When Jrgen Vig Knudstorp stepped down as the CEO of LEGO in January 2017, he was widely

Question:

When Jørgen Vig Knudstorp stepped down as the CEO of LEGO in January 2017, he was widely regarded as one of the world’s best corporate leaders. After becoming CEO in 2004, Knudstorp had moved quickly to turn around the fortunes of the maker of the iconic children’s play blocks.
The LEGO Company is a $5 billion global business built out of the humblest of materials: interlocking plastic toy bricks. From its base in Billund, Denmark, the family-owned LEGO empire extends around the world and has at times included theme parks, clothing, and computer- controlled toys. Each year, the company produces approximately 15 billion molded plastic blocks as well as tiny human figures to populate towns and operate gizmos that spring from the imaginations of young people (see Exhibit 16-11). LEGO products, which are especially popular with boys, are available in more than 130 countries; in the key North American market, the company’s overall share of the construction- toy market has been as high as 85 percent.

Kjeld Kirk Kristiansen, the grandson of the company’s founder as well as the main shareholder, served as CEO from 1979 until 2004. Kristiansen says that LEGO products stand for “exuberance, spontaneity, self-expression, concern for others, and innovation.” (The company’s name comes from the Danish phrase leg godt, which translates as “play well.”) Kristiansen also attributes his company’s success to the esteem the brand enjoys among parents. “Parents consider LEGO not as just a toy company but as providing products that help learning and developing new skills,” he says.

Questions
1. Jørgen Vig Knudstorp became CEO of LEGO in 2004. Assess the key strategic decisions he made, including outsourcing and divesting the theme parks.
2. LEGO’s movie-themed products, keyed to popular film franchises such as Harry Potter, Lord of the Rings, and Spider- Man, include detailed construction plans. Do you think this is the right strategy?
3. Using Porter’s generic strategies framework, assess LEGO in terms of the company’s pursuit of competitive advantage.
4. What risk, if any, is posed by LEGO’s movement into multimedia categories such as video games and television?

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