Lego is recognized everywhere by children worldwide. Today, we'll take a look at the story of how the Lego group built a large-scale business one plastic brick at a time.
Lego is a line of plastic construction toys manufactured by The Lego Group, a privately held company based in Billund, Denmark. The company's flagship product, Lego, consists of colored interlocking plastic bricks with an array of gears, sculptures called mini-figures, and various other parts. LEGO pieces can be assembled and combined in many ways, to form objects; Vehicles, buildings, and working robots.
The Lego Group began manufacturing interlocking toy bricks in 1949. Since then a global Lego subculture has developed. Supporting films, games, competitions, and six are developed under the Lego and Amusement Park brand. As of July 2015, 600 billion LEGO parts were produced.
Chances are you either played with Lego when you were young or you had a friend who did. Plastic construction sets are one of the best ways to foster creativity, and there are very few companies out there that have as much impact on children's lives as Lego. Their business model is very simple: they buy plastic for one dollar and sell it for 75. Beneath this simplicity, however, is a very interesting story, we will learn where these plastic bricks come from.
Lego's father was a Danish man named Ole Christiansen. He came from a small family of farmers near the small town of Billund and his favorite hobby was making wood. When he was old enough to travel, he practiced carpentry in Germany and Norway, earning just enough money to buy a local lumber shop in Billund when he returned in 1916. For the next 16 years, he worked as a carpenter and found it very good. During that time he married a woman in Norway and eventually had four sons. Life was good, but then the Great Depression ensued and things took a worst-case scenario. Prices crashed across Europe and Danish farmers could barely make enough money.
Ole Christiansson was forced to shoot at most of the employees of his shop because he could not pay them. He was left alone to take care of his four sons that same year, leaving his wife. Ole got them to work and exchange in the shop he used to make for wooden toys. The children liked him very much and soon Oleg started making toys in addition to his regular business. Local farmers however did not have the income to buy them, and most of the time they offered food in return.
In the end, Ole had to sell his toys door-to-door in nearby cities, where people had money to spend them. In 1934 he brought a name for his toys: he called him Lego by the Danish phrase "Leg Godt", which means he plays well. Incidentally, the word lego also means to gather in Latin. His shop burned down after a devastating fire in 1942, with Ole borrowing money to build an actual factory to make his wooden toys. Since then toys became his main occupation and the Danish people loved him. Ole made his eldest son Godfred the manager of the new company and together they started expanding their customers not only in Denmark but also in Norway.
By 1947, the company's workforce had grown to 40 and they were selling more than 150 wooden toys.
In 1949, while attending a toy fair in Copenhagen, Ole found was a businessman, plastic building blocks that you could use to build towers. Ole liked the idea a lot, so he brought the samples back to Billund to study them. A year later Lego began selling a modified version of these blocks, called automatic binding bricks. They look like modern LEGO bricks, but their underside is hollow, making them tickle and difficult to combine. Most customers did not like them, and by 1954 binding bricks barely made up five percent of the company's revenue. That same year, while visiting the UK to attend a toy fair, Godfred met a very enthusiastic department store manager. He talked about the state of the toy industry and the manager complained about how little incentive people had to buy new toys. He argued that finished toys are hurting the business because parents often will not need to buy more toys. As soon as Godfred came back to Billund, he started thinking about a system that would encourage people to buy their toys. He drew up a list of qualities he wanted his new system to be: some of the things he listed, for example, unlimited play ability, development of creativity, and suitable for children of any age and gender.
The obvious choice for this new system was automatic binding bricks, and a year later in 1955, Godfred released the first real Lego manufacturing set: the Lego System of Play. Unlike previous iterations of binding bricks, this time children could build entire cities, not just individual buildings, and only limit how many sets they had. This new set included small cars, trucks, and road signs, and as you can imagine it became extremely popular. Exactly two years later, God trade developed the modern Lego bricks we know today by introducing tubes on the underside, which made bricks more stable and allowed for more combinations.
Godfred became Lego's official leader in 1958 when his father Ole died. His first order of business was to accelerate the overseas expansion of companies. Lego's first international office opened in Germany in 1956 and soon thereafter, they began to spread to Western Europe. In 1961 Lego entered the US market by licensing its toys to Samsonite, which you probably know today for their suitcases. By that time, Lego had stopped making wooden toys after the 1960s fire. Over the next decade, Lego became one of the world's largest toy manufacturers.
By 1976 he had about $ 300 million in worldwide sales and made 1% of Denmark's total GDP. They released new sets based on various themes, but they always lived up to their design principles of simplicity and compatibility. For example, a brick made in 1957 would have no trouble fitting into a modern construction set and although they have added a bunch of new parts over the years, everything is backward compatible.
One of Lego's biggest hits was from Lego Mini figure 1978, which has since become one of Lego's most iconic symbols. Guesses from 2003 say that more than four billion of these small figures have been made, and today you will find them in almost every construction set.
She also made a film with him in 2014, which is very good, it got a 7.8 rating on IMDb. Lego was doing very well in the 1980s. Their sales were growing at around 10% annually and by 1992 they controlled 80% of the construction toy market with about $ 600 million in annual sales. However, Lego's patent for their bricks expired in 1981, and by the early 1990s other copycat brands were already popping up around the world. They will mass-produce nearly identical construction sets and sell them at a cheaper price, drastically cutting Lego's profits. Things became so bad that in 1994 the company saw a 2% drop in its first annual sales in Germany and 8% in the United States. The situation in the Asian market was worse because you know how loose they are about copyright and patents. With its first annual loss at $ 30 million, and by 2004, the company was almost bankrupt, losing $ 228 million in that year alone.
The CEO at the time was Gotfred's son, Kjeld Christiansen, and he felt so helpless that he resigned and hired the company's first non-family CEO: Jorgen Vig Knudstorp. His solution to the crisis was a bit radical, but it was effective. Over the next three years, he cut Lego's workforce in half and shifted his main manufacturing activities to Mexico. This was a drastic reduction in expenses, but the company decided to actively pursue licensing deals to Jorgen. Do you know all those expensive Lego sets based on Star Wars, Lord of the Rings, or mine craft? Jorgen's idea of ​​combining Lego with popular culture was brilliant and the success of these new sets saved the company from bankruptcy. Licensed Lego products made up about 60% of their total sales in 2008, and although the world was in the midst of the Great Recession, people were buying more Lego than ever before. The company has grown even more since then and in 2014 they beat Mattel to become the world's largest toy company. His most recent report from 2015 showed his global sales at $ 5.3 billion, larger than Mattel and Hasrombind. Lego has become so vast that Mattel and Hasbro are considering a merger only to remain relevant. Lego's success as a concept is not only due to its unique design, but also due to the impressive marketing behind it. One of Lego's best marketing decisions was to build its Leg land theme park. If you haven't visited one then you definitely should. There are seven Lego and Parks worldwide, with 4 currently under construction. All the parks have these huge model cities made of millions of huge bricks and they are worth seeing. The first one, by the way, is in Billund and Lego had to build an airport there because of how remote it was.
I hope you like the story of Lego.
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