Background on the industry:
The global toy industry in the UK:
The global toy industry is highly competitive and innovative and generates billions of dollars
every single year. The Lego Group earned over $8bn in sales revenue in 2021 making it the
largest toy company in the world. Tokyo-based Bandai Namco had sales in the region of $7.3bn,
making it the world's second-largest toy producer. Other market leaders include Hasbro, Mattel,
and Jakks Pacific
The toy industry in the UK:
As of 2020, the UK was home to more than 680 toy and game manufacturing enterprises and
over 1,100 specialized retail stores. This creates huge competition for Brondy's PLC (BRD). In
2022, toy and game revenue in the United Kingdom reached an estimated £5bn (around
$6.25bn). Although the UK toy industry is smaller than that in the USA and China, the UK is one
of the largest toy markets in Europe. Furthermore, sales revenue in the UK’s toy and game
industry is set to grow, reaching a projected figure of over £5.5bn by 2027.
Position
Company
Sales $bn (2022)
1
Lego
9.279
2
Bandai Namco
7.465
3
Hasbro
5.856
4
Mattel
5.434
5
Jakks Pacific
0.796
S.W.O.T Analysis:
STRENGTHS
-
Established brand with a long history
WEAKNESSES
-
of a unique three-rail system in model
in manufacturing wind-up clockwork
train sets.
toys.
-
Diversified product range, including
-
-
-
materials.
market of railway modellers who value
-
Failure to adapt to the market trend of
using plastic instead of metal
Strong customer loyalty and a niche
quality and realism.
High prices compared to competitors'
two-rail train sets.
clockwork toys, slot car racing sets,
and plastic model kits.
Limited market reach due to the use
-
Declining sales and financial
difficulties in recent years.
Skilled and experienced workforce
with low absenteeism and labour
turnover.
OPPORTUNITIES
-
-
-
Adoption of cellular production for
-
Competitors use more affordable
model train sets to enhance efficiency
plastic materials and two-rail systems
and meet production targets.
in model train sets.
Acquisition of Matchfix PLC and
-
Declining interest in modelling as a
Enam Ltd. expands product range and
hobby due to the popularity of online
opens new markets.
games.
Introduction of plastic model train sets
-
Increased customer complaints about
using 3D printing technology to
quality issues with Matchfix plastic
reduce costs and attract new
model kits.
customers.
-
THREATS
-
Shareholder pressure and the
Exploration of online sales channels
influence of 4 Change on strategic
and partnerships to tap into the
decision making.
growing online games industry.
Steeple Analysis:
Changing consumer preferences and societal trends
can impact BRD's product demand. The shift towards
Social
more sophisticated toys and the decline of the
clockwork toy market highlights the importance of
adapting to evolving sociocultural factors.
Technological advancements can have both positive
and negative impacts on BRD. On one hand, it
Technological
presents opportunities for innovation and product
development. On the other hand, it may require
substantial investments in new manufacturing
processes and equipment.
BRD's financial performance is directly influenced by
the economic conditions in the countries where it
Economical
operates. Factors such as consumer purchasing
power, inflation rates, interest rates, and exchange
rates can impact its profitability and sales.
BRD's manufacturing processes and materials usage
can have environmental implications. The shift
towards plastic manufacturing may raise concerns
Environmental
about sustainability and recycling. Compliance with
environmental regulations is crucial.
BRD operates in various countries, so it is subject to
the political stability, regulations, and policies of those
Political
countries. It may face challenges such as changes in
import/export regulations, trade agreements, and
political unrest in certain regions.
BRD operates under various legal frameworks,
including intellectual property laws, product safety
Legal
regulations, employment laws, and corporate
governance requirements. Any changes or
non-compliance with these laws can have legal and
reputational consequences.
Recyclability: The decision to use plastic for model
train sets raises ethical concerns about
environmental impact, given the lack of recyclability
Ethical
of the chosen plastic material.
ANSOFF Matrix analysis:
Market Penetration
Product Development
Market Development
Diversification
BRD could focus on increasing
BRD could consider
BRD could explore new
Given BRD's history of
its market share within the
introducing new variations
markets for its model train
successful diversification
current UK market for model
or innovative features to its
sets and plastic model kits,
(e.g., acquiring Matchfix and
train sets and plastic model
existing model train sets or
such as targeting emerging
Enam), the company could
kits by aggressive marketing,
plastic model kits to appeal
markets outside of the UK,
consider entering related
price adjustments, or loyalty
to the changing interests of
expanding its distribution
segments within the toy
programs aimed at retaining
the ageing customer base
network, or exploring
industry, exploring
the ageing customer base.
or attract younger
partnerships with retailers in
opportunities in different
customers.
these new markets.
types of toys, and hobby
products, or even
considering partnerships in
the digital gaming industry.
Fishbone Diagram Analysis:
Force Field Analysis’s:
Customer Resistance: Long-time customers may
Cost Reduction: Plastic materials are often
be attached to traditional metal products and may
cheaper than metal, which could lead to cost
resist the switch to plastic.
savings in production.
Quality Concerns: The board had concerns
Faster Prototyping: The use of 3D printing for
about the quality of plastic materials, which could
plastic prototypes (as demonstrated by Julia) can
impact the perception of BRD's products.
lead to quicker and more cost-effective design
iterations.
Environmental Concerns: If the chosen plastic is
Potential for Innovation: Plastic allows for more
not recyclable, it could face backlash from
intricate designs, enabling BRD to innovate and
environmentally-conscious customers and
offer unique features to attract new customers.
stakeholders.
Competitor Impact: BRD's metal-based products
Recyclability Focus: If BRD finds a way to make
have set it apart from competitors using plastic;
the plastic used recyclable, it aligns with growing
switching to plastic may impact this (USP).
environmental concerns.
Halted Production: The transition to cellular
production would require stopping production for
two weeks, which could impact short-term
revenue and disrupt the supply chain.
Efficiency Improvement: Cellular production
aims to enhance efficiency by reducing production
delays, improving coordination, and reducing idle
time through specialized cells and automated
delivery vehicles.
Employee Resistance: Employees might resist
changes to their roles or fear job insecurity during
the transition. This resistance could affect morale
and potentially hinder the smooth implementation
of cellular production.
Quality Control: Cellular production can lead to
better quality control as each cell is responsible
for a specific component, making it easier to
monitor and maintain consistent quality.
Additional Training: Providing training for
employees to become multi-skilled and work in
specialized cells may require time and resources.
Employee Multiskilling: Additional employee
training in cellular production can lead to a more
skilled workforce capable of handling different
tasks, which can be beneficial in a dynamic
manufacturing environment.
Initial Disruption: Switching to cellular production
might initially disrupt established production
processes and require adjustments, leading to
temporary challenges.
Meeting Customer Demand: By addressing
production issues and reducing postponements,
cellular production can help meet customer
demand more consistently, leading to increased
customer satisfaction.
Compatibility Concerns: Ensuring that the new
cellular production system integrates well with the
existing manufacturing infrastructure is crucial.
Compatibility issues could create problems during
implementation.
Cost Reduction Potential: While there may be
initial costs associated with the transition, the
potential for long-term cost savings due to
increased efficiency and reduced delays can be a
significant driving force.
Inefficiency: Batch production may lead to
inefficiencies, including production delays,
coordination issues, and idle time between
batches, which can affect overall productivity.
Existing Infrastructure: Batch production aligns
with the current production setup, equipment, and
processes, requiring minimal changes or
disruptions to the manufacturing facility.
Coordination Challenges: Batch production
might lead to difficulties in coordinating different
components of the train sets, potentially leading to
missed production targets and postponements.
Consistency: The established batch production
process may lead to consistent quality, as
employees are familiar with the work flow and
tasks within the current system.
Limited Adaptability: Batch production may be
less adaptable to fluctuations in demand or
changes in product design compared to cellular
production.
Production Familiarity: Employees are
accustomed to the batch production method,
which may reduce resistance, training needs, and
potential disruptions that can come with a switch
to a new production system.
Market Expectations: If the industry trend is
moving towards cellular or more flexible
production methods, staying with batch production
might result in a competitive disadvantage.
Lower Initial Investment: Transitioning to cellular
production may require a significant initial
investment in terms of employee training, new
equipment, and work flow adjustments. Sticking
with batch production could avoid these upfront
costs.
Quality Control: The inherent nature of batch
production could make it more challenging to
monitor quality consistently across different
batches.
BCG Matrix:
Key Definitions (BRD PLC):
Batch Production: A manufacturing process where items (products or components)
are produced in batches or groups, often in the same setup or production run, before
transitioning to the next item. This method can be efficient for certain types of
production but may face challenges in coordination and flexibility.
Cellular Production: A manufacturing approach where production is organized into
small, self-contained units or cells, each responsible for specific tasks or components.
This system aims to increase efficiency, reduce lead times, and enhance flexibility in the
production process.
Fringe Benefits: Non-wage compensation or perks are provided to employees by an
employer in addition to their regular salary. These benefits may include healthcare,
retirement plans, car allowances, subsidized meals, flexible working arrangements, and
other perks.
Supply Chain: The interconnected network of organizations, resources, processes, and
activities involved in the production, distribution, and delivery of goods or services from
suppliers to end customers. A well-managed supply chain is essential for efficient
operations and meeting customer demand.
Trade Credit Facility: An arrangement between a business (buyer) and its suppliers,
that allows the buyer to purchase goods or services on credit, typically with an
agreed-upon period for repayment (e.g., 30 days). A trade credit facility can help
manage cash flow and operational needs.
Share Capital: The total value of shares issued by a company represents the
ownership interests of shareholders. Share capital may be divided into different classes
of shares, each with specific rights and privileges.
Share Price: The current market price per share of a company's stock is determined by
supply and demand in the stock market. Share price can fluctuate based on various
factors, including company performance, market conditions, and investor sentiment.
Strategic Decision Making: The process of identifying and choosing courses of action
that align with a company's long-term goals and objectives. Strategic decisions often
involve evaluating various alternatives and considering the potential impact on the
organization's overall direction.
Return on Investment (ROI): A financial metric used to evaluate the profitability of an
investment. It is calculated as the net profit generated from the investment divided by
the initial cost of the investment, expressed as a percentage. ROI helps assess the
efficiency and effectiveness of investment decisions.
Diversification (in the context of corporate strategy): A strategic approach involves
expanding a company's product or service offerings into new markets or industries,
reducing risk by not relying solely on one product or market. Diversification aims to
capture new revenue streams and enhance the company's resilience to market
fluctuations.
Possible questions that can be asked ( Don't rely on these
questions to be used simply for practice):
1.) Explain two driving forces and two restraining forces associated with Brondy's
PLC considering a transition from batch to cellular production for model train
sets.
2.) Evaluate the potential impact of the decision to shift from metal to plastic for
model train sets on Brondy's PLC, considering both environmental and financial
factors.
3.) Discuss how the ageing customer base of Brondy's PLC's clockwork toys may
impact its market share and sales growth, referencing relevant concepts from the
business and management syllabus.
4.) Analyze how the founder's vision and diversification through acquisitions have
shaped the strategic direction of Brondy's PLC. Evaluate the advantages and
challenges of this approach in the context of the company's growth and
sustainability.
5.) Using the BCG Matrix framework, categorize Brondy's PLC's clockwork toys,
BRD Slotcars, BRD Three-Rail Model Railway, and Matchfix Plastic Model Kits
into one of the four product portfolio quadrants. Justify your categorization and
explain the implications for each category.
6.) Discuss the potential risks and benefits of CEO Arnold's strong relationship with
the factory employees at Brondy's PLC. Evaluate the impact of this relationship
on employee morale, productivity, and overall organizational performance.
Motivational theories:
Maslow - Hierarchy of needs
Physiological Needs:
In the context of Brondy's PLC, employees' physiological needs are addressed through
their basic wages and employment, providing them with the means to meet their basic
necessities such as food, housing, and other essentials. The case mentions that
salaries rise automatically by 3% every three years of employment, indicating a level of
financial security.
Safety Needs:
Safety needs are met through stable employment, low labor turnover, and low
absenteeism. The case highlights that employees have worked at the Liverpool factory
for over 20 years, suggesting a level of job security. The CEO's approach of engaging
with employees, learning about their family situations, and ensuring fair employment
practices contributes to a sense of safety in the workplace.
Social Needs:
Arnold's relationship-building with employees contributes to fulfilling their social needs.
By personally knowing each employee and celebrating their birthdays, he creates a
sense of belonging and camaraderie. The low absenteeism and absence of strikes
further suggest positive social interactions within the organization.
Esteem Needs:
Employees' esteem needs are addressed through the recognition of their long-term
commitment to the company. The fact that many have worked for over 20 years and the
CEO's efforts to personally interact and remember their birthdays contribute to their
self-esteem and sense of accomplishment.
Self-Actualization Needs:
The case study doesn't explicitly mention self-actualization initiatives for employees.
However, the Design Department's "Freedom Month" could be seen as a step towards
self-actualization, allowing employees to pursue individual design projects that align
with their interests and expertise.
Equity Theory - Adams
Inputs:
Employees' inputs include their skills, efforts, and experience in manufacturing toy
products.
The CEO, Arnold, is involved in understanding their family situations, remembering
birthdays, and maintaining a positive work environment.
Outcomes:
Outcomes include salaries, benefits, recognition, and job satisfaction.
Arnold's efforts to personally connect with employees and acknowledge their birthdays
contribute to positive outcomes.
Perceived Equity or Inequity:
Employees might perceive equity if their efforts and commitment align with the rewards
they receive, such as consistent pay raises and a positive work environment.
However, potential inequities can arise if some employees perceive that their inputs
(e.g., long-term commitment) are not being fairly rewarded compared to others.
Implications for Motivation:
When employees perceive fairness and equity, it positively influences their motivation
and job satisfaction.
Arnold's efforts to know employees personally and treat them with respect contribute to
their sense of fairness and equity.
Recommendations:
To enhance motivation and equity perceptions, the company could consider
implementing transparent reward systems based on merit and contributions.
Regularly communicating the rationale behind decisions related to promotions, rewards,
and benefits can reduce perceived inequities.
Limitations:
The case study provides limited information about explicit comparisons among
employees regarding rewards and inputs, which makes a direct application of Equity
Theory less clear.
Herzberg's Two-Factor Theory:
Hygiene Factors:
Job Security: The case mentions that many employees have worked for over 20 years,
indicating a level of job security.
Salaries: Automatic salary raises by 3% every three years provide a sense of financial
security.
Working Conditions: The case doesn't explicitly mention working conditions, but the
overall absence of strikes and low absenteeism suggests a relatively stable working
environment.
While hygiene factors don't necessarily lead to high job satisfaction or motivation on
their own, their presence prevents dissatisfaction.
Motivators:
Recognition: CEO Arnold's personal interactions, remembering birthdays, and giving
small gifts contribute to employee recognition and motivation.
Growth Opportunities: The Design Department's "Freedom Month" provides
opportunities for employees to pursue individual design projects that interest them,
fostering personal and professional growth.
Challenging Work: The Design Department's responsibility for managing designs and
solving production issues aligns with challenging and meaningful work.
Motivators directly contribute to job satisfaction and intrinsic motivation.
Implications for Motivation:
Focusing on both hygiene factors and motivators is essential for employee motivation
and satisfaction.
While hygiene factors prevent dissatisfaction, it's the presence of motivators that truly
enhances job satisfaction and intrinsic motivation.
Recommendations:
Continue efforts to provide recognition and personalized attention to employees, as
done by CEO Arnold.
Promote growth opportunities and challenging tasks to enhance intrinsic motivation.
Limitations:
The case study provides limited information on some factors, such as working
conditions and growth opportunities.
The theory's applicability assumes that hygiene factors and motivators are universally
valid, which may vary for different individuals.
Pink's theory:
Autonomy:
The case study doesn't explicitly mention autonomy, but some elements align with this
concept:
Design Team Freedom Month: Allowing employees to pursue individual design projects
during this month provides them with a degree of autonomy in choosing projects that
interest them.
Flexible Working Practices: The Design Department's employees have the flexibility to
work from home two days a week, which can enhance their sense of autonomy and
control over their work.
Mastery:
Design Department's Creative Projects: Allowing employees to work on individual
design projects during Freedom Month aligns with the concept of mastery. It offers them
opportunities to improve their skills, explore new ideas, and enhance their expertise.
Employee Multiskilling: The proposal to provide additional training for employees in
cellular production suggests a focus on skill development and mastery of multiple tasks.
Purpose:
Connection to Products: The Design Department's responsibility for managing designs
and solving production issues connects employees to the purpose of creating
high-quality model train sets that are aesthetically pleasing and functional.
Personal Relationships: CEO Arnold's efforts to personally interact with employees,
remember birthdays, and provide small gifts contribute to a sense of purpose and
belonging within the company.
Implications:
Emphasizing autonomy, mastery, and purpose aligns with Daniel Pink's theory and
contributes to enhancing intrinsic motivation and job satisfaction.
Providing opportunities for employees to choose projects, develop skills, and
understand the greater purpose of their work can lead to higher levels of engagement.
Recommendations:
Continue to provide opportunities for autonomy and mastery through initiatives like
Design Team Freedom Month.
Communicate the larger purpose of the company's products and the impact they have
on customers, connecting employees to the meaningful aspect of their work.