Lego Group

Lego Group

Type	Private
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	▲ DKK 7.823 billion (2006)
Operating income	▲ DKK 1.528 billion (2006)
Net income	▲ DKK 1.430 billion (2006)
Employees	4,922 (2006)
Website	lego.com

Lego Group is a Danish 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. The word Lego is derived from the Danish words "leg godt" which translate roughly into English as "play well".

Legoland

The Lego Group built four amusement parks around the world, known as "Legoland". Each park features large-scale Lego models of famous landmarks and miniature Lego models of famous cities, along with Lego-themed rides. The oldest Legoland park is located in Billund, Denmark. Others followed: Legoland Windsor in England, Legoland California in Carlsbad, California, and Legoland Deutschland in Günzburg, Germany. All four parks have recently been sold to Blackstone Group, although Lego Group still retains a 30% interest and voting rights.

Retail stores

In 1992, when the Mall of America opened in Bloomington, Minnesota, one of its premier attractions was the Lego Imagination Center (LIC). An imagination center is a large Lego store with displays of Lego sculptures and a play area with bins of bricks to build with. The store inventory includes a large selection of Lego sets for sale, including sets which are advertised in Lego catalogues as "Not Available In Any Store." A second imagination center opened at the Downtown Disney at Walt Disney World in Orlando, Florida.

North American stores

In 1999, the Lego Group opened the following stores in North America.

1. A Lego Brand Retail Outlet store in North Georgia Premium Outlet Mall in Dawsonville, Georgia.
2. A Lego Imagination Center in Downtown Disney at the Disneyland Resort in Anaheim, California
3. Another outlet store in Potomac Mills Mall in Woodbridge, Virginia
4. A Brand Retail Store in Chicago, Illinois
5. A third outlet store in the Discover Mills Mall in Lawrenceville, Georgia
6. A fourth outlet store in the Colorado Mills Mall.

In 2003, the Lego Group opened seven (7) new Lego Brand Retail stores, bringing the total to fifteen:

1. At the Burlington Mall in Burlington, Massachusetts
2. At the Solomon Pond Mall in Marlborough, Massachusetts
3. At the Paramus Park Mall in Paramus, New Jersey
4. At the Palisades Center Mall in West Nyack, New York
5. At the Woodfield Mall in Schaumburg, Illinois
6. At the Northbrook Court Mall in Northbrook, Illinois
7. At the Glendale Galleria in Glendale, California

In 2004, a second expansion opened stores in the following locations: (1) Bellevue, Washington, (2) Santa Clara, California, (3) San Mateo, California, (4) Pleasanton, California, (5) Bridgewater, New Jersey, (6) McLean, Virginia, (7) Rockaway, New Jersey and (8) Smithville, New York. In 2005, another expansion opened stores in the following locations: (1) Portland, Oregon, (2) Ontario, California and (3) Natick, Massachusetts.

In January 2005, the outlet in Dawsonville, Georgia was closed.

Europe Stores

October 2002 saw a significant change in 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 pieces 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 in England, have been marked by the production of a new, special, limited edition, commemorative Lego Duplo piece.

History

See also: History of Lego and Lego timeline

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 was not until 1949 the famous plastic Lego brick was created.

The design of Lego bricks changed considerably until the late '50s.

The company name Lego was coined by Christiansen from the Danish phrase leg godt, meaning "play well." 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, before the product saw any of its later success.

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 could not 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 was not 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 used 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.

The company was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.

The company moved production of its Creator brand to Nyíregyháza, Hungary,^[1] Duplo is already being produced in Sárvár, Hungary.^[1]
The company will also move production of its bricks to the Czech Republic.

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, 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 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. 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]

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 unanimously 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.

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.

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 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%), the sale of amusement parks, of a factory in Switzerland and general tightening up. Because the company expects further difficulties in the coming years, it plans to concentrate on profit growth instead of expansion of sales.

Future plans for getting the company back on track include selling the Legoland entertainment parks and reducing its workforce.

References

1. ↑ ^{1.0 1.1} "Factsheet: Lego Hungária". European Monitoring Centre on Change. European Union. Retrieved on 2008-07-04.

Further reading

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

External links

• Lego Group corporate information from the company's official website
• U.S. patent for the original Lego brick