| Type | Privately held company |
|---|---|
| Industry | Toys |
| Founded | Billund, Denmark (1932) |
| Founder(s) | Ole Kirk Christiansen |
| Headquarters | Billund, Denmark |
| Key people | Jørgen Vig Knudstorp, CEO Kjeld Kirk Kristiansen, vice-chairman and majority shareholder |
| Products | Lego |
| Revenue | DKK 9.526 billion (2008)[1] |
| Operating income | DKK 1.852 billion (2008) |
| Net income | DKK 1.352 billion (2008) |
| Employees | 5,388 (2008) |
| Website | http://lego.com |
The LEGO Group is a family-owned company based in Billund, Denmark,[2] 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", meaning "play well." The word "lego" can also be interpreted to mean "I gather together" in Latin, and "I connect" in Italian.
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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, 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. 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 24 May 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 14 July 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 Mega Bloks can continue to manufacture their bricks.
Because of fierce competition from copycat products, the company has always responded by being proactive in their patenting and has over 600 United States granted design patents to their name.[3]
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 first LEGOLAND park was built in LEGO's home town of Billund in Denmark. This was followed by LEGOLAND Windsor in England, LEGOLAND California in Carlsbad, California, and LEGOLAND Deutschland in Günzburg, Germany.
In July 2005, The LEGO Group announced that it had reached a deal with private investment company the Blackstone Group to sell all four parks for €375m to the Blackstone subsidiary Merlin Entertainments. Under the terms of the deal, The LEGO Group would take a 30% share in Merlin Entertainments and positions on their board.[4] The sale of the theme parks was part of a wider strategy to restructure the company to focus on the core business of toy products.
Since the acquisition, Merlin Entertainments has planned several new LEGOLAND parks, and has opened four new LEGOLAND Discovery Centre, which take the LEGOLAND concept and scale it down to suit a retail park environment.
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. Between 1999 and 2005, LEGO opened 24 further stores in North America, and in 23 US states by 2011. These stores sell various LEGO merchandise, including minifigures, PICK-A-BRICK (where you can buy Lego bricks, paying for each brick. There is also a center where you can design your own minifigure, using various parts provided by Lego. You can create 3 minifigures for US$9.99.
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 worldwide 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 the Birmingham Bull Ring shopping centre in England, have been marked by the production of a new, special, limited edition, commemorative LEGO DUPLO piece. LEGO opened the first brand store in its home country Denmark in Copenhagen on 13 December 2010.
In 2003, The LEGO Group faced a budget deficit of 1.4 billion DKK (220 million USD at then current exchange rates), causing Poul Plougmann to be replaced by Kjeld Kirk Kristiansen as president. In the following year, almost one thousand employees were laid off, due to budget cuts. However, in October, 2004, on reporting an even larger deficit, Kristiansen also stepped down as president, while placing 800,000 DKK of his private funds into 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 company returned a profit of DKK 702 million, having increased its revenue by 12% to DKK 7,050 million in 2005 against DKK 6,315 million in 2004. It also cut expenditures and disposed of amusement parks and a factory in Switzerland. Because the company expects further difficulties in the coming years, it plans to concentrate on profit growth instead of expansion of sales.
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