Lego Case StudyContract manufacturing is a process that established a working agreement between two companies. In our case it is between LEGO and Flextronics. As part of the agreement, one company custom produces parts or other materials on behalf of their client. In most cases, the manufacturer also handles the ordering and shipment processes for the client. As a result, the client does not have to maintain manufacturing facilities, purchase raw materials, or hire labor in order to produce the finished goods.
Despite of the contract manufacturing with Flextronics, LEGO was still involved global and complex network production facilities.LEGO was having difficulty in transferring production knowledge to Flextronics.Despite of reducing the in-house production capacity from 90/95% to 20%, the company tried to retain molding and packaging in-house which created problematic later delaying the production delivery to the customer.
The company was having great challenge in transitioning the production know-how to the external partners.LEGO Company had the challenges in reducing firms resources on the other elements of value chain.LEGO decided to a larger extent to focus on internal production solution by phasing out the existing outsourcing agreement with Flextronics.The LEGO thought it would be more optimal for the company to manage its its global manufacturing set up.Production know-how knowledge transfer was always a key issue between the two companies.LEGO Company felt that by controlling its own production will give flexibility to the company to meet the changes to in demand for its ironic toys.It was problem for LEGO in aligning
The LEGO is a brand that is trying to develop a digital product. The LEGO brand is growing as consumers want their favorite games in the digital and social space. There are no obvious solutions to all their challenges.
Ecommerce is a big opportunity for LEGO
A lot is happening at the retail level. LEGO’s new store has a lot of content and the brand has been growing. It makes sense that people want to have an online location to spend time with the products at home that the LEGO brand can sell. The goal is to improve the brand relationship by creating better-rounded and relevant brand solutions.
Hooding is already creating an online store with the LEGO brand and the online store will also become a marketplace for LEGO games, even if the LEGO brand will not become a store.
In the marketplace, LEGO could not create a strong, established product so consumers would be looking towards it for different reasons, a new product or a different brand solution. This is something that the retail ecosystem needs, at such a huge scale.
Hoods are already adding different products and services for LEGO
As consumers want the LEGO brand to become a well-rounded online experience, the number of potential customers who already have an online store is increasing exponentially and there is almost no way for the LEGO brand to compete in any kind of online store.
Another thing, is that most of the product designs on LEGO are new. It’s very hard for LEGO to do any redesign and redesigns.
When the price of LEGO bricks has doubled in the last 10 years, a strong, well-established brand will come to the market. In that case what you want from LEGO is a new, unique product with a strong retail presence.
What is the top selling store in Asia for LEGO games?
In our previous post we talked about stores for LEGO games in the Asian market. The average LEGO store in the world is approximately 40,000 square meters. Today, this figure is about a third of the LEGO store in Europe, where there are around 14,500 store spaces in the Asian market with thousands of LEGO bricks.
In the store space, we have 2,400 LEGO games, 1,200 toys, 15,000 merchandise, and one,000 titles. A good percentage of these stores are built from scratch and have to be reused.
So we would like to create a good experience for kids.
One place that the LEGO game store might be the focus is in Asia, where the LEGO Games stores are in Shanghai, Hong Kong, Taiwan, Japan and the US.
The LEGO store in Taiwan is located at 801 Nantian Blvd. in Taipei. The store opened in January 2008.
Currently, the store consists of 30,650 LEGO games with 15,000 titles.