Lego Group

From Wikipedia, the free encyclopedia

Lego Group
Type	Private company
Founded	Billund, Denmark (1932)
Headquarters	Billund
Key people	Jørgen Vig Knudstorp, CEO Kjeld Kirk Kristiansen, vice-chairman and majority shareholder
Industry	Toys
Products	Lego
Revenue	$1.380 Billion USD(2005)
Employees	7294
Website	www.lego.com

The Lego Group is a family-owned company, based in Billund, Denmark and best known for the manufacture of Lego-brand toys.

The company was founded in 1932 by Ole Kirk Christiansen. It was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.

Contents 1 Legoland 2 Retail stores 3 History 4 Trademark and patents 5 Economic difficulties 6 References 7 External links

[edit] Legoland

The Lego Group has built several amusement parks around the world, each known as Legoland. Each features large-scale models of famous landmarks. The oldest of these is located in Billund. Others followed: Legoland Windsor in England, Legoland California in Carlsbad, and Legoland Deutschland in Günzburg. These parks have recently been sold to Blackstone Group, although the Lego Group retains a 30% interest and voting rights.

[edit] Retail stores

When the Mall of America opened in 1992, one of its premier attractions, next to the Camp Snoopy amusement park, was the LEGO Imagination Center (LIC). A second LIC opened at the Downtown Disney at Walt Disney World. A LIC is a large LEGO store with displays of LEGO sculptures as well as a play area with bins of bricks to build with; they offer a large selection of LEGO sets for sale, including sets which are advertised in LEGO catalogues as "Not Available In Any Store."

North American stores: 1999 saw the opening of The LEGO Group's Outlet store in Dawsonville, GA (USA) located at the North Georgia Premium Outlet Mall. The Fourth Store was another LIC at the Downtown Disney at Disneyland Resort. The Fifth store was another outlet, located at Potomac Mills Mall in Woodbridge, VA. A sixth store, described as a "Brand Retail Store" opened in Chicago, IL. The seventh store was a third outlet store, located at Discover Mills Mall in Lawrenceville, GA. The eighth store was a fourth outlet, located at Colorado Mills Mall.

In 2003, LEGO Brand Retail in the US started a larger expansion, adding seven new stores to the existing eight stores:

Burlington, MA (Burlington Mall) Marlborough, MA (Solomon Pond Mall) Paramus, NJ (Paramus Park Mall) West Nyack, NY (Palisades Center Mall) Schaumburg, IL (Woodfield Mall) Northbrook, IL (Northbrook Court Mall) Glendale, CA (Glendale Galleria)

In 2004, a second expansion opened stores in the following locations:

Bellevue, WA Santa Clara, CA San Mateo, CA Pleasanton, CA Bridgewater, NJ McLean, VA Rockaway, NJ Smithville, NY

In 2005, a third expansion opened stores in the following locations: Portland, OR Ontario, CA Natick, MA

In January 2005, the Dawsonville Outlet was closed.

Europe Stores:

October 2002 saw a significant change in the Lego Group's direct retail policy with the opening of the first so-called "LEGO Brand Store" in Cologne, Germany. The second, in Milton Keynes, UK, followed very quickly - several dozen more opened world-wide over the next few years, and most of the existing stores have been remodelled on the new "Brand Store" template. One of the distinctive features of these new stores is the inclusion of a "Pick-A-Brick" system that allows customers to buy individual bricks in bulk quantities. How a customer buys Lego at a Pick-A-Brick is quite simple; Customers fill a large or small cup or bag with their choice of LEGO bricks from a large and varied selection and purchase it. The opening of most of these stores, including the 2003 opening of one in Birmingham's Bull Ring shopping centre (England), have been marked by the production of a new, special, limited edition, commemorative LEGO Duplo piece.

[edit] History

See also History of Lego and Lego timeline

The Lego Group began in the workshop of Ole Kirk Christiansen, a carpenter from Billund, Denmark. Ole Kirk started creating wooden toys in 1932, but it wasn't until 1949 the famous plastic Lego brick was created.

The company name Lego was coined by Christiansen from the Danish phrase leg godt, meaning "play well." The Lego Group claims that "Lego" means "I put together" or "I assemble" in Latin, though this is a rather liberal translation.

In 1947, Ole Kirk and Godtfred obtained samples of interlocking plastic bricks produced by the company Kiddicraft via a London-based injection moulding equipment manufacturer which was interested in developing its equipment sales in Denmark. The initial response from Mr Christiansen was skeptical, but the company produced the Kiddicraft bricks and said "you could be making these rather than your wooden toys." The name London Injection Moulders appears beneath early Kiddicraft bricks. These "Kiddicraft Self-Locking Building Bricks" were designed and patented in the UK by Mr. Hilary Harry Fisher Page, a child psychologist, who in 1957 took his own life without receiving any major benefit from the global fame of his invention.

In 1949, Lego began producing similar bricks, calling them "Automatic Binding Bricks." These bricks, manufactured from cellulose acetate, were developed in the spirit of traditional wooden blocks that could be stacked upon one another; however, these plastic bricks could be "locked" together. They had several round "studs" on top, and a hollow rectangular bottom. They would stick together, but not so tightly that they couldn't be pulled apart.

The use of plastic for toy manufacture was not highly regarded by retailers and consumers of the time. Many of the Lego Group's shipments were returned, following poor sales; it was thought that plastic toys could never replace wooden ones.

By 1954, Christiansen's son, Godtfred, had become the junior managing director of the Lego Group. It was his conversation with an overseas buyer that inspired the idea of a toy system. Godtfred saw the immense potential in Lego bricks to become a system for creative play, but the bricks still had some problems from a technical standpoint: their "locking" ability was limited, and they were not very versatile.

It wasn't until 1958 that the modern-day brick design was developed. The bricks were improved with hollow tubes in the underside of the brick. This added support in the base, enabling much better locking ability and improved versatility. That same year, Ole Kirk Christiansen died, and Godtfred inherited leadership of the company.

In 1963, the material used to create Lego bricks, cellulose acetate, was dropped in favor of more stable acrylonitrile butadiene styrene, or ABS plastic, which is still use today. ABS is non-toxic, less prone to discoloration and warping, and is also more resistant to heat, acids, salt, and other chemicals than cellulose acetate. Lego bricks manufactured from ABS plastic in 1963 still hold most of their shape and color 40 years later, and still neatly interlock with Lego bricks manufactured today.

Over the years many more Lego sets, series, and pieces were created, with many innovative improvements and additions, culminating into the colorful versatile building toys that we know them as today.

[edit] Trademark and patents

Since the expiration of the last standing Lego patent in 1988, a number of companies have produced interlocking bricks that are similar to Lego bricks. The toy company Tyco Toys produced such bricks for a time; other competitors include Mega Bloks and Coko. These competitor products are typically compatible with Lego bricks, and are marketed at a lower cost than Lego sets.

One such competitor is Coko, manufactured by Chinese company Tianjin Coko Toy Co., Ltd. In 2002, the Lego Group Swiss subsidiary Interlego AG sued the company for copyright infringement. A trial court found many Coko bricks to be infringing; Coko was ordered to cease manufacture of the infringing bricks, publish a formal apology in the Beijing Daily, and pay a small fee in damages to Interlego. On appeal, the Beijing High People's Court upheld the trial court's ruling [1].

In 2003 the Lego Group won a lawsuit in Norway against the marketing group Biltema for its sale of Coko products, on the grounds that the company used product confusion for marketing purposes.[2]

Also in 2003, a large shipment of Lego-like products marketed under the name "Enlighten" was seized by Finland customs authorities. The packaging of the Enlighten products was similar to official Lego packaging. Their Chinese manufacturer failed to appear in court, and thus Lego won a default action ordering the destruction of the shipment. The Lego Group footed the bill for the disposal of the 54,000 sets, citing a desire to avoid brand confusion and protect consumers from potentially inferior products.[3]

The Lego Group has attempted to trademark the "Lego Indicia", the studded appearance of the Lego brick, hoping to stop production of Mega Bloks. On May 24, 2002, the Federal Court of Canada dismissed the case, asserting the design is functional and therefore ineligible for trademark protection [4]. The Lego Group's appeal was dismissed by the Federal Court of Appeal on July 14, 2003 [5]. In October 2005, the Supreme Court ruled unanimoussly that "Trademark law should not be used to perpetuate monopoly rights enjoyed under now-expired patents." and held that Megablok can continue to manufacture their bricks.

[edit] Economic difficulties

In 2003, the Lego Group faced a budget deficit of 1.4 billion DKK (220 million USD at then current exchange rates), causing president Poul Plougmann to be fired and Kjeld Kirk Kristiansen to take over. In the following year, almost one thousand employees were fired, due to budget cuts.

However, in October, 2004, as the Lego Group faced an even larger deficit, Kristiansen once again stepped down as president, while placing 800,000 DKK of his private funds in the company.

Future plans for getting the company back on track include selling the Legoland entertainment parks and reducing its workforce. The company will also move production of its bricks to the Czech Republic.

In 2005, the Lego Group reported a 2004 net loss of DKK 1,931 million on a total turnover, including Legoland amusement parks, of DKK 7,934 million.

For 2005, the results are encouraging: a profit of DKK 702 million, thanks among other things to an increase of revenue to DKK 7,050 million in 2005 against DKK 6,315 million in 2004 (+12 per cent), the sale of amusement parks, of a factory in Switzerland and general tightening up. The company expects further difficulties in the coming years so it is going to concentrate on profit growth instead of expansion of sales.

[edit] References

• Henry Wiencek, The World of LEGO® Toys. Harry N. Abrams, Inc., Publishers, New York. ISBN 0-8109-2362-9.

[edit] External links

• The Lego Group corporate information from the company's official website