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Parameter Intensity Reason

Fixed Costs Moderate High costs involved in initial mould design while outsourcing
will enable in reducing the cost of production
Size & share of
competitors
Low Strong players in the industry with well established products
- Mattel (8.4%), Hasbro (5%). So number of player would be
high
Industry Growth Moderate A steady growth rate of 4% per year
Exit Barriers Moderate Directly related to fixed cost. In case of outsourcing the exit
barriers become low while in in-house production it is large
Capacity Expansion Low Depends on mould procurement and hence expansion can
be done in small increments also
Product differentiation High Rising fad toys shows an opportunity for new entrants.
Imitation of products is easy
Competitive Rivalry: High
1. Toy industry
Parameter Intensity Reason
Economies of scale Low Majority of the toys are manufactured in China. Moreover
decreasing life cycle of toys leads to lower reliance on
economies of scale
Product Differentiation High Rising fad toys shows an opportunity for new entrants.
Imitation of products is easy
Capital Requirements Low Outsourcing of manufacturing has considerably reduced the
production cost. Design ideas more important
Switching costs Low Low capex hence low switching costs
Cost Disadvantages
independent of scale
Low Design ideas are more important which can give a great
advantage to the new entrants
Expected Retaliation Moderate Established players have good tie-ups and established product
lines. But fad toys now playing a key role in industry
Threat of new entrants: Moderate-High

Buyers Power: High
Parameter Contribution to
power
Reason
Importance of industrys
product to the quality of the
buyers product
High Presence of alternatives in the market has resulted in a demand for better quality
products with educational value and improving creative thinking
Product differentiation

High Rising fad toys shows an opportunity for new entrants. Imitation of products is easy

Price sensitivity Moderate Quality is given importance and presence of alternative entertainment will result in
moderate price sensitivity
Products as a fraction of
their cost
Low Products do not form a substantial part of the buyers cost
Threat of Substitutes: High
Parameter Contribution
to power
Reason
Rapid Innovation

High Demand for fad toys require rapid design innovations. Presence of
alternatives in the market has resulted in a demand for better
quality products with educational value and improving creative
thinking.
Substitutes: Electronic products, Cinemas, Games and all other sources of recreation
Suppliers Power: Low

Parameter Contribution
to power
Reason
Concentration of
suppliers
Low Plastics and paints are a very common industry hence raw materials can
be easily procured. Moulds also seemed to be easily procurable
Product differentiation;
Criticality of suppliers
goods to industry
high Though product differentiation is high the basic ingredients used are the
same
Importance of industry
to the supplier groups
Low Plastics and paints find use in wide variety of products including
construction, automobile and other manufacturing industries
Presence of substitutes
for suppliers
Low There was no viable substitute to the materials the suppliers provided
Threat of forward
integration
Low Raw materials were a critical component . But it was only a small part of
the use of the material which is used in variety of industries and products
Switching costs Medium to
High
Low capex hence low switching costs
Plastics, paints, moulds
2. Industry Attractiveness evaluated
Industry is unattractive since the whole industry is
now hinged on fad toy and strong competition from
other means of recreation like electronic products,
video games.
Competitive Rivalry: High
2. Children/Teen recreation Industry
High competition from various recreational options like
Cinemas, Television, Sports and Video games and Toy industry.
Well established players present in each with high brand
image hence competitive rivalry in the industry is too high
Threat of new entrants: Moderate

A new technology can transform the industry like television,
movies and videogames killed the predecessors. But
established players in the industry like sports still hold a huge
share of market
Buyers Power: High
Threat of Substitutes: Low
Substitutes: After school activities, studies
The change in technology and life style of people can have a
great impact on the mode of recreation chosen.
Understanding the current trends of shorter spans and instant
gratification is essential in the industry. Hence Buyers power is
extremely high
Recreation is an essential activity of kids and teens and the
threat from substitutes will be low. The fad and whims will
only result in a change in the recreation style used
Suppliers Power: Moderate
All recreation activities are diverse and so are its suppliers.
Technology enabled recreation activities have a greater
dependence on the suppliers as they have specific parts like
chips. Non-technology dependant industries like toys and
sports have low supplier dependence

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