Published online by Cambridge University Press: 05 June 2012
In 2008, Jørgen Vig Knudstorp, CEO of the Danish toymaker LEGO, recalled the company’s development during the preceding four years. According to Knudstorp, the journey had been a rollercoaster ride – overwhelming, uplifting, and, at times, bumpy, chaotic, and highly emotional. He joined the company’s strategic business development unit in 2001 before becoming Head of Corporate Affairs and interim Chief Financial Officer (CFO) in 2003 (Figure 3.1). In 2004, he took on the Chief Executive Officer (CEO) position. At the time, the LEGO Group was suffering from annual losses amounting to billions of Danish kroner (DKK), which threatened the company’s independence. The organization was stressed and its identity was unclear. The company had basically lost its way. The initial steps of Knudstorp’s survival plan had been to regain financial control of the company and define its future direction.
From a financial perspective, the turnaround plan was successful. Following a 40 percent decline in sales, the LEGO Group reported annual losses of DKK 1.8 billion in 2004. However, in 2006 and 2007, net profits amounted to DKK 1.29 billion and DKK 1.02 billion, respectively (Table 3.1). Following the implementation of a number of cost-reduction initiatives – such as the relocation of production, the downscaling of the number of components used in production, the divestment of assets (including LEGOLAND theme parks), and a renewed focus on core product lines, user groups and markets – the LEGO Group had stabilized and was building a profitable business platform to serve as the backbone for sustainable growth in the years to come (Figure 3.2).
To save this book to your Kindle, first ensure firstname.lastname@example.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.