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.
