first to use this strategy nor will they be the last. But there is no better example of a company that
has used this approach superbly and profitably.

Innovating Around the Box: The third approach to innovation

What LEGO discovered in 2003 was that when it created new play experiences without bricks
and construction, it confused the typical toy buyer and infuriated core LEGO fans. Youve lost
your way, the CEO of Toys R Us told LEGO. We love this brand more than you do. We
want the brick. Fans echoed the sentiment. It was time to return to the brick, but how?

When LEGO reviewed the wreckage of its experiments, it found amid the failures and
disappointments one consistent success a quirky construction toy called Bionicle. In many
respects it was a typical LEGO toy a set of plastic pieces that kids assembled into action
figures. But Bionicle was different in an important way. Its boxes of plastic pieces were
surrounded by a host of little complementary innovations new packaging, comics, books, a
video game, direct-to-video movies, and licensed merchandise all wrapped around a rich story
of heroes battling villains to save the world. None of these complementary innovations was risky
or expensive and none would have succeeded by itself. But together, they made Bionicle
irresistible to the target audience: boys between six and nine years old. Even better, LEGO
owned, controlled, and profited from all of it, unlike what it got from its tie-ins with movies it
didnt own.
LEGO sold over 190 million of the Bionicle figures over the nine-year life of the toy. The profits
from those sales were the only bright spot for the company during the crisis years of 2003 and
2004. Bionicle was literally the toy that saved LEGO. Over the next four years, LEGO re-
organized to create multiple variations on what had made Bionicle so successful core
characters surrounded by low-risk complementary innovations, brought to market through
internal and external partners, and all tied together by the glue of an engaging story.

In a global market with intense competition, no barriers to entry, fickle customers, and no patent
protection, this third innovation approach has produced LEGOs seven-year run of 20% annual
sales growth and 37% annual profit growth. Its success demonstrates that multiple low-risk
innovations that support a core product innovating around the box, if you will can be as
powerful as big radical change.

And LEGO used this new approach to perfection in 2014 with The LEGO Movie. There was
nothing particularly risky or difficult about a CGI kids movie, but to ensure the movies success
they hired a producer-director team that had created Cloudy with a Chance of Meatballs and
other successful movies. At the launch of The LEGO Movie, over a dozen LEGO kits were
available that allowed kids to play out scenes from the movie. Happy Meal toys from
McDonalds, books, merchandise, and web applications all deepened kids involvement with the
story. The kits those $50-per-pound boxes of plastic flew off the shelves.

This was the approach taken by the company to turnaround from a major Financial Crisis.
THE RESULT:

LEGO is a brand name familiar to children around the world, but a decade ago Lego was in
crisis. Sales were collapsing at a rate of 26% a year, they had lost 1.4bn Danish kroner (150m)
in 2003 and private equity firms were circling the 82-year-old family-owned Danish company.

Now, after a series of job cuts and the ending of the family's management of the company, the
plastic brick business has rebuilt itself into the world's most profitable toy maker ahead of
Barbie's Mattel.

The company, which has been headquartered in the small Danish town of Billund since 1932,
has reported "another record breaking year" of sales and profits growth for the ninth
consecutive year. Its high profitability comes from its ability to turn each kilogram of raw
material plastic which costs less than $1 into sets that sell for more than $75 per kg.

Annual profits increased by almost 10% to 8.2bn kroner (900m) about the same as the profit
Facebook turned in last year. Sales jumped 10% to 25.3bn kroner (2.8bn).

"That is an incredible quadrupling of our revenues in less than 10 years," Joergen Vig
Knudstorp, Lego chief executive, said. "We think we are changing children's lives forever when
they play with Lego. We think this was another year where we got great affirmation of that."

Knudstorp is credited with driving Lego's resurgence since he took over as CEO from Kjeld Kirk
Kristiansen, grandson of the company's carpenter founder, during the 2003-4 crisis.

He said Lego's success was due to constant innovation and the creation of 60-70 new products
every year, including Harry Potter, Star Wars and SpongeBob SquarePants ranges. But he
admitted it is still a "major innovation challenge" to "stay on the top of children's wish lists"
against competition from iPads and computer games. "We need to constantly become better, or
otherwise there will be someone out there who will catch up to us," he said.

Jane Westgarth, a toy analyst at market research firm Mintel, said Lego's recovery had been
fuelled by its investment in quality and design. "They are doing things that are taking Lego into a
slightly different position, from the boxes of bricks where you had to use your imagination to
sets you use in specific ways with characters you already know," she said. "If it's good quality,
people are prepared to pay that little bit extra."

Westgarth said Lego was also benefiting considerably from parents' nostalgia for their own
childhood parents including David Beckham, who admitted earlier this month that he builds
Lego with his children to stay calm and had just completed the 4,287-piece Tower Bridge kit.
"For a parent aged 30 there's no doubt about it that they would have Lego in their homes. Parents
like to introduce their children to things that they loved as children."

The company, which sold its Legoland theme parks to Madame Tussauds owner Merlin
Entertainments in 2005, is building on its "red core business" by boosting its digital presence, but
Knudstorp said his customers have done most of the work for him.
More than 99% of Lego videos on Youtube featuring Lego recreations of everything from the
London 2012 Olympics to the New Testament are made by users. "We're not leaving the brick,
but we will leverage digital technology to stay relevant over the next 20 years," he said.

Lego, which is derived from the Danish "leg godt" meaning "play well", is also benefiting from
"a considerable amount of excitement" prompted by the Lego Movie. The film, which features
the hit Tegan and Sara song Everything is Awesome, is taking 2m a day in UK cinema box
offices, and has topped the US and Canadian charts for three consecutive weekends.
REFRENCES:

http://www.dailymail.co.uk/home/moslive/article-1234465/When-Lego-lost-head--toy-story-got-happy-
ending.html

http://www.robertsoninnovation.com/what-we-can-learn-from-lego/
https://www.theguardian.com/business/2014/feb/27/lego-builds-record-profit
http://fortune.com/2016/03/01/lego-sales-toys-2015/
https://www.smashingmagazine.com/2014/08/learning-creativity-innovation-from-lego/

YOUTUBE STORY:
https://www.youtube.com/watch?v=NdDU_BBJW9Y&feature=youtu.be

BOOK:
BRICK BY BRICK, BY DAVID ROBERTSON.

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