Premium Essay

Toys World Inc.

In: Business and Management

Submitted By roqibun
Words 959
Pages 4
Student Name: Shunde Tu
Student ID: 000196745
Course: MGT 121( Financial Management II)

Case Study on Toy World

I. Situation Audit a) Plastic Toys Manufacturing Industry Overview i. Highly seasonal, with a majority of sale volume generated between Aug. and Nov. ii. Competitive landscape 1. Highly competitive, populated by a large number of companies 2. Fierce design and price competition, with short product lives and a relatively high rate of company failures 3. Low entry barrier resulted from low capital and technology requirements. 4. Influx of imported toys intensified competitive pressure on smaller firms.

b) Company Overview The company studied in the case is Toy World, a manufacturer of plastic toys for children. More than 80% of the sale was generated between Aug to Nov. Toy World Inc.’s practice was to produce in response to customer orders. Therefore, the production was highly seasonal, and not more than 25%-30% of manufacturing capacity was used for the first seven months.

c) Product Overview i. Produce a wide range of designs, colors and sizes for most of its product categories. ii. Dollar sales of a particular product had sometimes varied by 30%-35% from one year to the next.

II. Problem Statement The company’s production had been scheduled to accommodate the seasonality of sales. The production manager proposed to adopt level production to reduce labor costs. The feasibility and benefit of adopting level production would be studied in detail.

III. Problem Breakdown and Analysis a) Pros and Cons of Seasonality Production, as compared with Level production i. Advantages of Seasonality Production 1. Lower Inventory. Less storage and handling cost 2. Be able to respond to market changes. Since the sales of a particular product

Similar Documents

Premium Essay

Toy World Inc.

...Toy World, Inc. is a company that manufactures plastic toys for children. It creates toys of many different areas including toy cars, trucks, construction equipment, rockets, spaceships, animals, rockets, etc. The company as a whole has been doing quite well since it opened in 1990 and has experience profitability since early 1993. Although they have been doing satisfactory, there is always room for improvement. They are currently pondering the idea of switching their scheduling production from seasonal to a more level production. It is believed that by switching it will save the company substantial amount of funds and help reserve its factory equipment. Also, they are and need to find a solution to the current loan agreement they have with their bank to coincide with this new plan. Adopting a policy of level monthly production was the idea of Toy World Inc.’s Production manager, Mr. Hoffman. He has stated multiple issues with the current production schedule and exclaimed projected ideas & results with the new level policy. Current problems arising from the seasonal production schedule include overtime premiums reducing profits, seasonal expansion and contraction of the work force resulted in recruiting difficulties and high training/quality costs, machinery was idle for months at a time and subjected to heavy use, frequent set up changes in the machinery, confusion in scheduling runs, and frequent setup changes that resulted in inefficiencies in assembly and packaging...

Words: 771 - Pages: 4

Premium Essay

Toy World Inc

...TOY WORLD INC, CASE Issues * To change Toy World´s production processes, from seasonal to even monthly production, * cThe arrangement of getting the loan for the bank and how it will be secured by the account receivable and inventory * Toy World is facing several challenges related to its equipment usage and availability, leading to high overhead costs under Seasonal production Inputs * Expected sales for 1994 is $1000000 * 200000 is the minimum cash balance * A loan of $752000 was outstanding at the end of 93, the bank is willing to extand the credit line up to $2million, it will be secured by the account receivable and inventory * Collecting period of account receivables is 60 days * Under the seasonal production cost of goods sold would be 70% of sales , under the level production cost of good sold would be 65.1% of sales . * Under the level production storage and handling cost will increase by $115000, it will be included in operating expenses. Solution Production Cost |   | Inventorized production |   | balance of enventore at the end of month |   |   |   |   |   |   |   |   |   | 586 | 542.5 |   | $464.38 |   | $1,050.38 | 542.5 |   | $451.36 |   | $1,501.74 | 542.5 |   | $438.34 |   | $1,940.08 | 542.5 |   | $451.36 |   | $2,391.44 | 542.5 |   | $451.36 |   | $2,842.80 | 542.5 |   | $451.36 |   | $3,294.16 | 542.5 |   | $438.34 |   | $3,732.50 | 542.5 |   | -$512.12 |   | $3,220.38 | 542.5 |...

Words: 910 - Pages: 4

Free Essay

Nintendo Game Genie

...Nintendo Game Genie Game Codes Page i # 1942 1943 3D Worldrunner 720 Degrees 8 Eyes …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. 1 2 3 4 5 A Addams Family Adventures in the Magic Kingdom Adventures of Dino-Riki Adventures of Lolo Adventures of Lolo 2 Adventures of Lolo 3 Adventures of Tom Sawyer Adventure Island 2 Adventure Island 3 Adventures of Bayou Billy Adventures of Rocky & Bullwinkle Airwolf Air Fortress Alfred Chicken Alien Syndrome Alpha Mission Amagon American Gladiators Anticipation Archon Arch Rivals Arkanoid Arkista's Ring Astyanax Athena …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. …………………………………. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Nintendo Game Genie Game Codes Page ii B Back to the Future Back to the Future 2 Back to the Future 3 Bad Dudes Bad Street Brawler Balloon Fight Barbie Baseball Simulator 1000 Baseball Stars 2 Bases Loaded 2 Bases Loaded 3 Bases Loaded 4 Batman Batman: Return of the Joker Batman Returns Battleship Battletank Battletoads Battletoads and Double Dragon Battle of Olympus Beetlejuice Bee 52 Best of the Best Championship Karate Bigfoot...

Words: 44940 - Pages: 180

Premium Essay

Merger

...to forge partnerships with other corporate leaders. They are often able to expand their services internationally to gain more profits and extend their brand. Corporations, such as Toys“R”Us, Inc. have been able to benefit from acquisitions in ways that corporations, such as smaller businesses have not. Through the evaluation of the strategies that were utilized by Toys“R”Us, Inc. and its international business-level and corporate-level strategies, one can better understand strategies that smaller businesses like Bunnies by the Bay for example could develop to increase their profits through acquisitions and mergers, as well as business-level and corporate-level strategies they can develop to expand their services internationally. Toys“R”Us, Inc. Toys“R”Us, Inc. has enjoyed great success as one of the largest toy retailing chains in the world. Toys“R”Us, Inc. is the world’s leading dedicated toy and baby products retailer, offering a differentiated shopping experience through its family of brands. Merchandise is sold in 867 Toys“R”Us and Babies“R”Us stores in the United States and Puerto Rico, and in more than 725 international stores and over 240 licensed stores in 37 countries and jurisdictions. In addition, it exclusively operates the legendary FAO Schwarz® brand and sells extraordinary toys in the brand’s flagship store on Fifth Avenue in New York City. With its strong portfolio of e-commerce sites including Toysrus.com, Babiesrus.com,...

Words: 1267 - Pages: 6

Premium Essay

Swot

...Toy industries used to manufacture toys which consisted of elements which were harmful and hazardous for health. With the onset of globalisation and spread of education parents became aware about the risks associated with the toys manufactured for children consisting of harmful chemicals. To save their market image the major toy industries took this matter seriously and recalled their products. This turned into a great opportunity for toy industrialists to manufacture toys which were environment friendly as well as for safe for children. “Robert von Goeben” took full advantage of this market scenario and established Green Toys Inc. In partnership with “Laurie Hyman”. The founders of Green Toys look after the different segments of the industry. Robert von Goeben responsible for production side of the business and Hyman as a marketing expert looked after the marketing of the products and consumer retention. This essay is about the strategies implemented by the Green Toys Inc. in order to create, diversify and sustain their market share in the toy market. There are several key methods responsible for excelling in the world toy industry. However, three factors play a vital role in the success of a toy company. The most important one is to target a particular segment of society and to retain it to create a consumer base. In 2010 Mattel successfully implemented this method and was able to increase sales of its brand “Barbie” by marketing it as a fashion statement which amused...

Words: 1518 - Pages: 7

Premium Essay

Toy World

...Introduction At Toy World Inc., President Jack McClintock is considering the adoption of a level monthly production plan for the coming year. The manufacturer of children’s plastic toys currently employs a production plan that follows the seasonality of sales. In considering whether to implement a level monthly production schedule, we compared the benefits and costs of both methods in relation to the financial and operational needs of the business. This allowed for an in-depth analysis of the savings allowed by a level monthly production schedule, and the impact of such a system on timing, cash flow and risk. As a toy manufacturer, Mr. McClintock’s company would face unique risks under the proposed system of production. These risks were compared to those accepted under a seasonal production schedule. By completing this analysis, we determined that Toy World Inc. would benefit the most from maintaining a seasonal production system. However, since a level monthly production plan would result in cost savings for the company, we have presented options through which Mr. McClintock can manage the financial implications of this schedule. Benefits of Level Monthly Production Mr. McClintock can expect to see savings of $490,000 in labour costs under this production system. These savings would be reflected in a lower cost of goods sold (70% of sales to 65.1%). A level monthly production plan allows the removal of overtime wage premiums in peak seasons, resulting in savings of $225...

Words: 1386 - Pages: 6

Free Essay

Hasbro, Inc.

...Hasbro, Inc. Hasbro, Inc.’s focal point is on building a strong global business and further growth of its presence in children and family’s free time, and also the entertainment industry. Hasbro is well balanced to power its incredible portfolio of classic brands globally, regionally, and locally. It aims to achieve these goals with an increased emphasis on global brand marketing and product development, complemented by synchronized regional and local marketing sales activity. Hasbro, Inc. is the second largest toy company in the world behind Mattel, Inc. The company not only produces toys, but also popular culture. From America’s Action Hero to a plastic human sized potato head to vehicles that transform into robots to the largest bird in the world, Hasbro toys are instantly known by millions of Americans. Hasbro makes G. I. Joe, Mr. Potato Head, and Transformers, and owns licenses for Sesame Street characters. Due to an abundance of company take-over in the 1980s and 1990s, it also makes Playskool and Romper Room preschool toys, Tonka trucks, Kenner’s Nerf toys, and Cabbage Patch Kids. Hasbro has become the leading company in the area of board games and puzzles through its ownership of Milton Bradley (maker of Scrabble and Parcheesi) and Parker Brothers (maker of Monopoly). Into the late 1990s and early 21st century, Hasbro has continued to obtain popular brands, such as Pokéman game cards with their attainment of Wizards of the Coast and regained the license for toys developed...

Words: 858 - Pages: 4

Free Essay

Toys R Us Profile

...Toys "R" Us, Inc. ___________________________________________________________________________________________ Toys "R" Us, Inc. Recent Developments Jan 31, 2011 : Toys "R" Us offers to pay staffers $1m in back pay Fast Facts Headquarters Address One Geoffrey Way, Wayne, 07470, United States of America Telephone + 1 973 6173500 Fax + 1 973 6174006 Website www.toysrus.com Ticker Symbol, Stock Exchange N/A Number of Employees 70,000 Fiscal Year End February Revenue (in US$ million) 13,543.00 SWOT Analysis Strengths Weaknesses Efficient distribution capabilities Dependence on selected vendors Industry recognition Seasonal nature of the business Multiple channel selling strategy Wide geographic presence Opportunities Threats Growth of web-based store concept Increase in counterfeit products Increase in consumer spending in the US Increase in organized retail crime Strategic collaborations Jan 31, 2011 : Toys "R" Us offers to pay staffers $1m in back pay Jan 31, 2011 : Toys "R" Us offers to pay staffers $1m in back pay Toys "R" Us, Inc. - Company Overview Toys "R" Us, Inc. (Toys"R"Us) is a specialty retailer of toy and baby products. The company’s product portfolio includes children’s apparel, juvenile, learning, entertainment, core toy, parenting and seasonal products. These products are sold under various private labels such as Fast Lane, Imaginarium, Dream Dazzlers...

Words: 8636 - Pages: 35

Premium Essay

Toy World Case

...annual savings of around $490,000. The question is, by transitioning to a level production schedule, will Toy World Inc. have enough cash on hand to meet purchasing requirements and pay their employees. Additionally, will a level production schedule result in the need for larger loans to be taken out, and at the end of the year will a level production schedule result in more profit? Methodology: Toy World’s estimates have been accurate in the past with regards to how much they are going to sell and how much they are going to purchase to produce all that they need. Because of this we were able to rework a cash budget (Figure 1) that would tell us how much cash they would theoretically need in order to make level production possible. We were also able to make a new income statement (Figure 2) to see how much more or less the company would make if they were to run a level production system. Analysis: Toy World is a company that has been doing very well and has been profitable for many years, but new management believes that the company could be even more profitable. There are many signs that lead us to believe that this is true. The company can save $490,000 in labor charges by switching to level production. On the other hand those savings are somewhat offset by the $115,000 charge for extra inventory and storage fees. In our workup of the cash budget for Toy World we find that the company starts to have to borrow cash early in the year beginning in March. This is because...

Words: 877 - Pages: 4

Premium Essay

Petrol Euro

...1996 Toy World, Inc. Early in January 1994, Jack McClintock, president and part owner of Toy World, Inc., was considering a proposal to adopt level monthly production for the coming year. In the past, the company’s production schedules had always been highly seasonal, reflecting the seasonality of sales. Mr. McClintock was aware that a marked improvement in production efficiency could result from level production, but he was uncertain what the impact on other phases of the business might be. Toy World, Inc. was a manufacturer of plastic toys for children. Its product groups included toy cars, trucks, construction equipment, rockets, spaceships and satellites, musical instruments, animals, robots, and action figures. In most of these product categories the company produced a wide range of designs, colors, and sizes. Dollar sales of a particular product had sometimes varied by 30%-35% from one year to the next. The manufacture of plastic toys was a highly competitive business. The industry was populated by a large number of companies, many of which were short on capital and management talent. Since capital requirements were not large and the technology was relatively simple, it was easy for new competitors to enter the industry. On the other hand, design and price competition was fierce, resulting in short product lives and a relatively high rate of company failures. A company was sometimes able to steal a march on the competition by designing a popular new toy, often...

Words: 2902 - Pages: 12

Premium Essay

Toy Case

...1996 Toy World, Inc. Early in January 1994, Jack McClintock, president and part owner of Toy World, Inc., was considering a proposal to adopt level monthly production for the coming year. In the past, the company’s production schedules had always been highly seasonal, reflecting the seasonality of sales. Mr. McClintock was aware that a marked improvement in production efficiency could result from level production, but he was uncertain what the impact on other phases of the business might be. Toy World, Inc. was a manufacturer of plastic toys for children. Its product groups included toy cars, trucks, construction equipment, rockets, spaceships and satellites, musical instruments, animals, robots, and action figures. In most of these product categories the company produced a wide range of designs, colors, and sizes. Dollar sales of a particular product had sometimes varied by 30%-35% from one year to the next. The manufacture of plastic toys was a highly competitive business. The industry was populated by a large number of companies, many of which were short on capital and management talent. Since capital requirements were not large and the technology was relatively simple, it was easy for new competitors to enter the industry. On the other hand, design and price competition was fierce, resulting in short product lives and a relatively high rate of company failures. A company was sometimes able to steal a march on the competition by designing a popular new toy, often...

Words: 2896 - Pages: 12

Premium Essay

Management Planning Toys R Us

...for this particular assignment is Toys “R” Us Corporation. I will evaluate the planning function of the company as well as analyze and provide examples on the influence that legal issues, ethics, and social responsibilities have on the corporation’s management planning. I will also evaluate three factors that affect Toys “R” Us Corporation’s strategic, tactical, operational, and contingency planning. Toys “R” Us is a leading retailer in toys and baby products. Toys “R” Us provides services to 873 stores in the United States and Puerto Rico and has expanded to over six hundred stores internationally. Toys “R” Us was founded over sixty years ago and have had the goals of being the world’s greatest kids’ brands by supplying a great variety of products while providing resources to keep their customers’ kids safe (Toys “R” Us, Inc., 2011). The planning function of Toys “R” Us, Inc. consists of creating a great environment for its employees by encouraging teamwork and collaboration with the foundation of trust and respect. The toy corporation’s plans for success also involves creating customer satisfaction by ensuring that they have a great experience each time they shop at any of their stores. They also want to ensure that their shareholders are satisfied through the consistency and reliability of their efforts. Toys “R” Us also want to maintain their reputation as a safe and caring neighbor in the communities in which they serve. Toys “R” Us, Inc. prides themselves in upholding...

Words: 1302 - Pages: 6

Premium Essay

Hasbro Paper

...Hasbro, Inc Strategic Management Project MBA 670 Executive Summary & Introduction Corporate Description Company & Industry Description History of the Firm In 1923, two brothers who migrated from Poland started a small business by selling textile remnants. In 1926, the Hassenfeld’s officially organized what is known today as Hasbro Inc. In the 1940’s, the brother duo expanded by offering pencil boxes and school supplies. By 1950, they were ready to leap into another market by introducing its novelty toy, “Mr. Potato Head”. GI Joe was introduced in 1963 producing revenue sells in excess of 28 million dollars the next two years after Hasbro spent nearly 2 million in TV ads (Miller 1998). In addition to toys, Hasbro develops games most notably Monopoly which was first introduced in 1935. Decades later, Hasbro continues to be innovative with product design, introduction of new products, developing brand recognition to maintain being a leader in the game and toy industry. Ownership Characteristics Hasbro Inc is a publicly traded company in the NYSE. Alan Hassenfeld, Chairman of the Board of Hasbro Inc., owns about 4% in shares of the company; while other corporations such as The State Street Corporation and Barkley’s Global Investors UK Holding LTD are the major institutional stockholders and each own approximately 6% of the company. While there are other private stockholders owning significant amount of shares in the company, most of the...

Words: 2268 - Pages: 10

Free Essay

Mattel and Its Challenges

...The Problem: The problem surrounding Mattel Inc., one of the world’s largest toy companies, is their mismanagement of international subcontractors and vendors and the production of certain toys (the manufacturing process), as well as their inability to adapt their marketing strategy or product to the constantly changing “demographic and socioeconomic trends” (Ferrell, et. all 466). This is supported by Mattel’s legal battle with Carter Bryant and MGA, their forced recall of certain toys that were manufactured overseas, and the increasing rate at which traditional toys are becoming less appealing to today’s young audience. Essentially, Mattel’s mismanagement and oversight lead to violations in terms of ethical and social responsibilities and safety standards. Issues Relevant to the Problem: Mattel’s problem of mismanagement can be divided into several issues that need to be considered: legal issues, international supply chain issues, and an increase in technology-based toys. In regards to legal issues, Mattel has been involved in prolonged litigation with Carter Bryant and MGA over a breach of an employment contract and copyright infringement. Due to Mattel’s poor management of its overseas manufacturers, in which unauthorized subcontractors and third-party suppliers were hired and unsafe materials used, several toy products were recalled. Advances in technology and changes in socioeconomic and demographic trends have created marketing, privacy, and product development issues...

Words: 3368 - Pages: 14

Free Essay

Bachiller

...1) ¿Cuáles son las características de la industria donde participa TOY WORLD INC.? Entre las principales características que destacan la industria donde participa TOY WORLD INC. Podemos mencionar: * La Fabricación de juguetes de plástico era un negocio muy competitivo. * La industria estaba poblada por una gran cantidad de empresas que fácilmente se podían involucrar en la fabricación de juguetes ya que los requisitos de capital no eran grandes y las tecnologías era relativamente simple. * Ventajas respecto a diseños de productos. * Mucha rivalidad entre los precios, la diferencias entre precios eran feroces. * Una constante búsqueda de los competidores por ofrecer productos similares con precios más bajos. ¿Qué estrategia genérica de Michael Porter ha caracterizado a TOY WORLD INC. En su trayectoria operativa desde su fundación? La estrategia genérica de Michael Porter que ha caracterizado a TOY WORLD INC en su trayectoria es la Diferenciación ya que la organización crea un producto diferente y que está acorde a la moda, por ejemplo figuras de acción como un súper héroe este contribuye grandemente a las utilidades de la compañía , por si fuera poco la empresa siempre está a la vanguardia ya que son los primeros en lanzar un producto en particular, más bien original, mediante su calidad inigualable, su diseño innovador o alguna otra característica , en razón de ello, puede imponer un precio más alto que el promedio, esta ventaja competitiva le...

Words: 535 - Pages: 3