p1 final deliverable

Date: February 14, 2016 To: Professor Javadi, Professor Keifer

Professor Marchese, Professor Levallet From: PM107 Team 3- Samuel Kunau,

Riley Swartz, Kylie Bell Brett Osborn, Bayli Cyrus

Subject: Analysis of the Toy Manufacturing Industry The following report has been requested by the managers of the Ohio University College of Business Integrated Business Cluster. The final deliverable given on February 14, 2016 is a comprehensive analysis of the toy manufacturing industry. This report includes an overview of the industry as well as emphasis on the three key success factors that we deem most valuable to be successful within the industry. An overview of each company is provided as well as our recommendations for Mattel, Inc.

Key Success Factors

Following the competitor analysis, the three keys success factors for the toy manufacturing industry are outlined:

• The ability of companies to obtain major brand licensing rights to produce toys

• The use of innovation and technology in the production of toys

• The ability to break into emerging markets, specifically in China and India. Once we collected information and statistics on the current state, future prospects, and industry trends we, Team 3, were able to determine the three key success factors in order to have a successful company in the industry. After discussing each key success factor in detail, we compared the performance of each company against them. In addition to our research of the KSFs, we are able to support them through our appendices in the report.

Final Remarks

We appreciate the time that we have been given from each faculty member in assisting us with the direction of our project. It has been extremely beneficial and we would like to personally thank Professor Javadi, Professor Keifer, Professor Marchese, Professor Levallet, Catherine Penrod, and Marie Strasbaugh. It has been quite the experience to be able to evaluate the toy manufacturing industry as a team. If any questions arise, please do not hesitate to ask, we can be reached at [email protected]. Sincerely Team 3, Samuel Kunau, Riley Swartz, Kylie Bell, Brett Osborn and Bayli Cyrus

The Compe))ve Advantage:

A Market Analysis, Company Analysis, Industry Analysis and the Key Success Factors of the

Toy Manufacturing Industry

Prepared For: Copeland Associates (Professor Javadi, Professor Keifer,

Professor Marchese, Professor Levallet)

Prepared by: PM107 Team 3-‐Samuel Kunau,

Riley Swartz, Kylie Bell BreO Osborn, Bayli Cyrus

Objec0ve: This report will examine the toy manufacturing industry as well as the three key factors that have been found crucial in order for any company to have success in the industry. This report will also analyze the strategic posi)ons of the three top toy manufacturers MaOel, Hasbro, and Jakks Pacific. Through close examina)on and analysis of these companies financials, future plans, and ability to use technology and innova)on, we have developed a criteria that will enable the reader to have an understanding of each company as well be able to determine which company is most suscep)ble to have success in the future of the toy manufacturing industry.

This report was wriOen by the associates of the Ohio University Integrated Business Cluster. It is intended for the managers of the Ohio University Business Cluster along with anyone interested in the toy manufacturing industry. Poten)al or current investors, toy company owners or simply individuals that may desire to enter the industry in the future may be interested.

The Toy manufacturing industry generated approximately $92.2 billion in 2014. The drivers in the toy manufacturing industry come from consumer demand and are directly related to the amount of disposable income of families related to their discre)onary spending.

Current Trends impac)ng the toy industry are: Interac)ve/app compa)ble toys such as “smart toys”, collectable toys, educa)onal toys, gender-‐neutral toys, and 3D printable toys.

We have selected several segments of the toy industry to analyze: Ac)vity toys, games and puzzles, infant/pre-‐school, outdoor, plush and lastly an “other” segment including all toys not belonging to the previously listed segments.

By combing our analysis of current trends together with what we have iden)fied as the most important segments in the toy industry, we were able to create three key success factors that will lead to the ability of a company to be successful in the toy industry.

Key Success Factors

Through our research, the three most crucial key success factors to companies in the toy manufacturing industry are:

The ability of companies to obtain major brand licensing rights to produce toys

The use of innova0on and technology in the produc0on of toys

The ability to break into emerging markets, specifically in China and India.

A_er researching the Toy Industry, it has been found to be fluid and ever-‐changing. It has endless opportuni)es, which are ripe and ready to be taken advantage of. Innova)on is everywhere, whether it be in the informa)on systems used by corpora)ons throughout the supply chain or in the produc)on and development of new and exis)ng toys themselves. Innova)ve toys can be technical and extremely intricate. Licensing has proven to play a crucial role in the success of major players in the industry. Emerging markets present the opportunity for the growth of these companies.

Execu)ve Summary

Introduc)on 1 Key Success Factor Matrix & Breakdown 2 Company Assessment of MaOel, Inc. 3,4 Compe)tor Analysis of Hasbro, Inc. 5 Compe)tor Analysis of JAKKS Pacific, Inc. 6 Key Success Factors and Criteria 7 Key Success Factor #1 8,9 Key Success Factor #1 Matrix & Analysis 10 Key Success Factor #2 11,12 Key Success Factor #2 Matrix & Analysis 13 Key Success Factor #3 14,15 Key Success Factor #3 Matrix & Analysis 16 Recommenda)ons 17,18 Conclusion 19 References 20-‐23 Appendices 24-‐37

Table of Contents

List of Figures Figure 1: Toy Manufacturing Industry Key Success Factor Matrix 2 Figure 2: Breakdown of Scoring 2 Figure 3:Figure X: MaOel: Revenue by FY2010-‐2014 3 Figure 4: Key Ra)os of MaOel vs Industry Standard 3 Figure 5:MaOel: Retail Sales by Geography 2014 4 Figure 6: Hasbro FY2014 Revenue Breakdown 5 Figure 7: Key Ra)os of Hasbro vs Industry Standard 5 Figure 8: JAKKS Future Revenue 6 Figure 9: Key Ra)os of Hasbro vs Industry Standard 7 Figure 10: : Distribu)on of Star Wars Earnings 8 Figure 11: Tradi)onal Toys and Games by Licensing, 2014 9 Figure 12: Key Success Factor #1 Matrix 10 Figure 13: Revenue Generated from 3-‐D prin)ng 11 Figure 14: Children 12 & Under Play Preferences 12 Figure 15: Key Success Factor #2 Matrix 13 Figure 16: Tradi)onal Toys & Games Forecast 14 Figure 17: : Emerging Markets Tradi)onal Toys and Games Sales

2014/2019 15 Figure 18: Expected Growth of Middle Class (Millions) 15 Figure 19: Key Success Factor #3 Matrix 16 Figure 20: Spending on Research & Development (Millions USD) 16

Purpose and Preview The purpose of this report is to analyze what makes various firms in the toy industry successful. In addi)on to this, we provide recommenda)ons that will help toy manufacturers stay on top of the industry. There are three key success factors in the toy manufacturing industry: •  The ability of companies to obtain major brand licensing rights to produce toys. •  The use of innova)on and technology in the produc)on of toys. •  The ability to break into emerging markets, specifically in China and India. We then compared the three companies, MaOel, Hasbro and JAKKS Pacific to these three key success factors to see their ability to implement them into their strategic posi)on. We gave each key success factor a weight according to the importance we felt that it had on the success of each company.

MaOel Striving for Great Industry Overview Like most industries, the toy manufacturing industry was hurt badly during the 2008 economic recession. Dumaine, B. 2015). The industry has shown steady and constant growth since then. The toy manufacturing industry in 2014 was valued at 92.2 billion dollars and is expected to grow to 116 billion dollars by 2019.This is a growth of 25.8%(Marketline, 2015). The growth of this industry is driven by many different factors we have found. In 2014, the largest geographical segment was Europe with 31.3%. The United States represented 24.9% of the market. Asia-‐Pacific is expected to be the largest region by 2019 (Morris, D. Z, 2015). While sales of toys in the Europe seemed to have finally started maturing, sales in India and China are increasing by almost double-‐digits. The UK and Germany both have nega)ve growth rates in this industry.

MaOel is a 6.02 billion dollar company situated in the toy industry. It is a world renowned and has a rich history of successful products. MaOel is currently reposi)oning and bringing out more innova)ve lines, such as Barbies that portray different body types, skin tones, and more. The hope of this revamp is that it will make MaOel more relevant in the average household again. MaOel has mul)ple sales channels which allows for further exposure in different markets. The company also has manufacturing facili)es across the globe which has enabled MaOel to avoid any disrup)ons that may occur. Due to the lack of capable leadership, MaOel has been experiencing decreases in sales. In September 2015, MaOel brought in 4 new execu)ves that are helping to bring revenues and stock prices back up.

Introduc)on Market Analysis

Key Success Factors Conclusion

Introduc)on

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Toy Manufacturing Industry Key Success Factor Matrix



Introduc)on

Key Success Factor #1: A_er an analysis of the toy manufacturing industry we were able to see the importance of licensing in the industry. We weighted this KSF with 40% due to the ability to produce revenue through licensed products. Evidence shows how large of a segment licensed products play in the revenue with these companies. It assists them in the marke)ng of their products due to the already established brand recogni)on from the license. Key Success Factor #2: The ability of a firm to u)lize innova)on and technology within their products to keep up with changing trends is vital. This KSF is weighted at 30%, because there will always be some demand for tradi)onal toys and games without any technology use at all. Without companies evolving, the risk of becoming outdated or obsolete increases. Changing consumer wants and needs prompt companies to be able to adapt to these changes to stay compe))ve.

Key Success Factor #3: Emerging markets are fueled by several factors that enable them to be prime opportuni)es for growth for companies in the toy industry. This KSF is weighted at 30% due to the fact that companies have some sort of presence in these markets, they need to expand the presence. Increase in disposable income, middle class and working condi)ons within China are factors in the expected growth of Asia-‐Pacific to be the leader of the toy market.

2

Figure 1

Figure 2

MaOel is number one MaOel had a revenue of 6.02 billion in 2014. MaOel is facing a major difficultly with the loss of Disney and Frozen at the beginning of 2016. In 2014 alone the sales of the two vital licenses accounted for 7.3% (440 million) of their total revenue (Euromonitor, 2015). They will likely look to expand their porpolio with new licenses to make up the difference.

Source: (Euromonitor, 2015)

MaOel has been a huge compe)tor in the toy industry since concep)on. It’s execu)ves were not afraid to try than fail, and this is reflected in the success of the company. Even though they have been struggling to keep up with changing ideas of play, they have con)nued to do well and outperform the rest of the industry. It tweaks and adjusts current lines such as Barbie, Hot Wheels, and American Girl. Analysts expect MaOel to con)nue to operate at its current level, albeit growing slightly in the next few years. In this sec)on, we will analyze various important aspects of the company.

Company History MaOel was founded in 1945 by Ruth and Elliot Handler. The duo had started to be successful thanks to Elliot’s wonderful ideas and Ruth’s ability to sell anything. A_er having their first child, Barbara, the Handlers were inspired to create the Barbie doll, which is known around the world as one of the most successful toys to ever be created, boos)ng them into the na)onal eye. Now MaOel owns several well known product lines, such as Hot Wheels and Fisher Price. It is headquartered in El Segundo, California and employees 31,000.



Company Assessment

MaOel Takes Huge Hit

MaOel fell from from 2013 to 2014 due to the fact of key brands declining like Barbie and Fisher-‐Price. Of MaOel brands, Fisher-‐Price accounts for 27% of the company revenue (Euromonitor, 2015). MaOel is considering transforming the brand to produce in the early childhood development segment in order to help combat the decrease in sales.

Figure 4: Key Ra0os of MaTel vs Industry Standard

Source: (OneSource, 2016)

Figure 3: MaTel: Revenue by FY2010-‐2014

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Key Customers & Brands Company Posi)on MaOel’s largest customers are Walmart (1.1 billion), Toys R Us (0.6 billion) and Target (0.5 billion). These large customers account for 35% of MaOel’s worldwide sales (Hoovers,2016). But MaOel is focusing on selling their products to customers more directly, all of their America Girl Brands are sold this way. MaOel’s major brands include Barbie, Hot Wheels, MatchBox and Fisher Price. Above is a chart of the breakdown of MaOel’s Q1 gross sales between 2014 and 2015. Each of their major brands have declined between the quarters. The coming years are expected to be challenging for MaOel as well due to the fact that they lost the licensing rights to Disney and Frozen.

The firm operates through three different segments, North American Segment, Interna)onal Segment and American Girl Brand. MaOel has been able to get into the Asian-‐Pacific market which is expected to be the largest in the toy industry by 2019. This is an advantage for the company because there is some level of brand recogni)on established.

Figure 5: MaTel: Retail Sales by Geography 2014


MaOel, Inc. is s)cking with its old and trusty toy lines, such as Barbie, American Girl, and Hot Wheels. Some of these lines are maturing, but instead of leung them fade or fail, MaOel refreshes them as needed. This seems to be working for them because they are not openly struggling financially, and have rela)vely steady annual revenues. Their marke)ng is consistent (think about how o_en you see their commercials on children’s TV channels), and they are currently riding on the massive wave that they made by releasing the new Barbie body shapes.

Company Assessment

Broken into Asia-‐Pacific



Acquiring Lego’s Compe)tor In April of 2014, MaOel acquired Mega Brands for $460 million, which is Lego’s biggest compe)tor. In 2013, Mega Brands had a revenue of $405 million, $300 million of this coming from construc)on toys (Katje, C. 2014). This will help increase their presence in the construc)on toys segment. In 2019, construc)on toys are expected to be one of the largest segments of the market. The acquisi)on will allow MaOel to be able to capitalize on this expected growth opportunity.

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Hasbro is the world wide leader in family )me and leisure products. The company is based out of Rhode Island with roughly 5,200 employees that is traded on the NASDAQ (OneSource, 2016). Some of the popular brands under Hasbro are, Transformers, Nerf, LiOlest Pet Shop, My LiOle Pony, Monopoly, and G. I. Joe. Hasbro is focused on revamping all of their old products while inven)ng new toys for the market to stay current with trends. The company operates through product segments based on boys, games, girls and preschool toys. Hasbro, Inc. had a revenue of 4.27 billion dollars in 2014. The largest was the boy segment with 1.48 billion, which was roughly 35% of net revenues for 2014. (See Appendix G) In 2013 the revenue for Hasbro was at 4.08 billion and the increase was due to a dras)c rise in the boy segment from the Star Wars toys licensed products. Hasbro’s revenue’s between Interna)onal and US & Canada are abouOhe same, only differing by about 500,000 dollars. (Fig 6)

The chart to the le_ compares Hasbro to the benchmarks for the toy manufacturing industry.



Hasbro, Inc.

Compe)tor Analysis

Data Source: (OneSource, 2016)

According to the data pulled from Hasbro’s financial statements, Hasbro has been able to stay in a relevant range for with their ra)os, sales, and net income. The overall net income would have been beOer off if it did not take out as much opera)ng expenses as it did in 2013. In 2014, it was able to improve the profit margin by 2.71%. Hasbro also has been borrowing money and has let their long-‐term debt reach over 50%. This money needs to be going towards research and development for the company. Refer to Appendix ? for more data on Hasbro’s ra)os.


Figure 7: Key Ra0os of Hasbro vs Industry Standard

Figure 6

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JAKKS Pacific, Inc. JAKKS Pacific became incorporated in 1995 and is based out of Malibu, California with 783 employees. This makes the company rela)vely new in comparison to MaOel and Hasbro. The segmenta)on of their sales is based in two categories tradi)onal toys & electronics and role play, novelty and seasonal toys. Some of JAKKS key brands are Club Penguin (Online based), Pokemon, The Smurfs, Hello KiOy and The Big Wheel.

Their profit margin was nega)ve in 2012 and 2013. The sales are expected to drop in FY2015 then slowly climb back up. (Fig X) JAKKS three largest customers are Walmart, Target and Toys R US which account for 18%, 16% and 12% of their total sales respec)vely. As opposed to MaOel and Hasbro who have a large interna)onal presence, JAKKS is severely lacking. JAKKS is heavily reliant on sales within the United States, only 19.3% of sales or 156.6 million came from interna)onal sales in 2014 (OneSource, 2016).

Compe)tor Analysis




In all but 2 key ra)os JAKKS is under performing compared to the Industry benchmark.

Figure 8: JAKKS Future Revenue

Small but Diverse Products Jakks was a 810 million dollar company in 2014, which makes in dras)cally smaller compared to MaOel and Hasbro. JAKKS produces children’s toys, electronics, indoor and outdoor kids furniture and even pet toys. They are a mul)-‐brand company which adds diversity to their product mix. JAKKS tries to spread all their profits across the four seasons, as a opposed to being heavily reliant upon the fourth quarter (Hoovers, 2015). The put an emphasis on this unique strategy, “Counter-‐seasonalizing” by ensuring that their products have an extended shelf life. Even though the claim this on their website, they s)ll had 74.5% of their net sales in the fourth quarter in 2014. Figure 9: Key Ra0os of Hasbro vs Industry Standard

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Licensing

KSF #1: The ability of companies to obtain major brand licensing rights to produce toys.

Key Success Factors



•  Gain licensing rights to blockbuster movies that are popular amongst children

•  Develop long term rela)onships with licensors

•  Penetrate the global market

KSF #2: The use of innova)on and technology in the produc)on of toys.

KSF #3: The ability to break into emerging markets, specifically in

China and India.

•  Ability of companies to promote smart toys to appeal to parents desires

•  U)liza)on of 3-‐D Prin)ng

•  The use of technology in the produc)on of products

•  Ability to provide toys specific to market trends

•  Companies’ spending resources on Research and Development

•  The presence of each company within these regions

Key Success Factors Criteria

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Due to the overwhelming amount of evidence that supports licensed toy sales as a major contribu)ng factor to industry growth and opportuni)es, our team has concluded that the ability of toy manufacturers to obtain licensing rights to major brands. We have broken down this KSF into three sec)ons: licensing rights to produce toys rela)ng to major movies, long-‐term rela)onships with licensors, and global market penetra)on of licensed toys.

Hasbro has been the most successful player in the toy industry three )mes in the last twelve years, in 2007, 2009, and 2014, because the company’s top toy sales all carried popular movie licenses, such as the Transformers (Banjo, S., 2015). Highly an)cipated movies that appeal to children expected to come out in the next 2-‐3 years, such as Finding Dory, Transformers 5, and Toy Story 4, are crea)ng huge opportuni)es to drive sales and influence the annual success of toy manufacturers.

Overview

Blockbuster Releases Blockbuster movies that appeal to children create huge opportuni0es for toy manufacturers to increase sales with a licensing agreement. For example, Star Wars toys has generated $12 billion of revenue since the beginning of the franchise, where box office and DVD sales have only generated about $8 billion (Wells, N., & Fahey, M, 2015). In addi)on to already well-‐established movie franchises, toy manufacturers have to be willing to take risks on up and coming children’s movies. Manufacturers did not purchase licensing rights to Disney’s frozen un)l a_er the movie was released, and Frozen increased the sales of licensed toys by 3% in 2014, while genera)ng $531 million in revenue (Kell, J., 2015). Properly )med movie themed toy releases can have a huge impact on the industry.



Key Success Factor #1

Figure 10: Distribu0on of Star Wars Earnings

Source: (Wells, N., & Fahey, M, 2015)

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Licensing creates a mutually beneficial rela0onship between the licensor and licensee. The licensor will receive revenue from the selling of the license, and will also benefit from the inadvertent adver)sing of their product through the sales of toys. The licensee will save the )me and money of developing a new product, and will benefit from the already well-‐established brand. Large licensors like Disney and Pixar con)nuously release hit movies that are extremely popular among children. Developing strong rela)onships with these licensors can create opportuni)es for toy manufacturers to obtain a license earlier than compe)tors, which provides a significant compe))ve advantage, or even gain sole-‐licensing rights. Hasbro was able to obtain sole-‐licensing rights to produce Star Wars toys in 1999, and increased revenue by nearly a billion dollars that year (Kell, J. 2015). In order to succeed in the industry, it is crucial for companies to capitalize on successful movie franchises, such as Star Wars and Frozen, and obtain licensing rights to produce toys throughout the dura)on of their popularity.

The map below shows that the U.S. is beat out by countries in South America, Western Europe, the Middle East, and Asia-‐Pacific when it comes to retail value share of licensed toys. Toy licensing is gaining popularity all around the world, but is s)ll rela)vely lowly concentrated in several large markets. Less than 15% of toys sold in China carry licenses, and China is expected to see strong growth in per capita disposable income in the years leading up to 2030 (Euromonitor 2015). In order to see success, toy manufacturing companies need to penetrate these emerging markets with toys carrying licenses that appeal to children while the markets are expected to see extreme growth. Brazil, Mexico, India and Russia are in a similar situa)on and are also expected to see growth in the licensed toy market size (2015).

Long-‐term Rela)onships




A Global Perspec)ve Licensed toys are sold all around the world. It is vital for companies to penetrate the market with licensed toys because of the already established brand is aTached to their product. The US sells more licensed toys than any other country in the world, however it does not have the highest retail value share in the world (Euromonitor, 2013).

Figure 11: Tradi0onal Toys and Games by Licensing, 2014


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Hasbro, Inc. We decided to give Hasbro a raw score of 8 on the “licensing rights to major blockbuster movies” criterion because of their significant amount of popular movie licenses, such as Frozen, G.I. Joe, Avengers, Transformers, and Star Wars. The main factor that caused Hasbro to come out on top was the recent acquisi)on of the Frozen and Disney Princesses license from its larger compe)tor in the industry, MaOel. With the highly an)cipated Frozen sequels and never ending popularity of Disney Princess toys, Hasbro will be at a significant advantage over MaOel for the next few years. Because of this rela)onship with Disney, Hasbro received an 8.5 in the “long-‐term rela)onships with licensors” criterion. With nearly half of their sales taking place outside of the United States, Hasbro also received a score of 8 in the “global market penetra)on” criterion.

MaTel, Inc. With notable movie licenses such as Batman, DC Universe, Toy Story, and Superman, we decided to give MaOel a score of 7.5 on the “licensing rights to major blockbuster movies” criterion. MaOel only received a 6 in the “long-‐term rela)onships with licensors” criterion because of their recent loss of the Frozen and Disney Princesses licensing rights to Hasbro. MaOel also has nearly half of their sales taking place in overseas markets, which allowed them to score an 8 in the “global market penetra)on” criterion.

JAKKS Pacific, Inc. carries licenses to several popular movie and TV series, such as Star Wars, Marvel, DC Comics, Power Rangers, and Nickelodeon. Due to this, we decided to score Jakks Pacific 7.5 on the “licensing rights to major blockbuster movies” criterion. Jakks Pacific also received a 7.5 on the “long-‐term rela)onships with licensors” criterion because of the highly an)cipated Star Wars movie releases, as well as upcoming Marvel and DC movies. However, because only about 20% of Jakks Pacific’s sales come from outside the United States, we gave Jakks Pacific a score of 4 on the “global market penetra)on” criterion.

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Figure 12

Overview If companies in the toy manufacturing industry want to be successful, it is crucial that they use innova0on and technology in the produc0on of their products in order to appeal to children and their parents. Technology is an ever changing and evolving being. Because of this it is vital that companies be innova)ve not only in the way they produce their products, but also with what products they are producing. The idea of being innova)ve is the act or process of introducing new ideas, devices, or methods. (Merriam-‐Webster)

One aspect of technology and innova)on that is becoming a big player in the toy industry is the use of 3D prin0ng. The toy industry can be one of the biggest benefactors of 3D prin0ng in several ways. First, in the produc)on of toys such as ac)on figures that is made up of primarily plas)c. 3D prin)ng technology enables these products to be produced in a much shorter )me and require fewer resources. 3D prin)ng enables crea)vity and customiza)on which is a benefit for the toy industry. Not only does it appeal to consumers but it also can localize produc)on and reduce transporta)on costs for the firm.


3-‐D Prin)ng



Source: (Seeking Alpha, 2013)

When 3D prin)ng technology first came out, it posed a big threat to toy manufacturing companies such as Hasbro and MaOel. This was due to the possibility of counterfei)ng toys. So, these toy manufacturing companies aOacked the new technology with the autude of “if you cant beat it, join it”. Hasbro announced that it would be partnering up with 3D Systems last February in order to deliver new immersive, crea)ve play experiences”(Business Insider, 2014). They now have over 4,200 toys available to be customized using 3D prin)ng (Business Insider, 2014). Revenue brought in from 3D prin)ng is expected to be $8.43 billion by 2020 (MarketsandMarkets 2014). 20% of that revenue is forecasted to come from consumer goods and toys totaling around $1.68 billion.

Partnerships

Advantages of 3D prin)ng: ·∙ Customizable manufacturing op)ons ·∙ Rapid Prototyping ·∙ Manufacturing speed ·∙ Reduced costs ·∙ Warehousing, only need to produce goods that have been sold

Figure 13: Revenue Generated from 3-‐D prin0ng

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Smart Toys are In The typical child now has never known a world without the internet, computers, or smart phones. This new genera0on prefers technologically enhanced toys, whether it be robo)c or )ed into an app. One study showed that as many as 72 million children that were interviewed are interested in smart toys, 22.4 million of which were in the United States (Interpret, 2014). When The NDP group surveyed parents, 77% said that buying an interac)ve gaming toy was definitely or probably worth the investment. Slightly more than half also said that adults were included in this play (NDP Group, 2015). Any )me that parents get to spend posi)vely interac)ng with their children is greatly appreciated, as both parents work in many households. This could contribute to the high sa)sfac)on in this area of toys. Whatever the case may be, smart toys are the future, and are a great way to both create revenue for toy manufacturers and bring families together.

As you can see in figure 14 (below), Children 12 and under prefer touch-‐screened toys to any other type of toy. This translates into revenue for toy companies that can integrate any sort of tablet into their products. One example of the popularity of touch screens is Leapfrog’s LeapPad tablet. They sold out of pre-‐sale units in just under 2 weeks, which helped Leapfrog’s revenue grow 10% in 2012 (Mitra, S. 2012). This success may be because the LeapPads also include what parents want in their children’s toys: educa)onal, balanced play. Due to the fact that the LeapPad hits desires on children’s and parent’s lists, it won 3 Toy of the Year awards in 2012: Toy of the Year, Educa)onal Toy of the Year, and Preschool toy of the year (Toy Industry Associa)on, 2012). This goes to show how important innova)on is in toys.



Figure 14: Children 12 & Under Play Preferences


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Source: (Michael Cohen Group LLC, 2014)

Another way technology is being u)lized to aid companies with their produc)on decisions are through the collec)on of “big data”. This term refers to the ability to collect very large amounts of data on customers. Every )me a customer buys something online, their purchases, searches, and almost everything else they do is being recorded. When companies are trying to figure out what is hot at that point in )me or prepare for what might be popular in the future, the collec)on of big data allows them to do so.

Big Data



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Key Success Factor #2 Figure 15

MaTel, Inc. This company lacks in innova)on compared to its compe)tors. They have been trying new lines, such as Hello Barbie, which was not very successful. However, In September 2015, MaOel completely revamped its leadership team in the hopes of being more compe))ve on the innova)on front. Since their implementa)on of the new leadership team, the price of MaOel stock has jumped over $10, from a low of $19.38 on October 1 to 32.29 on February 4th. Their newest line is the Fashionista Barbie, which incorporates different body types, skin colors, hair cuts, and eye colors. This new leadership team helps MaOel earn a score of 4 in the “Ability of companies to promote smart toys” criterion. As far as the “U)liza)on of 3D prin)ng” criterion, MaOel received a raw score of 3, for their new, but unfinished, venture into 3D prin)ng. Their version of a 3D printer, the ThingMaker, will allow children to make ac)on figures, jewelry, and other things from home (Kell, 2016). MaOel’s current score is rather low, at just 5.3, but they have shown promise and may have a much higher score when compared in the future. JAKKS Pacific, Inc. JAKKS has not taken up 3D prin)ng, but the concept of 3D prin)ng has influenced some of their product lines,, giving them a raw score of 5 in the“U)liza)on of 3D prin)ng” criterion. They boast a toy making machine that children can use to make their own characters. This machine uses wax and molds that interlock to create these characters. Jakks also has a ac)on figure and video game hybrid named Hero Portal, which allows users to change out their character on the video game by placing a different ac)on figure on the portal. This mixes real play with virtual play, much to the delight of parents, which gives them a raw score of 6 in the “Ability of companies to promote smart toys” criterion. Both of these lines are interac)ve and fun for kids, and in turn hit innova)on on the head. However, because Jakks does not u)lize 3D prin)ng, they earned a 6.3 in innova)on.

Hasbro, Inc. This company is a leader in innova)on. Hasbro was on of the first major players in the industry to invest in and u)lize 3D prin)ng. They now have 4200 customizable toys, which allow children to personalize products in the My LiOle Pony, Transformers, Star Wars, Scrabble, Play-‐Doh and Monopoly lines (Anusci, 2015). This scores Hasbro a raw score of 7 on the “U)liza)on of 3D prin)ng” criterion. They also offer more than 150 electronic toys, which span from Furreal Friends to Star Wars themed voice changer masks or even to electronic board games. These innova)ve toys give Hasbro a raw score of 8 in the “Ability of companies to promote smart toys” criterion. This versa)le product mix translates into an all around innova)ve company, giving Hasbro a total weighted score of 6.8.

Overview It is vital for companies in the toy industry to break into emerging markets, specifically in China and India. Evidence shows several economic changes and advances in these countries that will contribute to growth in the toy industry. We have broken this KSF into three sec)ons: Companies’ presence in emerging markets, companies’ adapta)on to toy trends in different countries, and money spent on research and development.

As the graph shows below, there has not been much industry growth in North America and Western Europe. Most of the industry growth from 2009 to 2014 can be contributed to markets in Asia-‐Pacific and Western Europe.


Emerging markets In order to capitalize on the opportuni)es created by emerging markets, companies need to establish a presence in countries with rapidly developing economies. The more developed North American and Western European markets may provide for more sales than developing na)ons, however, the largest opportuni)es for growth is within emerging markets. The toy market in China is expected to grow faster than in any other country in the world through 2017 (Euromonitor, 2015). The median income there will increase by 51% through 2019 as well (Euromonitor, 2015). The tradi)onal toys and games market grew by 90.2 % in India from 2009 to 2014 (Euromonitor India). In addi)on to the growth that Asia-‐Pacific regions are experiencing, Brazil is expected to become the fourth largest market for toys by 2017 (Euromonitor Brazil).


Figure 16: Tradi0onal Toys & Games Forecast

14 Introduc)on Market

Analysis Key Success Factors Conclusion

Market Trends Trends in the toy industry can vary around the world, and companies need to produce products that align with market trends in emerging-‐markets. Whereas collectable, technological, and 3D printed toys may be trending in Western countries, construc)on and plush toys may be gaining popularity in emerging markets (HKTDC, 2015). In order for toy manufacturers to capitalize on the projected economic growth of emerging markets, they need to have products that sa)sfy the wants of the consumers.


59% of Middle Class in Asia Pacific



The emerging markets are fueled by several factors that make them prime opportuni)es for growth. 23% of the middle class is currently in the Asia-‐Pacific region. By 2030, it is forecasted that approximately 59% of the world’s middle class will be represented from this Asia-‐Pacific region.(Fig 18) In result, this will increase the amount of disposable income in these countries, expanding the consumer base of toys.

Figure 17: Emerging Markets Tradi0onal Toys and Games Sales 2014/2019


The graph above shows the expected sales of the tradi)onal toys and games market in emerging countries. China is expected to be at nearly 14 billion US dollars. In 2014 the market was 9.4 billion (Euromonitor, 2015).

Figure 18: Expected Growth of Middle Class (Millions)

Source: (Kharas, H. 2011)

15



Hasbro, Inc. Hasbro ul)mately has had the upper hand when it comes to the ability to iden)fy specific toy trends within the Asia-‐Pacific region, which is why it received a 7.5 in the “ability to iden)fy specific toy trends in each country” criterion. This could change in the future due to new steps that MaOel is taking to gain a larger market share in these region such as building toy labs. Hasbro spent $222 million on research and development in 2014. This could be a main reason for their increase in sales that year. Hasbro did not end up performing as well as MaOel in an evalua)on of the company’s presence in the Asia-‐Pacific region. MaOel consistently ranks above Hasbro in market share size in this region.

0

50

100

150

200

250

2014 2013 2012

MaOel

Hasbro

Jakks

Figure 20: Spending on Research & Development (Millions USD)

MaTel, Inc. MaOel did not end up being the best when it came to the ability to iden)fy trends within the Asia-‐Pacific region. However, MaOel was not far behind their compe)tor Hasbro. MaOel has also developed some new ideas that will help them in the future such as create toy labs in China and India where thousands of children come play with new toys. This will help them iden)fy toy trends in these areas. A_er evalua)ng each company’s presence in the Asia-‐Pacific region, MaOel did score highest in the “presence within emerging regions” criterion. MaOel consistently ranks above Hasbro and among the top 10 as far as their market share size in this region. MaOel spent 209 million dollars on research and development in 2014. This was 13 million less than what Hasbro spent on R&D, and their revenue was less than it was the previous year in almost every region (Onesource 2016).

Data Source: (OneSource, 2016)

16

JAKKS Pacific, Inc. Jakks by far performed the worst out of all three companies that were analyzed. They are much smaller than Hasbro and MaOel and have not been around for near as long. In the past 5 years, their annual reports have shown research and development totals to be zero dollars. Only about 20% of their total sales are outside of the United States (Onesource, 2016). This means that they are fairly unknown in the Asian Pacific region, and is why they only received a 2 in the “presence within the region” criterion.

Key Success Factor #3 Figure 19

RECOMMENDATION #1: Obtain licensing rights to upcoming blockbuster releases in order to increase revenues.

A_er thorough research and analysis, team 3 of cohort PM107 of Copeland Associates derived three key success factors for the toy manufacturing industry. We then evaluated MaOel, Hasbro, and Jakks Pacific on their company’s current posi)on rela)ng to the top three criteria we developed for each key success factor. Based on the results of the key success factor analysis, Hasbro ranked as the top company in the toy industry, followed by MaOel and then Jakks Pacific. A_er further looking into opportuni)es and trends in the industry, our team decided on three main recommenda)ons that can boost MaOel into the top posi)on in the toy manufacturing industry.

Recommenda)ons



MaOel recently lost the licensing rights of Disney’s Frozen to Hasbro, which can put MaOel at a large disadvantage due to the previous success of Frozen and high an)cipa)on of the sequels. In 2014 alone these two licenses accounted for 7.3% of their total revenue (Euromonitor 2015). MaOel needs to acquire licenses to produce toys rela)ng to upcoming children’s movies that are expected to come out within the next 2-‐3 years, such as Star Wars, Toy Story 4, The Lego Movie 2, The Avengers, and Captain Marvel. Developing rela)onships with large licensors such as Disney could create opportuni)es for MaOel to gain sole licensing rights to a movie or even a movie series. Companies that have been able to do this in the past have seen huge success and large increases in sales, such as Hasbro did before the 1999 release of Star Wars. However, obtaining sole-‐licensing rights to movie licenses is very difficult, therefore the majority of licensed toys produced by MaOel will be compe)ng with other toy manufacturers that are producing toys that carry the same license. Due to this, MaOel needs to be highly innova)ve and make sure to u)lize technology when designing and producing their licensed toys. MaOel scored very low in the company evalua)on of the innova)on and technology key success factor, and is known to be very tradi)onal when it comes to style of toys produced, mainly due to their top brands of Barbie and Hot Wheels. Combining innova)ve development and and the implementa)on of technology with the acquisi)on of major movie licenses will allow MaOel to create a product that stands out from those of compe)ng toy manufacturers, and create a higher return on investment of their brand licenses.

RECOMMENDATION #2: U0lize 3D prin0ng and increase research and development within the smart toy category.

17

3D prin)ng has poten)al to completely transform the toy manufacturing industry. It is gaining popularity but s)ll is not very well established. MaOel should invest in 3D prin)ng and adver)se its benefits to customers before compe)tors in the industry are able to. The increase in online retailing can make the implementa)on of 3D prin)ng in the toy industry seem even more aOrac)ve. MaOel’s two best-‐selling brands are Barbie and Hot Wheels, and are typically viewed as simpler, tradi)onal toys. The addi)on of the more interac)ve Hello Barbie was a step in the right direc)on, but MaOel s)ll is lagging behind Hasbro and JAKKS in the smart toy category. Technology is becoming accessible to children of younger ages, and smartphone and tablet technology is becoming increasingly prevalent in the toy industry. In order to capitalize on the growth in this field, MaOel needs to research ways to incorporate popular technology with their already well-‐known brands Barbie and Hot Wheels.

Recommenda)ons



18

RECOMMENDATION #3: Increase presence in Asian Pacific markets to capitalize on projected economic growth.

RECOMMENDATION #2: U0lize 3D prin0ng and increase research and development within the smart toy category.

A high number of children per country, rapidly growing middle class, and rising amount of disposable income per family are just some of the reasons why the Asia Pacific region has poten)al to transform the toy industry. It also has the largest number of heavily licensed markets in the world (Euromonitor 2013).MaOel currently only has 6.9% of their sales taking place in Asia Pacific (Onesoure, 2016). Although not a very high percentage of company sales take place in Asia Pacific, MaOel s)ll has a higher presence in the region than its compe)tors. Aggressively pursuing opportuni)es in these markets will allow MaOel to dominate the region and make it difficult for compe)tors to enter the highly profitable emerging markets. Another way MaOel can capitalize on the growth of the Asia-‐Pacific region and set itself apart from major compe)tors is by inves)ng heavily into region-‐specific licenses. Asia-‐Pacific is the most heavily licensed region in the world, however many of these licenses that are sold there are not possessed by American companies. Every region has its own form of popular culture, and some)mes a major license that is popular in the United States may not sell as well in the Asia-‐Pacific region. MaOel needs to start producing toys rela)ng to popular movies and TV shows in specific countries in the Asia-‐Pacific region. By acquiring more region-‐specific licenses, MaOel can further globalize their company and create new product lines that other American companies may have not pursued yet.

A_er researching the Toy Industry, it has been found to be fluid and ever-‐changing. It has endless opportuni)es, which are ripe and ready to be taken advantage of. Our team analyzed MaOel, Hasbro and JAKKS Pacific based upon these the three Key Success Factors that we deemed to be the most influen)al in the success of a company within the toy manufacturing industry. Key Success Factor #1: Licensing: Licensing helps make toys more appealing for the consumer, because it adds a popular brand element into a toy. The movie companies build the brand, and they toy companies get to reap some of the benefits, for a cost of course. Developing long-‐term rela)onships with licensors helps, and can guarantee sustainable growth in sales over a set period of )me. Licensing may also be the easiest way to enter into other global markets. Popular TV shows and movies are already well established brands, so using these as a method of penetra)on into the markets helps save the )me and money it takes to develop a brand. Key Success Factor #2: Successful innova)on in technology for producing products decreases produc)on costs while increasing produc)on efficiency. While it may be a big investment upfront, it tends to pay for itself in the long-‐run. 3D prin)ng also helps with research and development costs because prototyping is made faster and cheaper. 3D prin)ng does not just help with prototyping, however. 3D prin)ng is great when u)lized as a customizer for toys. Hasbro and Jakks both offer op)ons on their websites to essen)ally build your own toy. Children get to pick color and other aspects to make a toy that they feel more connected to. Smart toys are a great way into customers hearts, too. Many children enjoy playing with smart toys, and the idea of smart toys is more appealing to parents as well. Key Success Factor #3: Many countries with large popula)ons around the world are rapidly developing into economic powerhouses that will create huge opportuni)es within the toy industry in the near future. Two of the fastest growing countries are India and China. Many of the current toy suppliers are smaller companies, so it would be easy for large companies like MaOel and Hasbro to swoop in and absorb not only the companies, but the knowledge of the culture that comes with them. While technology is the new fad in western countries, these new players prefer construc)on and plush toys. It is important for toy manufacturers to be aware of cultural and industry trends within a country before heavily inves)ng in the region. Recommenda0on #1: Acquire licenses to upcoming blockbusters that appeal to children. Spending large amounts of money and taking risks has proven to be worth it when it comes to popular movies in the past. Recommenda0on #2: U)lize 3D prin)ng and create more tech-‐centric product lines. Technology is a huge trend that is transforming the toy manufacturing industry, and MaOel can’t rely on its older, tradi)onal brands like Barbie and Hot Wheels to see growth in the future. Recommenda0on #3: While MaOel is outshining its compe)tors in the Asia-‐Pacific region for now, it would be easy for a compe)tor to overtake them if they do not con)nue looking into ways to expand within the region. There is room for infinite growth, so aggressively taking on the market will prove to be highly beneficial

Conclusion



19

References



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References

Current State Overview The market value of the toy industry was es)mated to be around 92.2 billion in 2014 (Marketline, 2015). The industry is not mature and highly concentrated. This industry is dependent on large retailers for the majority of their sales. Cash flow within this industry is heavily reliant on the fourth quarter earnings due to seasonal sales. Another difficulty within the toy manufacturing industry is the fact that companies are dealing with a fickle target market. It is hard to predict what will be popular in the minds of kids and for how long it will aOract aOen)on from consumers. A large por)on of the sales of manufactures comes from licensed merchandise. Companies use third-‐par)es to increase their sales through the use of licenses. Normally royalty agreements between the manufactures and the licensors may require a beginning payment followed by a percentage of all sales (Hoovers, 2016).

Like most industries, the toy manufacturing industry was hurt badly during the 2008 economic recession but has shown a slow recovery since. Industry revenue of manufacturers in the US fell 30.5% during the recession, due to a lack of demand from retailers (Dumaine, B. 2015). Asia-‐Pacific’s countries have had 9% growth(Morris, D. Z, 2015) and are expected to be the largest segment within the market by 2019. In 2014, Europe was the largest contributor to the market at 31%, while the US was at 25% (Marketline, 2015). In the United States, companies rely on outsourcing labor and impor)ng the products. The major buyers of the industry are toy retailers such as Toys “R” Us, Wal-‐Mart, and Amazon. The toy manufacturers are dependent upon the demand from the retailers. These retailers primarily depend on the disposable income of young families to purchase their toys.



Figure: Global Toys and Games Market Value, 2010-‐2014

Source: (Marketline, 2015)

Appendix A: Industry Analysis

The graph below shows the global toy and game market value from 2010 through 2014. It has shown as steady increases.

24

The industry can be broken up into seven main product categories. Disregarding the other category, ac)vity toys represent the largest segment of the market followed by infant/ pre-‐school. The number one segment can be accounted for because in 2012 the number of obese children was 20%. Parents want what is best for their children, promp)ng them to purchase ac)vity toys to encourage their children to be ac)ve. The second largest segment, infant/pre-‐school, with 16% of the market, is due to parents wan)ng their children to begin early development with educa)onal toys. Figure X below, gives the percentage of all segments within the industry globally.

Overview Segmenta)on by product



Source: (Marketline, 2015)

Figure: Global Toys and Games by category segment, 2014

Future Prospects The toy manufacturing industry has a perspec)ve growth of 25.8% which between 2014-‐2019 which will be valued at a 116 billion (Marketline, 2015). The disposable income of families are projected to grow in the coming years. This will allow families to be able to have more money in their budget for more discre)onary spending. The expected revenue for the toy and game manufacturing industry in India, UK and Germany in 2018 is 111 million, 694 million and 4.1 billion U.S. Dollars respec)vely (Sta)sta, n.d.). Which from today is a 7% increase in India, 2% decrease in the UK and a 6% increase in Germany.

Data Source: (Marketline, 2015)

The chart below describes the projected growth of the toy and game industry globally.

Figure: Global Toys and Games Projected Market Value,

2014-‐2019


25

Educa)onal Ac)vity Toys Growing up STEM(Science, Tech, Engineering and Math) are instrumental in a child’s development of cogni)ve and social skills. Although iPads and other video games are increasing in popularity among children, tradi)onal play experiences are crucial in the mental, social and educa)onal development on children (Auebarch, S. 2013). Parents are more focused on their children receiving educa)onal value from toys and not just enjoyment (Mintel, 2015).Educa)onal toys are beneficial to the companies in the industry because they are less seasonal than others compared to other segments and have longer life cycles.

Parents are also concerned with their child’s health, because of this, toys promo)ng ac)vity are popular. A study was done with a large sample of children ranging between ages of 6-‐11 on various ac)vi)es. It found that 67% of the children were not geung enough exercise and spent more )me on homework and watching TV than playing with their toys (Mintel,2015). With children unable to get enough exercise, this has an influence on the growth in sales for toys that can help the situa)on. The segment appeals not only to children having fun but also parents because of the health benefit.



Social pressure has forced several companies into producing gender neutral toys. This enables companies to appeal to both genders while cuung produc)on costs. This occurs by applying a more suitable color or shi_ing their adver)sing campaigns to aOract both genders simultaneously. For example, the Easy Bake Oven made by Hasbro has introduced a new line of products that are black and silver to appeal to boys. This trend can increase popularity among companies while decreasing produc)on costs because they do not have a variety to produce.

Figure: Feeling Towards Gender Neutral Toys

The graph shows responses to a survey conducted by the NPD Group which asked par)cipants if they were in favor of gender neutral toys.

Source: (The NPD Group, 2015)

Gender Neutral Remote Control An industry trend that has been evident is remote control toys. As technology changes and children are introduced to new ideas, consumer needs evolve. Drones can be used for fun for children or for businesses in crea)ng promo)onal videos or geung aerial views of the land for prospec)ng. Children are becoming “older at a younger age”, and because of this parents are purchased toys that

are more technologically advanced, such as remote control.


26

POLITCIAL-‐ China’s broadcas)ng policy prevents popular licensed toys in Western countries from establishing a presence in the large emerging market(Haider, Z. 2015). Increasing regula)ons in Europe are causing consumer confidence to decrease which has hurt the industry for Europe as the biggest regional market (Business Source Complete,2015). These factors together con)nue to make the US and Western Europe the largest markets in the industry.

ECONOMIC-‐ In order to remain compe))ve with imported toys, domes)c companies have been forced to lower prices which decreases their profit margin. The Toy industry is sensi)ve to the price fluctua)ons in raw materials such as oil and plas)c. Disposable income was down in the last several years, but it is forecasted to rise in 2016. This could have a posi)ve impact on the toy industry, as disposable income and the purchasing of toys are directly related. SOCIAL-‐ As social trends are changing, gender neutral toys, green toys and STEM toys are becoming more popular. This raises an opportunity for companies because they are able to capitalize on societal changes. If companies choose to ignore these, consumers will switch to compe)tors. Children in today's society are also leaving behind their tradi)onal toys at a younger age, switching to electronic toys and video games that seem to keep children engaged for longer periods of )me. Technological-‐ The collec)on of data and the capability that companies have to stay innova)ve and con)nue to keep up with the evolu)on of technology will greatly impact whether companies in the toy industry will be able to survive. The inability to u)lize technology to produce products and reach out to customers poses a great threat to manufacturers of toys. Legal-‐ Consumer Product Safety Improvement Act (CPSIA) requires companies to test toy intended for children 12 and under. If they do not comply, companies are subject to fines. The major threat to these companies are the produc)on of counterfeit toys. Environmental-‐ It has become increasingly important to consumers to purchase products that are environmentally friendly. According to a study by Nielsen, 55% of online consumers in 60 different countries are willing to spend more money for goods from companies that are socially and environmentally conscious (Adams, A. T., 2014).

Appendix B: PESTLE



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Threat of New Entries: The top 6 toy companies such as MaOel and Namco Bandai have been long well established and provide 23.38 billion dollars to the industry. Many )mes, this big companies get licenses from big TV shows and movies which create a lot of sales. If a new toy company wanted to emerge, they would have difficulty finding licenses and being able to produce sales even close to the big compe)tors. Supermarkets are allowing toys to enter their shelves to provide customers the ability to shop for toys and grocery all at once. This lowers the need to go to toy retailing store for the consumer and lowers the threat of new entries (Marketline, 2015).

Threat of Subs0tu0on: Customer loyalty to companies tend to be weak for consumers are looking for the best deals. Threat of subs)tute increases due to the fact that best deals are what the consumers are looking for. Adults tend to buy these toys; but children have taking note of prices for their toys. In a study, 47% of the children said their favorite brands offer great discounts on their favorite toys (Mintel, 2015). Deals are not the only factor that play into threat of subs)tute. Toys on the market tend to have same func)on as popular toys. For an example, LEGO is not the only building block toy out there. In general, building block toys can “enhance a child’s skills in crea)vity, reasoning and problem-‐solving” (Choi, 2014). Consumers can look and find toys similar to LEGO that can provide the same benefits. Buyer Power: The buyers have the power to buy what products they want to supply in their stores. These wholesalers and retailers tend to want toys that are crea)ng high demand in the market. Popular licensed merchandise such as Star Wars are what the buyers want since they are crea)ng big sales at the moment. The buyers are wan)ng to create emo)onal connec)on to the brands they offer. Toy companies need to make sure their toys can help provide that connec)on buyers are wan)ng to give to their customers.

Supplier Power: Toy companies are looking for green products and are now looking for suppliers for their raw materials to help provide these products. This have lessen the power of suppliers. Suppliers may be looking at consumers’ best interest. One of the suppliers for plas)c called American Plas)c Toys’ main goal is that want to try to keep the toys affordable for consumers of United States.(Walsh, 2015).

Compe00ve Rivalry: The rivalry stays high within this industry for several outside influences. Toy companies compete to keep their customers buying their products. The companies compete to gain licenses of popular shows and movies. For an example, Hasbro paid George Lucas a large amount of money to be able to gain the license for the original Star Wars. There are ranges of toy companies to toymakers out there wai)ng to add and keep their toys in the public view. Consumers, popular TV shows and movies, and wide of companies and toymakers all play a role into keeping the compe))on high.

Introduc)on Market

Analysis Key Success Factors Conclusion

Appendix C: Porter’s

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Strengths: Well established company License with major brands Development on current products

Opportuni0es: Grow into emerging market Provide STEM toys that protect child and family's’ privacy Gain more licensing from major brands

Weaknesses: Declining profitability Gender segmenta)on Highly seasonal Costs from recalls

Threats: Trends are unstable Decline in family size Children are growing faster Compe))on

Appendix D: SWOT Analysis

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Appendix E: Business Model

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Appendix F: MaOel Financials

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Appendix F: MaOel Financials

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Appendix G: Hasbro Financials

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Appendix G: Hasbro Financials

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Appendix H: JAKKS Financials

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Appendix H: JAKKS Financials

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Appendix I: Financial Comparison

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p1 final deliverable

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