LEGO GROUP: AN OUTSOURCING JOURNEY Jorgen Vig Knudstorp was appointed as the companies CEO. 2004 ended in another huge deficit due to the heavy amounts of write-downs. This is when the LEGO Group and Ferrari launched an agreement to make LEGO sets based on the iconic race cars. This is when the DUPLO trade mark was launched as a result of the requests from their consumers (Froberg-Mortensen, 2012). Key Issues A few issues that the LEGO GROUP has to iron out are a part of the strategy for the organization. Before the LEGO Group were hit with its crisis, the organization owned and operated decided to outsource to Flextronics, its main production plants were extremely overpriced and stationed in Denmark and Switzerland. This led them to outsourcing to Flextronics, where only three years after the contracts were signed LEGO management announced that it would phase out the sourcing collaborations with Flextronics (Pearce & Robinson 2011). The logistics of outsourcing put a strain on the relationship with DHL, LEGO’s logistics partner. When they won the contract bid, it made revenue calculations that were based on existing customer service requirements. This was a problem because the number of deliveries now was much lower than the amount that they forecasted. 3
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