ba 352 ch9 openended toy industry

Lorelay Corona

Angela Van Strander

Matthew Vital

The Toy Industry Term used to describe

industries that produce small number of goods in any material Hinges, buttons, belts, hooks,

etc. “Playthings”

1st based on small-cottage manufactories(London) Rise of the

middle class, a demand that led to rapid expansion of the industry○ Mid-18th century

Later, a number of very large manufactories were built.

Background (Cont’d) The US toy manufacturing

industry includes: About 700 companies and Has annual revenue of $20

billion

Most manufacturing is conducted in overseas factories Primarily in China.

Highly concentrated industry Top 50 companies generate

about 75%of revenue

Major Players

1. Mattel

2. Hasbro

3. Bandai

4. Lego

5. Tiger Electronics

#1. Mattel World’s largest toy

companyBarbie

○ Generates 80% of revenue sales

Hot WheelsAmerican GirlPolly PocketMatchbox

2007 – Toy Recalls~1 million toys in

China○ +180 times the limit of

lead paint Dora the Explorer,

Sesame Street

Widespread criticism of Mattel○ “Bad product” awards○ Fortune “Dumbest

Moment” in business of the year

#2. Hasbro 2nd largest global toy

maker Long-lasting toy

franchises since the 1920s○ Mr. Potato Head○ G.I. Joe○ Transformers○ My Little Pony

Board Games○ Monopoly○ Candy Land○ Scrabble○ Trivial Pursuit○ Pictionary○ Recently, Cranium Inc.

for $77.5 million

#3. Bandai

3rd largest toy manufacturerBased in Japan

Popular video games forNintendoSegaPlayStationGame BoyWiiXbox

#4. Lego

1934, Danish toymakerOle Kirk Christiansen

○ 1st line of wooden toys, then produced plastic bricks (legos)

Popular culture phenomenaStar WarsHarry Potter

#5. Tiger Electronics

American electronic-toy manufacturer

Subsidiary of HasbroHandheld gamesFurbyGiga Pets

Leading electronic toys for: Star Trek Neopets Barney Jeopardy Who Wants to Be a

Millionare? Winnie the Pooh

Minor Players

Fisher-Price Leap Frog Playskool

Fisher-Price

Headquarters: East Aurora, NY

Infant toysSubsidiary of Mattel,

Inc. (1933) Products

Little People toysPower WheelsOthers: Disney,

Sesame Street, Barney, Dora the Explorer, & See ‘n Say

Leap Frog

Based in Emeryville, CA

Leading designer, developer, & marketer of innovative, technology-based educational products world-wide

Most engaging & effective learning experience for all agesTag, Tag Jr., Zippity,

Scout, Leapster

Playskool

American company; headquarters in Pawtucket, RISubsidiary of Hasbro

Educational toys & games for childrenMr. PotatoPlay-DohTonkaTinker ToysLincoln LogsWeeblesGloworms

Common Trends AmongMajor Players

Budget ToysBasic, nostalgia

○ i.e. remote controlled cars

Movie ToysMovie-licensed toys

○ Iron Man, Superman, Batmam

Organic & Green ToysEco-friendly

raw materials from reused & recycled materials

Interactive and Digital ToysComputerized-

virtual world

The Toy Industry within OM:Supply Chain Structure

Manufacturer

Distributor

Warehouse

Retailer

Consumer

GOODS

$$$

The Toy Industry within OM: Push System

(def) Produce goods in advance of customer demand using a forecast of sales […]Replenish shelves as needed

The Toy Industry within OM:Value Chain Model

Management

Outsourcing

70% + toys are manufactured in China

Reasons for Outsourcing:Experience-specializationFast-track response

quick opportunities emerge

Save money & time○ Market

Intelligence3rd party research on market trends

Ethical Concerns

Labor Standards: Increased focus on

standards Req. by USA brands

Relocation of factories to cheap, remote area

Hiding bad practices

Recall of 45 million toys imported from ChinaConsumer Product

Safety Improvement Act○ Passed: August 2008○ In-Effect: February

2010

Innovations Webkinz

Ganz Company○ Stuffed animal with

unique “Secret Code”○ Webkinz World website

Concept: Giga pets

Green Toys Inc. Line of classic children’s toys

constructed from recycled plastic & other environmentally friendly materials.

Helps reduce fossil fuel use and greenhouse gas emissions Improving the overall

health and happiness of the planet

Differences betweenSmall vs. Large CompaniesSmall Companies:

Competitive Specialize in product

segment Respond faster to

market trends

Large Companies: Wide selection of toys Have scale advantages

in: Purchasing Manufacturing Distributing Selling Marketing

US vs. InternationalCompanies (List)

United States Tiger Electronics,

Massachusetts Fisher Price, New York Leapfrog, California Playskool, Rhode Island

International Hasbro, global Mattel, global Bandai, Japan

Differences between US & International Companies

US Traditional Toy Markets

Differences between US & International Companies International Traditional Toy Markets

References http://www.answers.com/topic/hasbro http://www.articlesbase.com/computer-games-articles/2009-top-

trends-for-toy-industry-879457.html http://www.firstresearch.com/industry-research/Toy-

Manufacture.html http://www.greentoys.com/about.html http://www.hoovers.com/toy-manufacture/--ID__244--/free-ind-fr-

profile-basic.xhtml http://www.hoovers.com/toy-manufacture/--ID__244--/free-ind-fr-

profile-basic.xhtml http://www.stanford.edu/group/scforum/Welcome/White

%20Papers/Demand%20Chain%20Optimization%20-%20Evant%20white%20paper.pdf

http://www.usatoday.com/money/world/2006-12-20-china-toys-usat_x.htm

Any Questions???