UK playthings and video games industry

 UK playthings and video games industry Article

Case evaluation

I. Macro environment

Any changes in macro environment will undoubtedly influence within the company. PESTLE is a framework to estimate external pushes (see Desk 1)

Table 1 . PESTLE analysis

FactorCurrent situationImplications



Environmental1) Restrictions in marketing to children

1) ethical and legal elements should be consumed in marketing to children; problems for company standing in case of offence Economical1) Restoration after economic depression and economic downturn 2) GDP growth

3) Industry trading deficit elevated by 40%1) rising costs and falling prices, money rate volatility etc .

2) disposable income growth

3) price competition may take place

Social1) Less spending on playthings and more confectionary, video game and consoles, kids magazines 2) Children delivery rate growth

3) Children sophistication and savvy

1) development of new markets/segments

2) market potential growth

3) educational or perhaps interactive gadget products

Technical1) Easy Internet access and large Internet penetration1) types and channels of communication with customers are shifting to digital kinds

External environment both complicates and provides fresh growth opportunities for Hornby company. Cost-effective and social forces define customer's habit. Digital occurrence and social internet marketing (SMM) really are a must currently.

II. Competitive environment

Virtually all issues may outcome from your industry.

In summary market environment it is better to work with Porter's Five Forces Style.

Potential entrants (low access):

• Boundaries to enter the toys and games market will be relatively low. Therefore , in the event local opponents appear they are really likely to require a niche sections; the more menace should be expected by overseas marketplaces when competitors take a decision to enter the united kingdom market or increase transfer volume for the UK (like Mattel or Hasbro, US owned businesses operating in the UK). •In terms of distribution stations Internet clears up physical boundaries and barriers and offers an unlimited usage of on-line gadgets and games shops of numerous producers around the globe.

Rivalry (high):

•Market rivalry is extremely intense. Hornby provides a number of good competitors at the whole market (Lego, Disney, Hasbro, Mattel etc) in addition to the doll vehicles part (Hornby as opposed to Peco/Bachmann/Dapol or perhaps Scalextric as opposed to AFX/Mattel (Hot Wheels)/Tomy/ Tyco).

Bargaining power of purchasers (medium):

•End-user customer base is definitely expected to grow (due to increase of children inhabitants in the UK) (↓ power) •Customers' throw-away income development (due to GDP growth) (↓ power) •Low cost of switching to a new brand (↑ power)

•Toys are customer goods with elastic demand (↑ power)

Bargaining benefits of suppliers (medium):

•High price in case of local production (↑ power)

•Opportunity to switch to overseas suppliers with reduced production cost exists (↓ power), nevertheless , a range of more risks occurs in this case (eg, currency level risk)

Power of substitutes (high):

•Hornby owns 7 brands and merchandise ranges: Hornby, Scalextric, Corgi, Airfix, Humbrol, Lima and Electrotren. Only railway company encounters 600 products. By customers perspective the chances of rivalry between items exist as they may encounter to issue which Hornby product to decide on. There is an implication of proper product portfolio managing to avoid potential trade-offs. •It is very easy to switch from toy merchandise to another.

3. Strategic assessment

From the strategic point of view -- how Hornby can go even more - the two Ansoff's development and Porter's generic approaches have to be employed simultaneously.

Industry development alternatives:

•Entering fresh markets while an opportunity to decrease reliance in UK revenue. •Targeting new market portion, eg busy people who have zero free time and prefer on-line searching. •Cooperation and partnership with other brands through licensing and product tie-ins.

Product development options:

•Vertical line...

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