Hasbro Strategic Review

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Originally named Hassenfeld Brothers after its family founders, Hasbro was founded in 1923 and incorporated in 1968 when the name was changed to Hasbro Inc. Over the years Hasbro has made several changes in its core competencies in to being a top competitor in the toy and game industry. Hasbro has had success in acquire several key companies that have grown to reputable brand names throughout world. Hasbro is not just another toy company, in addition to their excellent reputation of their individual brands; Hasbro has held a good reputation for their compassionate activities in reaching out to families throughout the globe. Traditional Hasbro has given back to the community through charitable contributions to reach out to all stakeholders and show they really do care in “making the world smile”. Hasbro’s contributions to society have helped mold a positive corporate image that carries over into its products and services that consumer’s value. The company enjoyed a long run of family leadership until May of 2003 when Al Verrecchia was internally promoted to CEO and Alan Hassenfeld stepped down to remain on the board. As the new CEO of Hasbro Verrecchia will continue in executing the current goal of making the company consistently more profitable by improving earnings, reducing debt, strengthening the balance sheet, and investing in new product development geared towards growing core brands. Companies that sell a product or a service for the consumer to use in leisure activities compete with Hasbro in the consumer recreation industry. This industry consists of companies involved in the design, manufacturing and marketing of a wide variety of products such as video games, movies, music, sports, and television as well as toys and games. Hasbro competes in a strategic group within the consumer recreation industry that consists of highly competitive companies involved in the design, manufacturing, and marketing of games and toys. The toy and game industry which consists of large competitors Mattel, JAKKS Pacific, Lego, and Hasbro; seems to be reaching its peak in the maturity stage and moving towards a trend in decline. Mattel is the industry leader in sales and holds the largest market weight. Lego is of comparable size to Hasbro, based on total sales and employees. JAKKS Pacific holds the lowest market weight of publicly traded companies in the industry and is accompanied by low revenues. The industry as a whole seems to be in a slight decline due to a variety of factors in the general environment. Industry average sales have declined consistently over the past three years and competitors are fighting rigorously for market share. The toy and game segment seems to be losing consumer interest to the growing software entertainment companies, which have shown a positive growth rate during the toy industries decline. Leaders in the software entertainment industry include Electronic Arts, Activision, and Take-Two Interactive Software. It is important for managers to be aware of competition in industries that compete for the same customer, to be able to capitalize on possible strategic alliances that could increase profitability through licensing agreements, franchising, and other value adding activities. It is also important to be aware of competitors outside a company’s strategic group in forecasting future actions the competitors may employ against you. The toy and game industry seem to be cyclical to the economy due to the strong correlation between industry sales and economic indicators such as real disposable personal income.6 The industry also shows seasonality with a large percentage of annual sales generated around the winter holiday season. A possible reason for the recent declining sales could be due the recent holiday season that was dismal for the entire consumer cyclical sector.6 With the negative effects of the economy and recent growth of the software entertainment industry occurring at the same time, companies...
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