K'NEX (A): 1991-- Product Development in the Toy Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of K'NEX (A): 1991-- Product Development in the Toy Industry
Focuses on entrepreneurship--both in setting up a new business and in keeping the entrepreneurial spirit alive in large, established organizations--and on internationalization. Describes how toy manufacturer Hasbro receives a proposal from an American entrepreneur specializing in plastic injection molding for a new toy. Describes the proposal, the toy industry, and Hasbro itself. Should Hasbro accept the proposal for the new toy? Also, how can large companies stay open to ideas coming from the outside?
Swot Analysis of "K'NEX (A): 1991-- Product Development in the Toy Industry" written by Jacques Horovitz, Els Van Weering includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Toy Hasbro facing as an external strategic factors. Some of the topics covered in K'NEX (A): 1991-- Product Development in the Toy Industry case study are - Strategic Management Strategies, Product development and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the K'NEX (A): 1991-- Product Development in the Toy Industry casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, there is increasing trade war between United States & China, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing commodity prices, technology disruption,
there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of K'NEX (A): 1991-- Product Development in the Toy Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in K'NEX (A): 1991-- Product Development in the Toy Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toy Hasbro, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toy Hasbro operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of K'NEX (A): 1991-- Product Development in the Toy Industry can be done for the following purposes –
1. Strategic planning using facts provided in K'NEX (A): 1991-- Product Development in the Toy Industry case study
2. Improving business portfolio management of Toy Hasbro
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Toy Hasbro
Strengths K'NEX (A): 1991-- Product Development in the Toy Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toy Hasbro in K'NEX (A): 1991-- Product Development in the Toy Industry Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Toy Hasbro in the sector have low bargaining power. K'NEX (A): 1991-- Product Development in the Toy Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Toy Hasbro to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Toy Hasbro digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Toy Hasbro has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Strong track record of project management
– Toy Hasbro is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Toy Hasbro is one of the leading recruiters in the industry. Managers in the K'NEX (A): 1991-- Product Development in the Toy Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Toy Hasbro has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Toy Hasbro to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– K'NEX (A): 1991-- Product Development in the Toy Industry firm has clearly differentiated products in the market place. This has enabled Toy Hasbro to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Toy Hasbro to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Toy Hasbro in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Toy Hasbro is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Toy Hasbro is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in K'NEX (A): 1991-- Product Development in the Toy Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Innovation & Entrepreneurship field
– Toy Hasbro is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Toy Hasbro in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Toy Hasbro is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Jacques Horovitz, Els Van Weering can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Toy Hasbro has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in K'NEX (A): 1991-- Product Development in the Toy Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Toy Hasbro is one of the most innovative firm in sector. Manager in K'NEX (A): 1991-- Product Development in the Toy Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses K'NEX (A): 1991-- Product Development in the Toy Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of K'NEX (A): 1991-- Product Development in the Toy Industry are -
Lack of clear differentiation of Toy Hasbro products
– To increase the profitability and margins on the products, Toy Hasbro needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Toy Hasbro has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Toy Hasbro has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study K'NEX (A): 1991-- Product Development in the Toy Industry, is just above the industry average. Toy Hasbro needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Skills based hiring
– The stress on hiring functional specialists at Toy Hasbro has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As K'NEX (A): 1991-- Product Development in the Toy Industry HBR case study mentions - Toy Hasbro takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Toy Hasbro supply chain. Even after few cautionary changes mentioned in the HBR case study - K'NEX (A): 1991-- Product Development in the Toy Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Toy Hasbro vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Toy Hasbro has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study K'NEX (A): 1991-- Product Development in the Toy Industry that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case K'NEX (A): 1991-- Product Development in the Toy Industry can leverage the sales team experience to cultivate customer relationships as Toy Hasbro is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Toy Hasbro, firm in the HBR case study K'NEX (A): 1991-- Product Development in the Toy Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Jacques Horovitz, Els Van Weering suggests that, Toy Hasbro is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities K'NEX (A): 1991-- Product Development in the Toy Industry | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study K'NEX (A): 1991-- Product Development in the Toy Industry are -
Developing new processes and practices
– Toy Hasbro can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Toy Hasbro in the consumer business. Now Toy Hasbro can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Toy Hasbro can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Toy Hasbro can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Toy Hasbro can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Toy Hasbro in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Toy Hasbro to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Toy Hasbro has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Toy Hasbro can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Toy Hasbro can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Toy Hasbro to increase its market reach. Toy Hasbro will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Learning at scale
– Online learning technologies has now opened space for Toy Hasbro to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Toy Hasbro can use these opportunities to build new business models that can help the communities that Toy Hasbro operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Threats K'NEX (A): 1991-- Product Development in the Toy Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study K'NEX (A): 1991-- Product Development in the Toy Industry are -
High dependence on third party suppliers
– Toy Hasbro high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Toy Hasbro needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Toy Hasbro can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Toy Hasbro in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Regulatory challenges
– Toy Hasbro needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Consumer confidence and its impact on Toy Hasbro demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Toy Hasbro
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Toy Hasbro.
Stagnating economy with rate increase
– Toy Hasbro can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study K'NEX (A): 1991-- Product Development in the Toy Industry, Toy Hasbro may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toy Hasbro can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study K'NEX (A): 1991-- Product Development in the Toy Industry .
Shortening product life cycle
– it is one of the major threat that Toy Hasbro is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Toy Hasbro with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of K'NEX (A): 1991-- Product Development in the Toy Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study K'NEX (A): 1991-- Product Development in the Toy Industry needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study K'NEX (A): 1991-- Product Development in the Toy Industry is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study K'NEX (A): 1991-- Product Development in the Toy Industry is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of K'NEX (A): 1991-- Product Development in the Toy Industry is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Toy Hasbro needs to make to build a sustainable competitive advantage.
