Mattel Strategic Analysis

External Environment Analysis

Industry Environment Analysis

The toy industry is a diverse and unique industry with many important aspects that should be examined by those wishing to compete within it. First of all, toy sales exhibit a strong seasonal trend with most sales occurring in the third and fourth quarters which would be explained by sales for the holiday season (site). In addition to sales being seasonal it is often difficult for firms to properly determine what products will succeed and which will not before introducing them to the consumer. This is due to the target market being centered on children whose tastes are often highly unpredictable. This leads to many smaller firms success or failure being left dependant on the popularity of one or two major products. A huge failure with one product can often signal the end for a small toy manufacturer, while a great success with one product can propel a small firm to becoming a major contender in the market (site).

The toy market may seem attractive to many firms due to how large of a market it is. With $71 billion in sales globally in 2007, the toy industry holds a lot of potential for success. It is also attractive because it has shown steady growth over the years with a strong 6% growth over 2006. Approximately 36% of these sales occur in North America and about 30% in Europe (site). In North America a large portion of toy sales occur through three major retailers: Wal-Mart, Target, and Toys ’R’ Us. Although many manufacturers offer their products online and through mail order, Wal-mart still accounts for about 25% of toy sales in the U.S. (site). This means a great deal of bargaining power is held by these major retailers.

A major trend for large manufacturers in the toy industry over the past several decades involves outsourcing the production to overseas locations in order to cut costs and remain competitive. This is evident in that an estimated 90% of toys in the U.S. are...