TOYS, INC Toys, Inc. is a 20-year-old company engaged in the manufacture and sale of toys and board games. The company has built a reputation on quality and innovation. Although the company is one of the leaders in its field, sales have leveled off in recent years. For the most recent sex-month period, sales actually declined compared with the same period last year.
As an operational consultant, our task is to help Toys, Inc gain more gross profit by reduce unnecessary operation cost and cease the sale from declining with highly quality control finished goods, and marketing. First of all, we need to discover where the problem occur the most with our product which is to conduct a customer survey to find out whether it! |s customer! |s misusage or abuse of use or it! |s manufacturing default. By learning the problem with our product, we could either provide a clear usage instruction to avoid misusage or improve product quality control to increase customer satisfaction. Conduct a SWOT analysis can help a firm identify the strategy-related factors that can have a major effect on the firm. The ultimate goal is to identify the critical factors affecting the firm and then build on vital strengths, correct flaring weaknesses, exploit significant opportunities, and avoid disaster-laden threats. The ultimate goal is not simply to develop the SWOT analysis but to translate the results of the analysis into specific actions to help the firm grow and succeed.
It serves as a solid foundation to identify subsequent actions in the marketing plan. Figure 1 shows the internal and external factors affecting the market opportunities for Toys, Inc. Stated briefly, this SWOT analysis highlights the great strides taken by the company since its products were first introduced. In the company! |s favor internally are its strengths of a broadly experienced management team, innovative and high quality products, national distribution, experienced personnel, economies of scale in manufacturing, and continuous efforts in research and development.
Favorable external factors (opportunities) include a stable mass market that recognizes the company for the quality of its products, that TOYS, Inc. is a leader in its field with a distinctive name, technological breakthroughs will enable production costs to be lowered, and innovative products are important to U. S. households. Among unfavorable factors, the main weaknesses are that decisions might be hard to make since there are so many differing views in management, competitors offer cheaper products, people don! |t associate the products with TOYS, Inc. , turnover rates for workers can be high, inspection and rebuilding expenses may go higher, and the company needs to put forth more action into their research and development plans.
Threats include a declining economy and people might not buy things that are not a! SS necessity, !" competitors can attempt to duplicate and make similar products for a lesser price, and households may be shifting towards buying more! SS useful!" products. Figure 1. SWOT Analysis for TOYS, Inc. Internal Factors Strengths Weaknesses Management very experienced, broad, well sized hard to come to consensus because of differing views Offerings innovative and high quality toys & games Similar products from competitors with competitive price. (Cheaper) Marketing national distribution people still don! |t associate the products with the company Personnel Large firm with good, experienced employee. High turnover rate, self loafing.
Manufacturing economies of scale inspection and rebuilding expenses may go higher&D continuous efforts need to put forth more action External Factors Opportunities Threats Consumer/Social mass market, likely to be stable, reputation of quality products declining economy, people might not buy things that isn't a 'necessity " Competitive leader in the field, distinctive name in market competitors can attempt to duplicate and make similar products Technological technological breakthroughs enable production costs to be lowered Equipment upgrade cost occurs. Economic consumer income is still high, innovative products important to U. S. households more households may be shifting towards more 'useful' products In order for TOYS, Inc. to continue to be a leader in its field, it also need to focus on market penetration, market development, product development, and diversification. Firms can view growth opportunities in terms of four combinations of (1) current and new markets and currents and (2) current and new products.
As TOYS Inc. attempts to increase declining sales revenue, it can try to use a strategy of market penetration, increasing revenue of present products in its existing markets. In this case, they must try and increase the revenue by increasing inspection of finished models before they are shipped. Therefore, they will not have the problem of customer complaints. It can also focus more on market development, which means selling existing products to new markets. In this case, they also could try and resell returned products, after they have been rebuilt, in their retail outlet store.
This way, they would appease the customers while also not wasting the product and gaining revenue still. The company can also attempt to focus on product development. This involves selling a new product to existing markets. With their REALISTIC line having many complaints, the products need a new image and a new guarantee.
Therefore, offering to trade in the defective products for a new product would demonstrate goodwill and placate dissatisfied customers. Thus, the customers would continue to have faith when buying more products. Lastly, TOYS Inc. can also focus diversification.
This involves selling a new product in a new market. Although the company is not venturing out in the field yet, it could be a worthwhile plan to implement in order to raise declining revenues. Cost Benefit is when consumers make purchases at market prices they reveal that the things they buy are at least as beneficial to them as the money they relinquish. Consumers will increase their consumption of any commodity up to the point where the benefit of an additional unit (marginal benefit) is equal to the marginal cost to them of that unit, the market price.
Therefore for any consumer buying some of a commodity, the marginal benefit is equal to the market price. By providing a high quality product with acceptable market price to consumer to maximum company profit is our goal. Beyond the same sales level, reduce manufacture cost means increasing gross profit. Layoff employee will reduce labor cost which will also has a disadvantage as the decrease of productivity; to avoid the decreasing if productivity by standardize the procedures to simplify the working steps, purchase new equipment to substitute automated processing for manual processing to improve average quality. Also, we can reduce the material cost by changed the less popular production line to produce the most popular product which will eliminate the material cost by purchasing different types of material with small quantity but have quantity discount when purchase large quantity of same types of material.