Lego's troubles

By
International Herald Tribune writes:

Billund, Denmark - Lego, the maker of the iconic toy building blocks, put this little town on the map. Employees and residents alike cherished the family owned, community-based business as a benevolent source of jobs and revenue. Those were the good old days.

In recent years, competition from abroad and the computerization of children's playtime have turned rich profit into a deep loss.

Billund, a prototype European company town, is struggling to change with it. Thanks to decades of spectacular sales of Lego Group's blocks - 340 billion pieces and counting - Billund, the town of 6,500 where the company has been based since it was founded in 1932, has an amusement park, a swimming hall, a sculpture park and a big international airport.

But in recent years, Lego has cut almost a third of its work force here, a loss of 1,000 jobs.

Lego's problems result from a number of factors, including the expiration of its last patents in the late 1970s and piracy of its intellectual property. Worse, after growing rapidly for more than 50 years, the core business began to suffer as children's taste in playthings changed. While children have not given up on traditional toys altogether, the introduction of computers, cellphones, MP3 players and other high-tech gadgets to younger and younger children means that the competition for their play time has become much fiercer.

Popular posts from this blog

It Pays to be a Nervous Wreck

By Ramesh Akkineni
from an article in Livemint Two weeks ago, Microsoft issued the sort of quarterly report usually seen of a company in finest mettle. Redmond’s sales were up 15% and profit double that, excluding certain deferrals. And the rest of the year, it projected, would be just as sanguine—certainly unlike in the economy as a whole. Elsewhere, that would be a mandate for staying the course. In Redmond, though, they were crossing off days on their calendars, waiting until Friday, the first day of February and thus the first opportunity Microsoft would be able to truthfully state, “Okay, Yahoo, it’s been a year since we talked to you guys; where’s the beef?” Microsoft remains obsessed about Google because it reads the same things everyone else does about how Google’s style of free, “in the cloud” computing means the slow and steady decline of Windows and Office. That’s a technical debate, one in which both sides have good arguments. But....
Read more

Korean Model

By Ramesh Akkineni
from an article by Ha-Joon Chang in the Guardian In my lifetime Korea has lived through one of the greatest development miracles – half a century ago, its annual per capita income was around £50, less than half that of Ghana at the time. Today, it stands at £12,000, putting it on a par with Portugal and Slovenia. How was this possible? Korea of course did things that most people agree are important for economic development, such as investment in infrastructure, health and education. But on top of that, it also practised many policies that are now supposed to be bad for economic development: extensive use of selective industrial policy, combining protectionism with export subsidies; tough regulations on foreign direct investment; active, if not particularly extensive, use of state-owned enterprises; lax protection of patents and other intellectual property rights; heavy regulation of both domestic and international finance. The Korean experience shows that sustainabl...
Read more

Wild West

By Ramesh Akkineni
From an article in San Jose Mercury News by John Boudreau Not long ago, Tsoi Chun Bun made potato chips. Now he designs and sells millions of mobile phones a year. He is one of hundreds of young entrepreneurs seeking overnight fortunes in Shenzhen Inc. — the Wild West of the mobile-phone industry. Phones made and designed by these Chinese vendors will account for about a third of the 1.1 billion cell phones that will be sold around the world this year. Three decades ago, Shenzhen was China's first city to experience market-oriented economic reform, unleashing anything-goes capitalism that has spread throughout the nominally capitalist country. And while China's mobile-phone industry has spread beyond Shenzhen, the southern region remains a center of the mobile-phone ecosystem that inspires dreams of instant success. "It is China's version of the Gold Rush," said Shanghai-based Ken Qing Wang, general manager of the China operations of Silicon Valley-based Tele...
Read more