Zaur AICo-founder of openincubator.ie | Student Entrepreneurship Programme Manager @TCD

LEGO's Great Business Model Turnaround Story

Name: LEGO's Great Business Model Turnaround Story
Uploaded: 2015-04-13T12:17:57+00:00
Duration: 1 min 32 s
Channel: Zaur AI
Description: Short narrated overview of LEGO's business turnaround: the video explains that LEGO—creator of the interlocking brick—expanded in the 1990s into licensed…

13 Apr 2015 · 2 min

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1:32

Short narrated overview of LEGO's business turnaround: the video explains that LEGO—creator of the interlocking brick—expanded in the 1990s into licensed kits (Star Wars, Harry Potter) and diverse branded products (computer games, apparel, theme parks). After patents expired and younger generations favored video games, LEGO nearly went bankrupt in the 2000s. The company refocused on its core product (LEGO bricks), cut unprofitable product lines, streamlined operations, and broadened its market (designing sets for girls). The turnaround culminated in strong earnings growth and cultural recognition exemplified by The LEGO Movie.

Chapters

Hi everyone. Today I'm going to be talking about a famous toy manufacturer that almost went bankrupt 10 years ago, but had turned its business around to become the world's top selling toy manufacturer. Today. I'm obviously talking about LEGO and their famous LEGO bricks. LEGO invented the little stackable bricks that are sold in sets to kids and that the company patented. In the late 90s, Lego obtained the rights to design kits based on popular movies like Star wars and then later Harry Potter and which have represented a major source of revenue since. Amongst this line of products, LEGO also counted diverse other LEGO branded products like computer games, apparel and theme parks. But lego's patent soon expired and didn't protect LEGO from copycats anymore. On top of that, there was less interest in playing LEGO in new generations of kids that grew up with video games, with tech products. In the 2000s, Lego was on the verge of bankruptcy. They got rid of LEGO branded products and decided to focus solely on their core value proposition, the LEGO bricks. They slashed their cost by getting rid of products and kits that weren't profitable and by streamlining operations. LEGO kits had been a boy products for a long time, but now LEGO is literally doubling the size of its market by designing sets for little girls who rave about them. LEGO got back in the race with earnings that have soared in the past years and a brand that is recognized by others. The recent proof of it is the success of the LEGO Movie. Although they almost failed, LEGO redesigned its business model to stay as relevant to kids today as it was in the past.