Central European University
Mattel Case Study Report
Prepared by Neli Gavrilova
I. Executive Summary:
Mattel, Inc. (Mattel) designs, manufactures and markets a variety of toy products worldwide which are sold to its customers and directly to consumers. Mattel's portfolio of brands and products are grouped in categories, such as Mattel Girls & Boys Brands, including Barbie fashion dolls and accessories (Barbie) and American Girl Brands, including My American Girl. American Girl Brands products are sold directly to consumers via its catalogue, website, and retail stores. Mattel is facing some operating turbulence and fast changing customer needs which means constant re-evaluation of current product lines and re assessment of customer needs. The current revenue mix shows, that domestic sales slightly exceed international 54% vs. 46%. The mainline product Barbie accounts for more than 50% of the sales that signals undeveloped product mix. Mattel has been investing in developing new product lines and expending its product catalog around the world. The company is at the pivotal place; it needs to evaluate its growth and product strategy. Mattel needs to look closely at the product line and find ways how to increase brand affiliation and tap new customers in new markets. In this document, I would like to evaluate the different alternatives that Mattel could take to keep the leading roles as a manufacture of toys and expand to new markets while maintaining the corporate social responsibility.
II. Problem/Issue statement:
Some of the challenges that Mattel is facing relate to the customers and the customer cultural factors. In Mattel’s case the customers are 2 different subclasses – children and their parents. The product mix has to be sufficient and adequate to the needs and the wishes to customers all over the globe. At the moment, it is apparent that the there is a heavy dependence on the US and the EU markets to drive revenues. In today’s operating environment with heavy reliance on outsourced production the company has to keep high on its agenda the ethical aspect – not to compromise the customer privacy and the safety standards of manufacturing. Win on the market place by offering products that are specifically tailored to the local interest groups. Many customers in the developing region are price sensitive and therefore the product’s price needs to reflect the purchasing power. III. Situational Analysis:
III/1. Porter 5 forces analysis
Bargaining power of suppliers (LOW)
The bargaining power of Mattel’s suppliers is low overall as the company has a significant number of subcontractors and own manufacturing plants in China. Bargaining power of customers (HIGH)
The buying power is strong due to the wide range of various toys and games available in the market at low costs as well. This element of choice strengthens buyer power and affects Mattel’s business. Bargaining power is high overall. Threat of new entrants (LOW)
Entering this market usually requires additional capital due to relatively high fixed costs. There are also obstacles to entry and expand fast. There is a high level of product differentiation, so newcomers may find it harder to attract buyers away from existing incumbents. Mattel is one of the main players and have a sustainable competitive advantage. Threat of new entrants is low overall. Threat of substitute products (MODERATE)
The most significant substitutes to the toys and games market are computer games. Computer games are becoming more popular than traditional toys and games where customer loyalty is low. However, young children with generous parents still provide a stable source of revenue for more traditional toys and games. Substitute power is moderate overall. Competitive rivalry within the industry (MODERATE)
The tendency for customers to move between toys and games vendors serves to...
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