What Are the Strengths and Weaknesses of Mattel? - Paper Example

Published: 2021-08-02
558 words
3 pages
5 min to read
University of Richmond
Type of paper: 
Case study
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Mattel is one of the leading companies in the design, manufacture, and marketing of toys with a top line close to $3.64 billion every year. The company's strength lies in their market position and the attractive dividend yield. The company has maintained several of the sectors top brands like Barbie which is the best-selling doll. Barbie has risen to the top status in the US home since it was launched in 1959. Subsequently, the company also has Hot Wheels brand and Disney licenses which have been fundamental towards their financial success. Mattel has also been able to generate enough cash that covers the generous dividend which currently stands at $1.52 each share on a yearly basis. The dividend payout also looks relatively safe given the likelihood of substantial earnings.

Even though the some of the brands have perked up, there are notable weaknesses related to merchandising deals, technology advancement, and management flux. With the increasing competition from emerging companies like Hasbro, there have been quality issues and an inadvertent narrowing of the client base. Mattel appeared to be behind on essential licensing front when it lost the rights to market products based on characters from bestseller animated Disney. The company is also slow to technology and is taking longer to incorporate e-commerce and grow its brand with a corresponding online presence.

What is Mattels major goal/objective?

Mattel aims at achieving a 15 percent growth in their earnings. This will is expected to be achieved by first, continuing with the profitable practice to extend the companys current brand. At the same time, new product categories will be developed especially for boys toys and board games, areas that the company has been weak. To achieve this, there is a need to develop the toys in-house then grow the business through further investment. Thirdly, the overseas market share will be extended through increased sales to more than 50 percent of Mattels sales up from 40 percent. Finally, earning will be increased through the reduction of costs. This will be achieved through the utilization of low-cost foreign companies like China and Thailand.

Has Mattel managed to build and sustain competitive advantage? Justify your answer.

Mattel has not been able to sustain the prevailing competition in the market. The companys growth rate appears to be gradually slowing. This is attributed to the lackluster sales for its toys based on Disney latest film. The company has also failed to sustain their competitive advantage due to the lack of creativity and the notable brands being acquired rather than developed internally. Through the emphasis on the existing brands, the company runs the risk of mission out on the successful new epics.

Identify the key elements of Mattels strategy on how the company can achieve its goal(s)/objective(s).

The main elements of Mattel's strategy in achieving the 15 percent growth in earning include first, to continue with profitable practice to extend the existing brand. The second element is to develop new product categories through the manufacture of toys in-house and grow the business through further investing. Another element is to focus on the efforts of expanding sales to oversee nations and increase sales to more than 50 percent, from the current 40 percent. The final element of the strategy is to maximize earnings by reducing cost. The cost reduction is expected to align production to low-cost foreign countries such as Thailand and China.

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