Most businesses are established with the aim of focusing and addressing various gaps in the market. The companies are also expected to create wealth and offer continuous benefits to the stakeholders. However, most companies face multiple challenges that make it impossible for them to operate efficiently. In this case, the primary focus will be on the LEGO Company and how it was able to establish a successful brand. However, over time the company has failed to achieve the intended goals which has seen the entity suffer from issues such as bankruptcy.
The LEGO group failed in its operations due to a number of reasons. The company was established so as to focus on the production of toys based on the plastic-brick technology. At the time, this was the most prominent technology, and the company strived to ensure continued success. More families were taking on the new toys, and the company registered growth in their portfolio to about 200 toys in 1949. This proves that more households were willing to accept the toys and the company had done enough to ensure that their consumers would pick their toys first.
The bankruptcy experienced by the company was caused by a number of factors such as the technological evolutions in the market for toys. Companies such as Mattel posed significant threats since they had come up with toys that were appealing to the younger generations. This means that the LEGO group would continue to lose their customer base. The company also faced serious challenges since they had adopted a system that allowed for in-house manufacturing. All toys were manufactured within the company which resulted in extra costs with the shrinking customer base. The company had to consider outsourcing their production activities if they hoped to compete with companies such as Mattel. The company was unable to identify products that made money and could not eliminate products that resulted in the loss which left the company in a financial maze. The firm also experienced a decline in the product life cycles resulting in old inventory being held for a long time, and that pushed more consumers away from the business.
The company initiated two phases known as “the growth period that wasn’t” and “the fix that wasn’t.” The company expected growth during the period between 1993-1998, but that was not to be. There was a reduction in the birth rates in North America and Western Europe which meant that most households would not need toys. The company failed to innovate in a manner that would have helped them focus on the existing market. During the period, the revenues recorded by the entity had decreased by about 50%. The business tried to focus on other areas such as inventing children wear, coming up with a leisure park, and developing media products. However, the company failed to achieve their intended targets. The company also tried to adopt measures to fix their operations, but that did not succeed. The restructuring adopted by the new COO only resulted in more problems for the business since they had to come up with new systems and lagged behind their competition.
A number of measures need to be adopted to help elevate the company back to its former glory. The employees require comprehensive training to ensure they can come up with ideas that work for the market. The business also needs to consider outsourcing their production operations to regions such as Asia where they can secure cheaper costs. This would help grow their margins, and they would compete favourably in the market. The business needs to focus on technology and how to incorporate that within their products since more children are moving towards technological toys. The concept of innovation also needs to be encouraged within the internal structures to ensure the workers can come up with ideas that may enhance competitive advantage.