In 2004, the LEGO Group, the Danish company behind the famous plastic bricks, made a net loss of DKK 1.8 billion. This free case puts you in the boss’s chair: what would you change to save it? It takes about 30 minutes and suits students aged 10 to 13.
Case at a glance
Level: Starter, ages 10 to 13
Time: about 30 minutes
Skills: spotting the real problem, choosing what matters most, explaining a decision
Good practice for: a first business competition (try our competition finder)
Company: the LEGO Group, Denmark
The situation
LEGO was founded in Denmark in 1932 by Ole Kirk Kristiansen, and it is still owned by the Kirk Kristiansen family today. Millions of children know its bricks.
But in 2004 something had gone badly wrong. LEGO still sold a lot: its revenue for the year was DKK 6,295 million (Danish kroner). Yet it spent even more than it earned. Before tax, it lost DKK 987 million. After the costs of closing down some parts of the business, the total loss for the year was DKK 1,800 million.
LEGO was not only a brick company at the time. It also owned the LEGOLAND theme parks in Denmark, England, Germany and California. Kjeld Kirk Kristiansen, whose family owns LEGO, later said the toy market had been shrinking for some time and was extremely competitive.
The key numbers for 2004
Revenue (money from sales): DKK 6,295 million
Loss before tax: DKK 987 million
Net loss for the year: DKK 1,800 million, including DKK 516 million from businesses it was closing
Average full-time staff in the businesses it kept: 5,603
Words to know
Revenue: all the money a company receives from selling things.
Profit: what is left after all the costs are paid. If costs are bigger than revenue, the company makes a loss.
Core product: the thing a company is best known for and best at making.
Your questions
LEGO sold more than DKK 6 billion of products in 2004, yet it lost money. In your own words, how can a company sell a lot and still lose money?
LEGO owned toy bricks, theme parks and other businesses. If it could keep only one, which should it keep, and why?
Name two things you would tell LEGO to stop doing, and two things it should do more of.
You are the new boss. In one minute, explain your plan to save LEGO to the family who owns it.
Thinking toolbox
Follow the money: which parts of the business bring money in, and which cost the most?
Focus: what does LEGO do better than anyone else?
Customers: who buys LEGO, and why do they love it?
Take the challenge
Record a pitch of up to 2 minutes answering question 4, and ask a parent to enter it in the IFA Case Challenge. Every entry receives short written feedback.
What happened next
In July 2005, LEGO sold its majority holding in the LEGOLAND parks to the investment firm Blackstone, in a deal valued at €375 million. LEGO kept a 30% share in the new company that ran the parks, Merlin Entertainments Group. Explaining the sale, Kjeld Kirk Kristiansen said LEGO wanted closer relations with its customers, better marketing and a greater emphasis on its core products.
LEGO returned to profit in 2005, with a net profit of DKK 214 million. By 2008, its revenue had grown to DKK 9,526 million and its net profit to DKK 1,352 million.
Look back at your answer to question 2. Did your plan also focus on what LEGO did best?
Sources
LEGO Group Annual Report 2008, five-year financial highlights
Written by International Finance Academy for learning, using public sources checked on 8 November 2026. IFA is independent and is not affiliated with, or endorsed by, the LEGO Group or any company named. LEGO and LEGOLAND are trademarks of the LEGO Group.
