Environment Analysis of Toy Industry

Doing business in the worlds defraud diligence immediately, is anything b atomic number 18ly plain sailing, with the tinker indus label as a whole generating $21.47 Billion in 2009 and $21.65 Billion in 2008 (Riley, 2010) This producing a fiercely step down-enterprise(a) marketplace, still a market that is truly make headway to impertinently entrants,right throughout the industry. The market is in addition ripening division on year with birth rank rising throughout the world, with the U.K. Birth rate emergence this year (2014) by 13%.Risk of aditThe barrier of entry to the act industry is really moo, this granted unexampled and up and coming entrepreneurs and companies a chance of success in this really fast paced and fiercely free-enterprise(a) market, to create crossroads to capture the attentions of children and adults alike. The market milieu has as well as pushes many well k right offn brands to invest a major part of their budgets on research an d development, twoowing them to get in new products continuously. Many well known brands oftentimes(prenominal) as as Hasbro, Mattel, BanDia and many other companies alike invest huge amounts of money to make out for licensing of products attached to characters from TV shows, Films and exposure games,to expand their market sh ar.Power of the BuyersThe flirt industry is precise concentrated, this leaving manufacturers I a very weak bargaining position with its customer, for character fives stores including Wall(a)-mart and Toys R Us make up 54% or Hasbros net Revenue in 2009. (Hasbro inc., 2009) Target, Wall-mart and ToysR Us excessively had 43 % of Net gross revenue of Mattel, (Datamonitor, 2007)these both figures being vastamounts of products and given these companies ability on set. The rise in online activity had besides gave the manufacturer a door to sell head up to customer, but most of the queen-sized manufacturers still part the traditional route through supply chain.Power of the SuppliersThe materials utilize in spite of appearance the production of 1UpToys products, for example plastics, paper, cardboard, computer chips and c suitables, are available from a wide range of suppliers , but are susceptible to market related pricing, (e.g., hair for wiring, plastics etc.) just about of which are controlled by legislation ascribable to the chemical compounds (like Phthalates and BPA) Which could incur higher taxation brackets and could be subject to g all(prenominal)placenment legislation.Threat of substitute productThe threat of substitutes are growing with the continuous growth in demand, with children at a very young age having introduction to high expert gadgets and platformsThis has impelled chat up companies to curb more than technology inwardly their products, as gip companies are now in direct rival non only with other toy products but also with traditionally non toy products much(prenominal) as, Tablets, com puters, unfermented phones and even Mp3,s oblation gaming within their scientific platforms. The risk from these platforms is very high and is on the increase, as with prices continue to drop on cell phones and technological other gadgets, children are adopting to them earlier in their lives, with these devices offering gaming and entertainment at a very low cost and on occasions no cost at all to download.The phenomenon of these technological devices has added redundant pressure to the toy industry as a whole , to create toys with enough bells and whistles to compete with these digital device alternatives, with the cost of traditional toys significantly some(prenominal) higher to invent and manufacturer in coincidence tothe digital format. As a result to this the do good margins of the more traditional product is significantly lower, adding to the take away to sell more units per product to make utility in todays toy market.A nonher major factor for the toy industry is tha t children at contrasting ages have shifted preferences. Young children are expecting more comment from their playthings than before to capture and hold their attention. Hasbro calls this phenomenon of kids Getting older, younger. This threatens everyone in the toy industry because the window toys and games have to make their way into childrens lives keeps shrinking. The toy industry also relies heavy on the intellectual properties of any given toy business, which they may not be able to protect from countries with loose copyright laws and regulations.This may not be a problem throughout the E.U and the join States, but is very rampant within uphill economies, for example china where products such as, DVDs, work on Figures and nearly every other product thought process able can be copied and reproduced at a fraction of the retail price though piracy, which is a huge problem for the toy industry and a great threat to any companies looking to part their domestic revenue losses by expanding to chinaware or any other emerging economy.Competitive contest in the IndustryThe Completive rivalry in the toy industry is fierce and diluted with numerous alternatives popping up everyday, with new platforms arising contentiously within this business sector, with companies and new toy products fighting for the limited shelf space, within all the analogous stores throughout the retailing world, with companies victimisation all the resources possible to gain the competitive advantage oer their competitors.This competitiveness has seen all toy companies jockeying for position and has over all lowered companies profit margins, as they compete with pricing with each other, using lower pricing strategies and offering exclusives and unique features to their customer base, at a cost to them.There is also fierce competition within the supply chain, with most toy companies have the volume of its manufacturing done in China, it can only commonplace as much shelf space as there is available space on large cargo container ships., with many companies fighting for the space, especially only when before the holiday season, the price per TEU (twenty-foot equivalent unit) may go up in these peak seasons and transfer costs are also very assailable to changes in fuel pricing, which is forever on the rise.SLEPT analytic thinking (see appendix 2),we can look at the (Macro) external environment for the toy industry.Social EnvironmentThe societal environment of todays toy customer base is progressively becoming more technically driven, with children and tweens spending more and more of their time on the profit and social media platforms, as accessibility to these high speed internet and mobile devices enter more homes everyday. A consume released in January 2010 by the Henry J. Kaiser Family Foundation appoint that young people, aged 8-18, spent seven and a half hours seven days a work week consuming media (Music, videos, blogs, social media, etc.) Wh ile consuming, they are also multitasking. So they can fit almost football team hours of media into that seven and a half hours (Rideout, Foehr, & Roberts, 2010) and this is growing year on year, with easier accessibility and reduced cost to online access.This has rising to in 2013 and said to be having expert consequences , with kids ages 8 to 18 spending on average 44.5 hours per week in front of screens, with parents being increasingly touch that screen time is robbing them of real world experiences. tight 23% of youth report that they feel habituated to video games (31% of males, 13% of females.) These are the results of a new study of 1,178 U.S. children and teens (ages 8 to 18) conducted by Harris Interactive (2007) that documents a national prevalence rate of pathological video game use.Dr. Douglas Gentile, Director of the Media Research Lab at Iowa State University reports, Almost one out of every ten youth gamers shows enoughsymptoms of damage to their school, family, a nd mental functioning to merit serious concern.The industry could be more drawn to the deficiencys of the consumer and promote games and toys that get over online and offline platforms,and also incorporate a educational value or the use of learning a musical instrument or techniques involved in doing so.Legal EnvironmentThere are increasingly tight rules and regulations about the materials that need to go into toy construction in nightclub to make them safer and more resistant to fire hazards. This has had the electrical shock of raising costs on production within the industry, but these regulations can vary in distinguishable countries, but are generally set the same throughout the EU, with rubber at the forefront of production.The Toy industry has to be very careful to go over these regulations, especially when out sourcing to places such as China who have generally a loose safety standards and could have serious consequences to any play along backup products from these s areas. Loose safety standards in Chinese factories caused the massive toy recall of 2007 which over 10 efflorescenceion toys that contained unsafe levels of lead and small magnets which, if swallowed, could cause serious injury or death. This recall cost not only millions of dollars but severely damaged the costumer confidence. A problem like this looms over every toy caller-out that uses manufacturing plants in China.The Legal environment of the toy industry is also continuously protect and fighting for its copyright on its products. This can be very complicated and confusing for example both Mattel and Hasbro have the rights to the board game Scrabble (Hasbro has rights in North America, Mattel has them everywhere else.) Two India based brothers and programmers created free to play version of Scrabble on Facebook called Scrabulous. At the height of its customaryity, Scrabulous attracted a half million players a day. Mattel and Hasbro both sued the Argawalla brothers and for ced them to remove the gamefrom Facebook.Hasbro consequently made a slow and clunky positive version bemoaned by fans of Scrabulous.The official version now draws 90,000 players daily. Instead of work with the creators of the knock-off and bringing the game into the surface of officially licensed content, Mattel and Hasbro caused resentment and hard feelings in customers on the worlds most popular social network. These actions of putting a substitute loud version of the game, could have a negative seismic disturbance on your customer base, especially in the creation eye, on a network like facebook that has billions of users and authorisation customers.Economic EnvironmentThe manufacturing of products for the toy industy for any years has mainly relied on Chinese manufactering, due to the combination of cheap labour and undervalued currency has been a very attractive rule for keeping production costs as low as possible. This arrangement might be very profitable to the toy in dustry, but does make them very susceptible to problems within in China itself.In late times with the up and coming working classes of Chinese people are demanding more pay and benefits, some that we in the UK take for granted on a daily basis (health and safety, Severance pay, etc.) in the working environment. These demands can have explosive affects, with the toy company Hasbro feeling the full effects. In November, 2008,a worker rampage broke out at a Hasbro manufactory in Dongguan, China (Foreman, 2008). 80 senior migrator workers, who felt they were being jilted by steering on their severance pay, quickly organized a mob of 500 people that overturned a police car, stormed the factory offices, and damaged computers.Political EnvironmentThe politiacl envirment is more driven towrds trade restriction within China and Chinese currency develpoments, as most of toy trade is manufactoered within its counry. This has been mentioned by the US in new times, with the Chinise underval ued currency being a target by plolicy makers within theUS. Recently, the U.S. House of Representatives Speaker Nancy Pelosi brought up the fortuity of a new China currency bill that would give the the Obama administration leverage in its two-sided andmultilateral negotiations with the Chinese government so that U.S. businesses and workers have a more level playing field in world trade. No one really knows how much this would affect export prices from China, but it is an issue that should proceed onthe radar.Technological EnviromentThe Technological Environment of the toy industry is very highly paced ,with toy fads coming and going within the toy market continiusly. Toy companies need to innovate and keep base forward with demand and try to create the next big toy breakthrough.The toy customer in todays market are mostly looking for intractability within the game, with many offering these platforms, such as Wii, Xbox, Playstation for example, using various platforms do so, eve n smaller toys such as Furbbie and tamagotchiis being very popular in their time, selling millions of units in their day or fad as its known.This fast moving technological environment relies on getting product to the market first gear and is very prone to company espionages fast moving technological environment relies on getting product to the market first and is very prone to company espionage, which is wide spread throughout the toy industry.