Introduction
Mattel Toy Company was established in 1945 by Elliot Handler and Harold Matson and had its headquarters in El Segundo, California. Mattel Company is a distinguished global leader in the manufacture, design, and marketing of a variety of toy products. The Toy Company’s products are organized into three distinct business groups. Namely: the Mattel boys and girls brands, the Fisher- price brands and the American girl brands. The Mattel boys and girls brand comprises of Barbie dolls and accessories, Polly pocket, Batman, Superman and the hot wheels. In addition, the Fisher-price brand also consists of the little people, power wheels and Sesame street among others. Mattel has facilities and offices in 36 countries and sells various products in more than 150 Nations worldwide (Ireland et al., 2008). The company has continuously led from the front due to the various strategies that it incorporates in its operations. In 2011, the company was categorized as the largest toy manufacturer with sales worth approximately €3.3 billion and this was about 23.5% of the entire toys and game market (Ireland et al., 2008). Companies usually aim at increasing their customer base hence expounding on their profits. The company managers are expected to be good strategic thinkers so as to facilitate better the achievement of organization’s vision, goals and mission. Strategic thinking is a crucial concept to any business and entails generating and applying unique business insights and opportunities with the intention of creating competitive advantage for the company. The paper provides an analysis and evaluation of the strategies being used by Mattel Company.
Analysis and Evaluation of Strategies
The company has incorporated different business strategies with the aim of enhancing efficiency of its operations. Examples of the strategies include: vertical integration and diversification and differentiation. Taper integration that is a form of vertical integration is evident when Mattel outsources are manufacturing to Thailand, Ireland, Indonesia, Malaysia, China and Mexico. However, most of Mattel's manufacturing is done in China which accounts for about 65% of Mattel’s total production. Mattel Company manufactures its products in China then imports the products for sale in the United States (Ireland et al., 2008). The idea of producing in-house and outsourcing the rest in indeed a good strategic idea because outsourcing is usually cheaper hence it cuts overall costs (Wotton, 2010). Further, Mattel Company has embraced the diversification in various aspects. Firstly, it has opened branches in several countries across the globe thus it engages in globalization whilst globalization is important for any business. Globalization has enabled Mattel Company to build its brand (Ireland et al., 2008). Also, the company’s workforce is indeed diverse by any measure in terms of race, gender, ethnicity and even religion. A culture that is rich in diversity undoubtedly contributes to the success of any business hence diversity, and indeed inclusion is an integral part of Mattel’s strategies (Wotton, 2010). The consumers are, therefore, able to identify with the products.
Over the years, Mattel has managed the peculiarities of the toys industry through incorporating a series of innovative and often revolutionary ideas. The company partnered with other companies with the aim of enhancing its growth. For example: In 1955, Mattel Company partnered with the ABC Television hence sponsored a fifteen-minute segment of Walt Disney’s Mickey Mouse for a full year (Ireland et al., 2008). In 2005, Martel also partnered with the Scholastic Entertainment to produce various educational learning systems. Partnerships are imperative because it enables the company to explore other ideas and also increase productivity. Mattel Toy Company has also been trying to gain market power in the video games markset hence it has acquired Radica games. In 2012, Mattel successfully launched Apptivity, a type of active touch technology that allows the physical toys to interact with the iPad (Ireland et al., 2008).
Corporate Social Responsibility (CSR) is also an important strategy that enables the company to give back to the community (Wotton, 2010). Mattel is committed to the different communities, and this is seen when a company engages in various outreaches. For example: in over 20 countries such as Latin America and Europe, Mattel employees have voluntarily supported different local Olympic games. Through the CSR, the company may create awareness about its upcoming products thus it can be used as a marketing strategy. Some individuals usually lack information about the different product varieties hence marketing is necessary. Mattel’s differentiation strategy is evident when Mattel licenses with well-known brands such as Barbie and also license with the cartoon and movie makers (Wotton, 2010). The differentiation strategy adopted aims at lowering costs and also move the factories to growing countries. In addition, differentiation allows for the achievement of economies of scale. The company also incorporated cooperation strategies through forming alliances with other companies such as the Wal-Mart and Walt Disney (Ireland et al., 2008).
Based on the SWOT analysis, the company indeed has its strengths and weaknesses. Some of the company’s strengths include Mattel’s ability to license with big companies, effective cost management, a strong capital base, and a strong distributor network Wotton, 2010). The company has also tapped the existing opportunities including the fast growing Asian economy and the recall of its competitor Hasbro Company. In addition, the company has established a number of educational products that seek to educate the children. Subsequently, the company also has various threats such as the existence of substitute products, unpredictable consumer tastes and preferences, fake products from china and the rise in costs of raw material (Wotton, 2010). The disadvantage experienced by the company is that their primary market target is the children. Additionally, the children grow older much faster and hence do not require the toys once they become of age.
Mattel Company strives to achieve significant cash flows hence it has invested in technological advancements. Technology is crucial for the success of any business since it enhances efficiency and effectiveness and also increases production capacities. Additionally, product quality is also improved. The company’s management envisages that they will be able to achieve growth if they invest in their core brands and also build new franchises. Further, the company intends to launch new products by the end of 2014 hence this will enable it to edge out its competitors. Consequently, a broad range of fashions, accessories and dolls will be released. An example of the product set to be launched is “Barbie the Pearl Princess”.
Inasmuch as the strategies are beneficial to the company, some strategies may negatively impact on the company’s operations if not properly regulated. The differentiation strategy may cause a lack of quality quality-control. For example: In 2007, Mattel Company was involved in a product quality and safety defect dispute hence it recalled about 30 million toys that it had manufactured in China. The lead paint and loose magnets on the toys that children could swallow sparked a serious debate about the product quality and safety of the toy products (Ireland et al., 2008). Mattel reported huge losses in profits due to the recall incident and the company’s image was also severely affected at that time. The company, therefore, needs to change its differentiation strategy since it compromises on the product quality. Producing low quality or substandard products can ruin the reputation of the company, and this will lead to massive losses since customer loyalty will be lost. In business, image matters a lot and should be safeguarded at all costs.
Benefits of the Strategies
Nevertheless, when properly implemented, the strategies usually contribute to the consumer satisfaction and transparency of business operations. The company also trains its employees regularly, and this ensures that they remain relevant to the job market requirements. Appropriate strategies also ensure that the customers are retained and that the company’s resources are used efficiently hence utilizing available resources (Wotton, 2010). The inefficient use of resources often costs the company much money and also a loss in the market share. Appropriate strategies allow the company to explore other business opportunities outside the usual business practice hence facilitating company expansion (Wotton, 2010). Constant reviews of strategies by the companies also enable them to identify their Strengths, weaknesses, Opportunities as well as threats. An effective strategy also provides information about what needs to be done so as to edge out the competitors hence the company becomes proactive (Wotton, 2010). New strategies also seek to ensure that the Company’s stay in line with the government requirements and standards e.g. quality products and filing of tax returns. Such revenues are used by governments to provide essential services such as education to its citizens. Appropriate strategies also serve to provide general economic growth in the long-run
Conclusion
Reference
Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning.
Wootton, S., Horne, T., & Wootton, S. (2010). Strategic thinking: A nine step approach to strategy and leadership for managers and marketers. London: Kogan Page Limited.
