BUS 475: Thurs. April 26, 2012

On Thursday, we discussed implementing strategy in single industries. Organizational design is the process of deciding how a company should create, use and combine organizational structure, control systems, and culture to pursue a business model and strategy successfully. Organizational structure assigns employees to specific value creation tasks and roles. The control system functions to provide incentives to motivate employees and to provide specific feedback on performance. Finally, the organizational culture is the values, norms, beliefs and attitudes shared within an organization.

In 2011, Hasbro was showcased in Fortune magazine’s list of the 100 Best Companies to Work For in the United States, at number 59. The awards are based on indicators such as health care provision, work-life balance, and professional training and development opportunities. Obviously, Hasbro has been effective at maintaining a positive organizational culture among its employees and has been publicly recognized as doing such. With over 5,800 employees globally, and 3,000 just in the U.S., it must have taken the company some trial and error to get to the position they’re at now. Strong corporate cultures endure over time and are identical in different locations and different divisions; therefore, Hasbro has had to work hard to implement a corporate culture that is consistent across all of their global locations. Hasbro is an example of a firm with a flat organizational structure, as the company tends toward deference to expertise and responsiveness to customers rather than deference to seniority and rule following.

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By Jennifer Yuen Tagged

BUS 475: Thurs. April 19, 2012

On Thursday, we discussed performance and governance, with a focus on the importance of conducting a stakeholder impact analysis. Stakeholders are individuals or groups with an interest or claim in a company. They can be internal (i.e. employees, stockholders, members of the board of directors), or external (i.e. customers, creditors, investors, suppliers, etc). The company must consider stakeholder claims in developing and implementing their strategy by performing an impact analysis, which involves identifying the stakeholders’ interests and concerns and the resulting strategic challenges.

Another major topic from the lecture was the importance of ethics and strategy. Ethics are accepted principles of right or wrong governing conduct of a person, a profession, and/or an organization. Companies will often face ethical dilemmas when forming their strategy. Such dilemmas can include self-dealing, anticompetitive behavior, opportunistic exploitation, substandard working conditions, environmental degradation, and corruption.

Hasbro, in particular, is proud to have an ethical approach to doing business embedded into the company’s culture, values and day-to-day work environment. The company started a formal ethics program in 1991, when they introduced a comprehensive Code of Conduct with mandatory training for employees. In 1994, Hasbro’s Chief Legal Officer (CLO) also assumed the position of Chief Ethics Officer. I was particularly impressed to learn that last month, Hasbro was named as one of Ethisphere’s 2012 World’s Most Ethical Companies. In addition to the company’s ethical business practices, part of the reason for the honor was the announcement in 2011 that Hasbro’s major toy brands are now being packaged in more environmentally friendly containers.

By Jennifer Yuen Tagged

BUS 475: Tues. April 10, 2012

On Tuesday, we discussed corporate-level strategies such as horizontal and vertical integration. Horizontal integration is acquiring or merging with industry competitors, while vertical integration is expanding operations backward into industries that produce inputs for a company or forward into industries that distribute a company’s products. Other corporate-level strategies include strategic alliances, which are short term contracts that replace vertical integration, and strategic outsourcing, which is letting some value creation activities within business be performed by an independent entity.

If Hasbro were to pursue a strategy of horizontal integration, it would consider acquiring or merging with other toy-maker competitors such as Mattel. A couple months ago, I reported on how Hasbro had partnered with digital game-maker Zynga, the company known for creating popular Facebook games such as FarmVille and Words with Friends, to create physical board-game versions of these games. This is an example of the company’s corporate-level strategy and is a cross between horizontal integration and a strategic alliance. I haven’t heard too much about whether Hasbro has ever pursued a strategy of vertical integration, or expanded into strategic outsourcing, but I imagine they probably have, at least to a small extent. As a toymaker, they might find it beneficial and even cost-efficient in some cases to be able to control operations for their inputs and distribution of their output to retail stores.

By Jennifer Yuen Tagged

BUS 475: Thurs. March 22, 2012

On Thursday, we learned about strategy in the global environment. When deciding to go global, companies have four basic global strategies to choose from:

  1. Globalization standard – reaping cost reductions from economies of scale and location for standardized products & services.
  2. Localization – customizing goods & services to provide good match to tastes and preferences in different national markets.
  3. Transnational – a business model that simultaneously achieves low costs, differentiates across markets and fosters a flow of skills between subsidiaries.
  4. International – multinational companies sell products & services serving universal needs and don’t face significant competitors.

Another concept that I found really interesting was the choice of entry modes available for companies who want to expand globally. The basic entry modes available are: exporting, licensing, franchising, joint ventures and wholly-owned subsidiaries.

In the case of Hasbro, the company has already expanded internationally. Since 2007, the company has opened offices in Brazil, Russia, the Czech Republic, Romania and China. In 2010, the company opened offices in Peru and Korea, and in 2011, they opened an office in Colombia. Hasbro has also been targeting the emerging markets through joint ventures in Chile, Turkey, Poland and India. One of the company’s long-term goals is to establish a global market presence by developing business in key emerging markets. So far, Hasbro seems to be doing well with their international expansion plan, although the main focus of their business is definitely still on domestic sales in the U.S.

By Jennifer Yuen Tagged

BUS 475: Thurs. March 8, 2012

On Thursday, we discussed strategy and industry environment. The most interesting takeaway I got from the lecture was learning about the different types of industry environments – fragmented, embryonic, growth, shakeout, mature, or declining.

  1. Fragmented – composed of a large number of small & medium-sized companies, with low barriers to entry permitting constant entry by new companies. For example, restaurants and law firms.
  2. Embryonic – just beginning to develop when technological innovation creates new market or product opportunities. The objective is to share building. For example, solar power.
  3. Growth – first-time demand is expanding rapidly as many new customers enter the market. The objective is to maintain competitive position. For example, CFLs and LEDs for lighting.
  4. Shakeout – the objective is to survive when competition is the strongest.
  5. Mature – dominated by a small number of large companies whose actions are so highly interdependent that success of any one company’s strategy depends on the response of its rivals. The objective is to defend the business model. For example, breakfast cereals.

To relate what we learned to Hasbro, I think that the games & toys industry exhibits characteristics of several of the different types of industry environments. If I had to categorize it into one, I would probably say it is in the shakeout or mature environment just because it is definitely not in the embryonic or growth stage, as the industry has been around for a very long time and hasn’t faced any significant technological innovations that would cause rapid growth. I think that it could be considered a fragmented industry because it has low barriers to entry. It isn’t difficult to create a new game or toy and enter the market.

By Jennifer Yuen Tagged

BUS 475: Thurs. Feb. 23, 2012

On Thursday, we learned about functional-level strategies, which are aimed at improving the effectiveness of a company’s operations. The desire is to give a firm superior: (1) efficiency, (2) quality, (3) innovation, or (4) customer responsiveness. One of the most interesting parts of the lecture for me was learning about the strategies to achieve superior quality; i.e. through cost leadership or differentiation. The differentiation strategy states that strong reputation for quality allows a company to differentiate its products. The cost leadership strategy states that eliminating defects or errors reduces wastes, increases efficiency, and lowers cost structure, thereby enabling low cost leadership and increasing profitability.

In the case of Hasbro, I think the company has done a pretty good job of achieving superior quality through the differentiation strategy. Hasbro has a great reputation for quality because it fulfills both dimensions – reliability and excellence. Even though the company is facing challenges right now with coming up with products that are attractive and relatable to kids today, I think the reason that Hasbro has been around for so long is because the company has been able to maintain a reputation of quality and excellence. Consumers associate the Hasbro brand name with superior quality and would pick up a Hasbro product over a similar product that didn’t have the brand name. The brand name is definitely something that Hasbro needs to leverage and take advantage of in their design and marketing of products.

By Jennifer Yuen Tagged

BUS 475: Thurs. Feb. 16, 2012

On Thursday, we learned about the importance of conducting an internal analysis for a company. An internal analysis pinpoints the strengths and weaknesses of the organization and includes assessments of the firm’s resources and capabilities and distinctive competencies. In order for a company to build and/or sustain a competitive advantage, the company must achieve superior efficiency, quality, innovations or responsiveness to customers. A company is efficient if they require fewer inputs to produce given output. They have achieved differentiation through quality if customers perceive that a product’s attributes provide higher utility in excellence and reliability. Companies differentiate themselves through innovation through their products or processes. Finally, companies have a high degree of customer responsiveness if customers attribute more utility by a company creating differentiation with competitive advantage.

In the case of Hasbro, the company has aimed to achieve competitive advantage by differentiating itself through the innovative games and products they offer. As stated in their 2010 annual report, their success is dependent on continuous innovation in their entertainment offerings, including both the continuing development of new brands and products and the redesign of existing products to drive consumer interest and market acceptance. While some of their toys and games have become dated or out of style, the company is still pursuing other ways to renew and regenerate their brand name with consumers. For example, two of the most recent news stories I’ve found on Hasbro have mentioned how the company is teaming up with Zynga, which is a digital game maker that created the popular Facebook games FarmVille, Mafia Wars, and Words with Friends, to transform these digital games into physical board games. Hasbro also recently re-introduced some of their popular older board games, The Game of Life and Monopoly, with iPad and iOS integration, to appeal to tech-savvy consumers. Consumers can download apps from the App store, and use their iPads when playing the actual physical board games. For example, with The Game of Life, the app turns into a digital spinner that can be placed in the middle of the board game and substituted for the physical spinner. These actions are examples of Hasbro trying to maintain relevance in an industry that is constantly being reinvented due to technology.

By Jennifer Yuen Tagged

BUS 475: Thurs. Feb. 9, 2012

On Thursday, we learned about the importance of performing an external analysis in order to identify strategic opportunities and threats in an organization’s operating environment. In order to perform an external analysis, you must understand the environment (the industry vs. the sector vs. market segments). One of the most effective ways to analyze a company’s external environment is to use Porter’s Five Forces Model, which I described in my last blog.

Another factor of the external analysis is the Industry Life Cycle Analysis, which analyzes the effects of industry evolution on competitive forces over time. There are five distinct life cycle stages:

  1. Embryonic
  2. Growth
  3. Shakeout
  4. Mature
  5. Decline

In the case of Hasbro, I think it’s pretty safe to place the company in the Maturity stage. In mature industries, the market is saturated with little or no growth. Market share competition also leads to shrinking prices, price wars and declining profits. Surviving companies are efficient low-cost, have strong customer loyalty, and/or are strongly differentiated. Hasbro, by nature of being primarily a games & toy company, faces strong competition from other toy manufacturers who may come up with products that are more original or innovative. Success in the market is based heavily on meeting consumer entertainment preferences and on the quality of products manufactured. Hasbro must also deal with the phenomenon that many children have been moving away from traditional toys and games at a younger age and the array of products and entertainment offerings competing for the attention of children has expanded. In other words, “children getting older younger.” The company has recognized this stagnant growth and is making attempts to focus its brand blueprint on “continuously re-imagining, re-inventing, and re-igniting our brands.”

By Jennifer Yuen Tagged

BUS 475: Thurs. Feb. 2, 2012

During the first week of class, we learned about the importance of understanding a company’s strategy, vision, values, and business model. Strategy is the set of related decisions that drive, pace, and frame the evolution of an organization. When developing their strategy, companies must consider such factors as leadership, competitive advantage and goals. In order to achieve superior performance, companies must have a competitive advantage (or better yet, sustained competitive advantage, that will allow the company to maintain profitability for a number of years).

The company I will be following is Hasbro. Hasbro is the #2 toymaker worldwide (second only behind Mattel Inc.) and specializes in children’s and family leisure time products and services with a broad portfolio of brands and entertainment properties. Because we learned about analyzing a company’s strategy this week, I thought it would be interesting to begin my research of Hasbro by looking into their strategy and mission statement.

Hasbro’s strategy revolves around the objective of continuously re-imagining, re-inventing, and re-igniting its brands through a wide range of innovative toys and games, entertainment offerings, and licensed products, ranging from traditional to high-tech and digital, under well-known brand names such as TRANSFORMERS, PLAYSKOOL, NERF, LITTLEST PET SHOP, MY LITTLE PONY, G.I. JOE, TONKA, MILTON BRADLEY, PARKER BROTHERS, CRANIUM and WIZARDS OF THE COAST.

The company’s mission statement is: “The heart of Hasbro’s business is making great games, toys, lifestyle and entertainment products that are enjoyed by people of all ages worldwide. Hasbro intends to be the number-one company in the toy and game industry; the leading provider of play; and the number-one marketeer, pioneer and partner to all channels and all customers.”

By Jennifer Yuen Tagged