The Lego Group

In: Business and Management

Submitted By sere94
Words 896
Pages 4
The countries known collectively as the PIIGS—Portugal, Ireland, Italy, Greece, and Spain—are burdened with increasingly unsustainable levels of public and private debt. Portugal, Ireland, and Greece have seen their borrowing costs soar to record highs in recent weeks, even after their loss of market access led to bailouts financed by the European Union and the International Monetary Fund. Spanish borrowing costs are also rising.

Greece is clearly insolvent. Even with a draconian austerity package, totaling 10 percent of gross domestic product, its public debt would rise to 160 percent of GDP. Portugal, where growth has been stagnant for a decade, is experiencing a slow-motion fiscal train wreck that will lead to public-sector insolvency. In Ireland and Spain, transferring the banking system's huge losses to the government's balance sheet—on top of already-escalating public debt—will eventually lead to sovereign insolvency.
The official approach, Plan A, has been to pretend that these economies are suffering from a liquidity crunch, not a solvency problem. The hope is that bailout loans, with fiscal austerity and structural reforms, can restore debt sustainability and market access. But this "extend and pretend" or "lend and pray" approach is bound to fail, because most of the options that indebted countries have used in the past to extricate themselves from excessive debt are not feasible.
For example, the time-honored solution of printing money and escaping debt via inflation is unavailable to the PIIGS, because they are trapped in the eurozone straitjacket. The only institution that can crank up the printing press is the European Central Bank, and it will never resort to monetization of fiscal deficits.
Nor can we expect rapid GDP growth to save these countries. The PIIGS' debt burden is so high that robust economic performance is next to impossible.…...

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...------------3 1.1 Lego design-------------------------------------------------------------------3 1.2 Manufacturing operation----------------------------------------------------3 1.3 Reasons for company’s success--------------------------------------------3 2 current business and operation strategy--------------------------------------3 3 Strengths and weakness-------------------------------------------------------3 4 Order winners and qualifiers-------------------------------------------------3 5 Environment analysis---------------------------------------------------------3 6.1 external analysis--------------------------------------------------------------3 6.2 Forces analysis---------------------------------------------------------------3 6 main expectations-------------------------------------------------------------3 7.3 main expectation--------------------------------------------------------------3 7.4 improvement from the relationship with Flextronics---------------------3 7 key challenges-----------------------------------------------------------------3 8 key issues-----------------------------------------------------------------------3 Reference---------------------------------------------------------------------------3 Appendix---------------------------------------------------------------------------3 Abstract This report is based on the case study of Lego Group’s outsourcing......

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