The LEGO Group
The LEGO brand is today the most renowned in the toy industry, even surpassing Hasbro and the Barbie
doll in recognition. However, few are aware that the Danish company started as a regular manufacturer of
wooden products, and the first LEGO toys were made of wood.
Company History
LEGO's history dates back to 1932, when Ole Kirk Christiansen founded a company in Denmark that
produced everyday goods. Ole's products were made of wood, and initially, the company's main revenue
came from ladders and ironing boards, the demand for which plummeted during the global financial crisis.
A new market needed to be identified. Ole saw an opportunity in the production of wooden toys, as their
demand remained strong even during financially challenging times. Ole's primary assistant at that time was
his son, who had been working alongside his father since the age of 12. Upon starting the toy production,
Christiansen began seeking a name for his company. He tasked all the factory workers with suggesting
names. There were many proposals, but ultimately, the name chosen was one devised by the founder
himself – LEGO, derived from two Danish words, Leg and Godt, meaning "play well" together. A few years
later, the founder discovered that the phrase "LEGO" in Latin means "I assemble" or "I learn." Evidently, this
realization influenced the company's future trajectory.
Company Structure
The company is family-owned, controlled by the founder's descendants. The company's management
structure includes various functional departments responsible for product development, manufacturing,
marketing, and sales:
1. Board of Directors: Defines the company's strategic direction.
2. Chief Executive Officer (CEO): Manages daily operations.
3. Executive Team: Comprises top managers responsible for finance, marketing, production, research and
development, and human resources.
4. Functional Departments: Specialize in research and development, manufacturing, marketing, finance, and
human resource management.
5. Regional Offices: Oversee local operations in various countries.
Financial Policy
The financial policy of "The Lego Group" revolves around a balanced approach to risk management and
ensuring investment stability. It encompasses strategic product portfolio management, ongoing monitoring
of market trends and competitiveness, as well as active financial planning to secure sustainable profitability
and enhance brand value.
Ups and Downs of the Company
From its inception ,the business kept on growing year after year until LEGO became a household name. It
looked like nothing could stop them until 2003 and 2004 which are some of the worst years (in terms of
profits) in the company’s history. There are many reasons that could have caused this decline but I’ll say the
two main points. Firstly, they started producing a lot more variety in the bricks which would have cost a lot
to do because of all the new moulds they would have had to made for these new bricks. The other reason is
that they opened three new theme parks from 1996-2002 in England, the US and Germany. Because of this
in 2003 they were in $800 million in debt and made a loss of $225 in 2004. With no way out, LEGO had to
rethink their strategy.
But already in the first half of 2015, The LEGO Group became the world's largest toy company by revenue,
with sales amounting to US$2.1 billion, surpassing Mattel, which had US$1.9 billion in sales.
Interesting Facts
1) All LEGO bricks produced, when laid end-to-end, could circle the Earth not once, but ten times.
2) Manufacturing 300 million tires annually, the LEGO Group is the world's largest producer of toy tires.
3) Heating plastic to 200°C produces a dough-like plastic mass from which the bricks are made.
4) At Google’s office, the first server rack was built using LEGO bricks.
5) In the company’s headquarters, located in Denmark, all LEGO sets are stored. The collection of rarities
begins from 1958.
