Mattel outsources manufacturing to Indonesia, Malaysia, Thailand, Mexico, Ireland, and China. Most outsourcing is done through China accounting for 65% of Mattel’s total production. Mattel owns one plant in the USA, and Ireland with the reaming in Mexico and Asian countries. Mattel uses these in-house manufacturing plants for about half of their production which is relatively high in comparison to Hasbro which uses nearly no in-house production. The half that is produced by non-Mattel owned plants are required to operate under the Vendors Operation Asia (VOA) in order to keep Mattel’s standards in production and relationships that they offer in the Asian government. This is to keep up with the ever-changing toy market that has a life cycle of about one to two-year or less. Mattel carries functional and innovative products that they offer mainly to the USA at 36%, Europe at 29%, and then Asia at 24% of the toy market with Asia and Latin America on an incline. Mattel has the highest percentage of the global toy market at 6%. There is a trend of consumers “getting older younger” as technology develops. The demand for high tech toys and video games is growing.
In the recent years Mattel has experienced issues with product recalls resulting from manufactures in China using lead based paint, and also product design failures. The relationships that Mattel has to these manufactures oversees have become a problem as innovative products have such a fluctuating demand that the suppliers are not being used fully and are not content. Mattel places a large need for lower prices brought on by warehouse stores becoming the major suppliers. Labor costs are also on the rise in China which is conflicting with Mattel’s demand for low-priced manu...
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...itored for their employee practices as well as their product quality.
Mattel needs to be reactive to the market trend to electronic entertainment by creating video games and high tech toys that the young consumer is developing a demand for. Technology is always being developed and the trend towards electronic entertainment will continue to grow. Mattel should begin to compete in this growing market through investments in what consumers want. The supply chain for high tech toys will need to be implemented by outsourcing microchips to American, or Japanese manufacturing plants that are most efficient in quality and production. Video games and electronic entertainment may be soon deliverable online, in which Mattel will need to create a channel structure through Xbox 360 online, Playstation 3, directly, or simply through online distributors of electronic content.
Robertson, David C. BRICK by BRICK: How Lego Rewrote the Rules of Innovation and Conquered the Global Toy Industry. First Edition. New York: Crown Publishing, Division of Random House, Inc., 2013. Print.
Mattel wants to improve their execution of the existing toy business and globalize their brands; extend their brands into new areas; identify new trends, create new brands, and enter new industries; develop people and improve productivity by simplifying processes and maintaining customer service levels. Mattel wants to make a positive impact in children’s lives around the world by using unrivalled creativity and innovation to create high-quality toys that will be loved by children and trusted by parents.
Mattel industry is one of the known toy manufacturing industry in the Asian countries, especially in China. This industry gets its raw materials and marketing from China. Its production has majorly been influenced by the constant price decrement, increased concentration of supply amount in China. In the 2007 festive holiday, Mittal was faced with a great challenge in terms of its toy product value and sense of security like the use of lead paint and loose magnets which taunted the image of the industry and its brand honor.
Key Changes in the Video Game Industry The first wave of home video games was launched nearly 30 years ago. By the early 1980s, this electronic entertainment medium had emerged as a cultural phenomenon, thanks to classics such as Asteroids, Centipede, Donkey Kong, and Pac-Man. The world of video games has, of course, changed drastically since then. For starters, Microsoft, Nintendo, and Sony are now the key players in the console industry, having replaced Atari, Coleco, and Mattel for those top spots. Advances in technology are making game worlds more realistic and interactive than ever before.
Toys R Us is the world's largest children's specialty retailer. The company operates toy stores throughout the world and is publicly traded on the New York Stock Exchange. In this paper I will give a brief company history, cite where the competitive environment is coming from, strategies that were attempted, and where they stand today.
It is evident that Mattels core focus has changed considerably- especially when compared to their focus prior to the first recall. It is evident that Mattel now focuses its attention on doing the right thing for “regulators, retailers, customers and suppliers ahead of damage control or profits.” (Hurley, 2012) In doing so Mattel has built credibility around its supply chain risk management capabilities and regained the trust of the general public as well as that of other stakeholders. (Deschene, 2007)
Video games can be seen in both a positive and negative light. Video gaming has become a popular activity for people of all ages, yet many fear the aftermath they can ensue. Many children and adolescents expend large amounts of time playing them. Video gaming is a multibillion-dollar industry – bringing in more money than movies and DVDs. In fact, the PlayStation 2 was the first video game system to integrate DVD mechanics. It was originally intended to exist as a CD add-on to complement the Super Nintendo, but due to licensing difficulties Sony chose to develop the PlayStation as its own distinctive system. Video games have become very sophisticated. Some games connect to the internet, which can allow children and adolescents to play online with unknown adults and peers. The
Hasbro owns "the three main part", United States, Canada and International. The United States and Canada department through innovation and reform will promote the Hasbro toys and games. This is driven by consumers’ survey and market insight into new products and measures, There is no direct sales of our products to retailers and wholesalers in Hasbro's international departments of Europe, Latin America, South America, and Asia, but sales made through our existing national distributors, Hasbro has offices in more than 35 countries, contributing to the sales of more than 120 countries. They continue to expand in Eastern Europe, Asia and emerging markets in Latin America and South America. Emerging markets is first priority areas of Hasbro, because
Hasbro uses licensing strategies the method of entry that involves foreign licensees purchasing the rights to produces the company’s products in their own country for a negotiated fee that is decided upon by the father company which is Hasbro. As reported by Hasbro: Hasbro’s growth will come from investing where we can secure the greatest return – on our franchise and partner brands – and from further penetrating emerging markets and growing our presence in these countries. We have built a powerful and profitable business in emerging markets and expect them to support our business growth. Most of Hasbro’s toy products are manufactured by third-party vendors.
Wal-Mart set extremely low prices on toys in a very successful pricing strategy to attract customers and become the leader in toy sales (Grant, 2004). This pricing strategy is called market penetration pricing. Penetration pricing is used to enter the market quickly and win a large market share (Anderson & Bailey, 1998). These low prices have taken their toll on toy stores. Toys “R” Us is now the second largest toy seller in the U.S. behind Wal-Mart. Toys “R” Us was recently bought for $6.6 million by investors who hope to transform the store into a more viable store for the entire family (D’Innocenzio, 2005). Other toy stores are not as fortunate. FAO In...
Products are not standardized and vary by country in terms of type, packaging and specification. This increases production time, production costs, lead tim...
Lynch (2012) asserts that it is necessary for an organization to carry out an analysis of its resources and capabilities as it help it in identifying the places where value can be added by the organization. This also helps the company in finding out ways to gain competitive advantage in the market. The given case on Nintendo showed that by 2005, Nintendo appeared to be heading towards an end as its rivals Microsoft and Sony has captured the market through Xbox 360 and PlayStation 3 respectively. In this scenario, Nintendo innovated Wii which changed the market scenario in 2007. The case showed that innovative new strategy by Nintendo with its Wii games machine has transformed the industry and revived the profitability of the company. Since the release of the Wii, Nintendo is the leader in the video game industry. By introducing a totally new, one of a kind console, Nintendo has set clearly its goal and objectives, i.e. to reach an unexplored market share by introducing new gaming experiences, and therefore being the leader over its two main competitors, Sony and Microsoft. The case thus highlights the need to take a resource based view of the capabilities of the company so that such resources can be exploited to generate higher value for the firm.
Lardener, J. (2010, March 18). A History of Home Video and Video Game Retailing. Retrieved
Microsoft has a lot to gain from outsourcing the Xbox production to Flextronics. Microsoft’s core competency is producing software, not hardware. So by the Law of Comparative Advantage, it is best for Microsoft to let someone, who is good at producing hardware, produce the Xbox. Flextronics not only offers their expertise in hardware, but also their network of connections worldwide which reduces production costs, thus making the market value of Xbox lower and more affordable. Because of Microsoft’s web-based information system, they are able to share information with Flextro...