Internal Analysis:1- Analysis (Please look at the example of how to do)2-Problem formulation 3- VRIO analysis (Please look at the example of how to do)4- SWOT (Please look at the example of how to do)5-Recommendations 3 are enough
example_for_internal_analysis.jpg
hasbro_r3.f19.pdf
Unformatted Attachment Preview
“Sorry!” Children love the satisfaction of shouting this while
playing the infamous board game of the same name. Whether it
was playing Sorry or crafting with Play-Doh, almost every person
in the United States has played a Hasbro game at some point in
their life. As home to some of the biggest names in toys and games
including Monopoly, Nerf, Marvel, Star Wars, Operation,
Playskool, and G.I. Joe among many others, Hasbro is a
prominent player in the toy wholesaling industry.i
Founded in 1926, Hasbro was initially known as Hassenfeld
Brothers Inc. The Polish Hassenfeld brothers, having experience
in the textile remnant business, began to make pencil boxes and
cloth zipper pouches, eventually adding pencils to their business
line as well. It was not until the 1930s that Hasbro began making
toys. While not a direct connection to school supplies, this
extension to the business proved successful in 1942 as demand for
school supplies tapered off and toys became the powerhouse
revenue source for Hasbro.ii
Hasbro
University of Nebraska Omaha
Capstone Cup
Finals
Fall 2019
Since its entrance into toys, Hasbro has become one of the market
leaders with 9.4% of the global toy wholesaling industry.iii
However, net income has declined 58% since 2016 ($533M to
$220M), hitting its lowest point since 2005.iv Couple this with
missing earnings expectations, its stock price has continued to
plummet. In fact, immediately following the earnings
announcement in the third quarter of 2019, Hasbro stock dropped
by 17.7%.v
Hasbro blames the United States–China trade war as the primary
reason it missed forecasts. However, Mattel, Hasbro’s number one
competitor, exceeded earnings forecasts and stated that the trade
war played only a minor role.vi Another big contributor to
Hasbro’s struggles is that it is still reeling from the bankruptcy of
Toys R Us. Toys R Us was an integral part to Hasbro’s sales, and
mid-2019 was the first time Hasbro began to find its footing
following this massive shakeup in the industry. vii
Hasbro’s largest direct competitor is Mattel, with a market share
of 8.9%.viii These two companies constantly compete head-to-head
and are always in a battle for higher revenues, better products, and
more market share. However, Hasbro also faces steep competition
from Lego which has more revenue than both Mattel and Hasbro.ix
In addition, Hasbro also competes with other forms of
entertainment including online video games and streaming,
highlighting a need to diversify beyond the wholesale toy industry.
Succeeding in the toy industry is no easy task. Just like the game
of Risk, crafting a strategy is vital to winning the game. Having
faced many problems, Hasbro is in dire need of developing a way
forward to not only overcome its own problems, but beat out its
competition to find a more sustainable competitive advantage.
UNO CAPSTONE CUP | ROUND 3, FALL 2019
1
Hasbro: The Game of Strategy
Hasbro
Hasbro’s mission is “to create the world’s best play and entertainment experiences.” It does this with more than
1,500 brands across three toy and game categories: franchise and partner brands, Hasbro gaming brands, and
emerging brands. As depicted in Figure 1, franchise and partner brands include Disney’s Frozen, Star Wars, and
Marvel; Hasbro gaming brands include Operation, The Game of Life, and Clue; and emerging brands include Furby,
Power Rangers, and Playskool. In addition to this wide variety of toys, Hasbro also focuses on its entertainment
labels, Allspark Pictures and Allspark Animation, which brings its toys to life through television shows and
blockbuster movies. In addition, Hasbro also dabbles in music, publishing, and location-based entertainment. x
Across all of these brands and entertainment outlets, when deciding which ones to incorporate into its business
model Hasbro looks at the brand’s storytelling and consumer-focused opportunities. If these align, Hasbro will then
conduct further analyses to decide whether or not to officially introduce the new brand to the well-established
Hasbro family.xi
Figure 1.
*Source: Hasbro Annual Reportxii
Within its business operations, Hasbro places a significant focus on corporate social responsibility. Two of its most
prominent corporate initiatives include Hasbro Toy Recycling where it attempts to reduce the number of toys in
dumps, and Toybox Tools wherein it partnered with The Autism Project to make play accessible for all kids. These
initiatives have led to Hasbro being honored as one of the world’s most ethical companies by Ethisphere and being
ranked number 13 on the 2019 Best 100 Corporate Citizens list by CR Magazine.xiii While seen as highly ethical,
Hasbro has struggled with diversity as exhibited in its leadership team. Overall, seven of the eight executives are
male, and all eight are Caucasian which represents another internal issue the company has yet to address.xiv
Financially, Hasbro has been struggling. Revenues have plateaued between four to five billion in the past five years
as detailed in Figure 2. However, net income has plummeted from 2016 ($533,151,000) to 2018 ($220,434,000).
Across the board, Hasbro has seen ROE, ROA, and ROI all decrease since 2015 which has contributed to decreasing
stock prices.xv
The consolidation of customers in the toy retail market has led to more efficient product distribution. This
consolidation has contributed to an increase in Hasbro’s ability to accurately analyze and forecast consumer
demand, allowing it to more effectively select brands and entertainment mediums. However, this also means
Hasbro is relying more heavily than before on its forecasts, namely on its predictions of the performance of
blockbuster movies. For example, Hasbro saw an expected increase in revenue from the 2019 release of Avengers:
Endgame and is placing a heavy emphasis on the success of Disney’s Frozen 2 for a boost in holiday sales.xvi
UNO CAPSTONE CUP | ROUND 3, SPRING 2019
2
Hasbro: The Game of Strategy
Figure 2
Source: Statista1
Recently, Hasbro announced the intended acquisition of Entertainment One Ltd., which is a Canadian-based
publicly traded company that produces a number of popular films, television series, and music.xvii Some of its most
prominent productions include Spotlight, Peppa Pig, and The Walking Dead.xviii This acquisition would significantly
enhance Hasbro’s film and television capabilities, adding to its entertainment resources. Relatedly, in November
2019 Hasbro also announced that it would be offering additional common stock to help pay for this acquisition.xix
Overall, Hasbro’s internal operations exhibit many strengths, however the company continues to struggle
financially which may indicate strategic missteps and/or volatile markets .
The Market
Within the toy wholesaling industry, Hasbro has the lead with 9.4% market share, but Mattel is close behind with
8.9% (see Figure 3 for a comparison). The remaining 81.7% is made up of a number of other players including Lego
and Jakks Pacific among others. In addition to these direct competitors, over the years Hasbro and the rest of the
toy wholesaling industry has witnessed increased competition from other forms of entertainment. It has become
increasingly difficult to grab children’s attention with the rise of technological entertainment including online video
games and streaming.xx While industry experts note that gaming and other forms of entertainment have now been
around for some time and aren’t necessarily taking more of the market, they also acknowledge that consumer shifts
are far from over.
UNO CAPSTONE CUP | ROUND 3, FALL 2019
3
Hasbro: The Game of Strategy
Figure 3
Source: Klosters Retailer Panel
Overall, the $28.7 billion industry in the past five years has seen an average yearly decline of 0.9%, and this is
expected to get worse with an annual five-year projection of -1.6%. This decrease is a result of a number of factors.
One of the most prominent is the decline in demand from department stores, which coupled with an increase in
vertical integration, has spelled disaster for many small companies. To remain competitive and avoid a reduction
in profit margins, companies have had to find ways to reduce costs so they can offer further discounts to large-scale
retailers and department stores such as Walmart and Target as well as online retailers such as Amazon. xxi Given the
importance of these retailers, the Chapter 11 bankruptcy of Toys R Us has sent ripples through the industry, and
many companies are still suffering.xxii As shown in Figure 4, overall brick and mortar sales are declining while online
sales are increasing, showing that large retailers are still important for the industry.xxiii
Figure 4
Source: Muller, 20181
UNO CAPSTONE CUP | ROUND 3, FALL 2019
4
Hasbro: The Game of Strategy
Last December the Wall Street Journal published an article “Toy Sorry: Why the Holiday Season May Give Hasbro,
Mattel a Lump of Coal” which predicted a tough year ending for both companies. The Toys “R” Us bankruptcy left
a large void and manufacturers are still recovering. The total revenue of the global toy market has increased year
over year (see Figure 5), though it did fall in 2018 in the U.S.
Figure 5
Source: Statista1
In addition to shifts in competition, the United States-China trade war has caused a threat to the industry. While
some companies are being hit worse than others, any company that manufactures in China is being impacted.
Hasbro in particular has been significantly impacted. Because of the inexpensive labor from China, Mexico, and
Vietnam, offshoring and outsourcing is likely to continue despite the trade war increasing costs. xxiv This trade war,
among a number of other factors such as the inverted yield curve, have also increased the fear of an impending
recession beginning in the next five years. Given that this industry is particularly susceptible to recessions and
recession fears, this presents a concern for companies.xxv
Overall, the toy wholesaling industry is faced with a number of threats and few clear options are available for the
vast number of competitors that exist. As profit margins are attacked and forecasted trends appear negative, it is
more imperative than ever to address the challenges faced within the changing marketplace. With the most
market share, albeit by a minimal margin, Hasbro must address these challenges head on. It has numerous
capabilities at its disposal, yet its net income and stock prices continue to slip downward. Hasbro is coming up on
100 years in business, but it has never faced issues as drastic as those it is experiencing now. Is it possible for
Hasbro to remain number one? How can Hasbro develop a strategy that will create a sustainable competitive
advantage?
UNO CAPSTONE CUP | ROUND 3, FALL 2019
5
Hasbro: The Game of Strategy
Resources
Utilize the case brief as well as outside resources (consider the source) to help your team build strong
recommendations for the client, Hasbro. This is meant to be used as a starting point for your research.
General Resources
•
Criss Library: https://www.unomaha.edu/criss-library/
Hasbro Resources
•
•
•
•
•
https://shop.hasbro.com/en-us
https://shop.hasbro.com/en-us/brands
https://corporate.hasbro.com/en-us/community-relations
https://newsroom.hasbro.com/
https://csr.hasbro.com/en-us
Financial Information
•
•
•
https://hasbro.gcs-web.com/financial-information
https://hasbro.gcs-web.com/stock-information
https://finance.yahoo.com/quote/has?ltr=1
Industry Information
•
http://clients1.ibisworld.com.leo.lib.unomaha.edu/reports/us/industry/default.aspx?entid=954
Industry Evolution
•
Business Wars Podcast by Wonderly: Mattel vs Hasbro:
https://www.stitcher.com/podcast/wondery/business-wars/e/59522294?autoplay=true
References
Hasbro. (2019). Corporate. Retrieved from https://hasbro.gcs-web.com/corporate.
Encyclopedia.com. (2019, October 31). Hasbro, Inc. Retrieved from https://www.encyclopedia.com/socialsciences-and-law/economics-business-and-labor/businesses-and-occupations/hasbro-inc.
iii O’Connor, C. (2019). IBISWorld Industry Report 42392. Toy & craft supplies wholesaling in the US. Retrieved
from IBISWorld database.
iv (2019). Hasbro, Inc report. Retrieved from Mergent Online database.
v Shore, R. (2019, November 1). Toymakers and trade wars: Hasbro and Mattel face off. Retrieved from
https://www.fool.com/investing/2019/11/01/toymakers-and-trade-wars-hasbro-and-mattel-face-of.aspx.
vi Duprey, R. (2019, November 3). Mattel drives past tariff troubles that sunk Hasbro. Retrieved from
https://www.fool.com/investing/2019/11/03/mattel-drives-past-tariff-trouble-that-sank-hasbro.aspx.
vii Rossolillo, N. (2019, October 16). Is Hasbro a buy ahead of the 2019 holiday shopping season? Retrieved from
https://www.fool.com/investing/2019/10/16/is-hasbro-buy-ahead-2019-holiday-shopping-season.aspx.
viii O’Connor, C. (2019). IBISWorld Industry Report 42392. Toy & craft supplies wholesaling in the US. Retrieved
from IBISWorld database.
ix O’Connell, L. (2019, September 27). Top companies revenue worldwide 2018. Retrieved from
https://www.statista.com/statistics/241241/revenue-of-major-toy-companies-worldwide/.
x Hasbro. (2019). Corporate. Retrieved from .
xi Hasbro. (2019). Investor factsheet July 2019. Retrieved from https://investor.hasbro.com/staticfiles/8dc080cb-70e3-4a4d-b351-658e9bafe783.
xii Hasbro. (2018). Hasbro annual report. Retrieved from https://investor.hasbro.com/static-files/cee88521-71dc4b58-89bd-7adb7bb04b84.
xiii Hasbro. (2019). Corporate. Retrieved from https://hasbro.gcs-web.com/corporate.
xiv Hasbro. (2019). Executive management. Retrieved from https://investor.hasbro.com/corporategovernance/management.
i
ii
UNO CAPSTONE CUP | ROUND 3, FALL 2019
6
Hasbro: The Game of Strategy
(2019). Hasbro, Inc report. Retrieved from Mergent Online database.
O’Connor, C. (2019). IBISWorld Industry Report 42392. Toy & craft supplies wholesaling in the US. Retrieved
from IBISWorld database.
xvii Business Wire. (2019, November 4). Hasbro announce public offering of common stock. Retrieved from
https://www.businesswire.com/news/home/20191104006010/en/Hasbro-Announces-Public-Offering-CommonStock.
xviii Entertainment One. (2019). About eOne. Retrieved from https://www.entertainmentone.com/about-eone/.
xix Business Wire. (2019, November 4). Hasbro announce public offering of common stock. Retrieved from
https://www.businesswire.com/news/home/20191104006010/en/Hasbro-Announces-Public-Offering-CommonStock.
xx O’Connor, C. (2019). IBISWorld Industry Report 42392. Toy & craft supplies wholesaling in the US. Retrieved
from IBISWorld database.
xxi O’Connor, C. (2019). IBISWorld Industry Report 42392. Toy & craft supplies wholesaling in the US. Retrieved
from IBISWorld database.
xxii Rossolillo, N. (2019, October 16). Is Hasbro a buy ahead of the 2019 holiday shopping season? Retrieved from
https://www.fool.com/investing/2019/10/16/is-hasbro-buy-ahead-2019-holiday-shopping-season.aspx.
xxiii Muller, L. (2018, July 27). 3 challenges for the U.S. toy manufacturers in 2018 – Tariffs, Amazon and Toys ‘R’
Us. Retrieved from https://seekingalpha.com/article/4191149-3-challenges-u-s-toy-manufacturers-2018-tariffsamazon-toys-r-us.
xxiv Shore, R. (2019, November 1). Toymakers and trade wars: Hasbro and Mattel face off. Retrieved from
https://www.fool.com/investing/2019/11/01/toymakers-and-trade-wars-hasbro-and-mattel-face-of.aspx.
xxv O’Connor, C. (2019). IBISWorld Industry Report 42392. Toy & craft supplies wholesaling in the US. Retrieved
from IBISWorld database.
xv
xvi
UNO CAPSTONE CUP | ROUND 3, FALL 2019
7
…
Purchase answer to see full
attachment
Are you having trouble with the above assignment or one similar?
We offers 100% original papers that are written from scratch.We also have a team of editors who check each paper for plagiarism before it is sent to you.