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Abstract

This case deals with e-commerce issues for manufacturers of products with a global brand name. Specifically it describes the business issues and concerns of the global toy manufacturer LEGO Company, after it had decided to engage in e-commerce. The LEGO Company had specialised in the design and production of construction toys and like most manufacturers, traditionally sold to middlemen. E-commerce was a radical departure from the traditional mode of business, because the LEGO Company had not sold directly to consumers. The prime motivator for initiating e-commerce was a desire by the LEGO Company to differentiate their new and innovative LEGO Mindstorms from their mainstream products. One way of doing this was to establish sales directly to consumers via the Internet and build an Internet-based community of enthusiastic LEGO mindstorm owners. Once this main decision had been taken, the issue was how to implement the decision and assess its impact on the organisation, its distribution and sales channels. One of the big issues for the LEGO Company was how to convert the wishes of kids playing on the Internet to demands from their parents with actual buying power. This case is open-ended and does not have a set solution, nor does it follow a specific trait. It is designed to engage participants in discussions on issues like global pricing versus traditional segmentation, setting up new distribution channels or keeping the existing channels, how to deal with country specific customs and tax issues, and variations in consumer protection.

Time period

The events covered by this case took place in 1998-1999.

Geographical setting

Region:
Europe
Country:
Denmark

Featured company

LEGO
Employees:
5001-10000
Turnover:
EUR 1.02 Billion
Industry:
Toys

About

Abstract

This case deals with e-commerce issues for manufacturers of products with a global brand name. Specifically it describes the business issues and concerns of the global toy manufacturer LEGO Company, after it had decided to engage in e-commerce. The LEGO Company had specialised in the design and production of construction toys and like most manufacturers, traditionally sold to middlemen. E-commerce was a radical departure from the traditional mode of business, because the LEGO Company had not sold directly to consumers. The prime motivator for initiating e-commerce was a desire by the LEGO Company to differentiate their new and innovative LEGO Mindstorms from their mainstream products. One way of doing this was to establish sales directly to consumers via the Internet and build an Internet-based community of enthusiastic LEGO mindstorm owners. Once this main decision had been taken, the issue was how to implement the decision and assess its impact on the organisation, its distribution and sales channels. One of the big issues for the LEGO Company was how to convert the wishes of kids playing on the Internet to demands from their parents with actual buying power. This case is open-ended and does not have a set solution, nor does it follow a specific trait. It is designed to engage participants in discussions on issues like global pricing versus traditional segmentation, setting up new distribution channels or keeping the existing channels, how to deal with country specific customs and tax issues, and variations in consumer protection.

Settings

Time period

The events covered by this case took place in 1998-1999.

Geographical setting

Region:
Europe
Country:
Denmark

Featured company

LEGO
Employees:
5001-10000
Turnover:
EUR 1.02 Billion
Industry:
Toys

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