Porter’s five forces analysis in Hasbro company

Introduction

Production of entertainment products across the globe has gained high popularity among the investors where the industry has attracted significant investments. Further, the current technology has initiated substantial changes in the industry were more practical and modern entertainment products are enhancing the production of entertainment and toy firms. One of the popular toys and Entertainment Company in the US is the Hasbro Company that has been the leader in the production of toys and entertainment products during the 20th century (Quelch, nd).

Nevertheless, the stiff competition, customer demands and cost of production have affected the market performance of the firm across the US market. Due to the critical challenges, the Pierre Group should consider to invest with the company and utilize the eminent opportunities in the toy and entertainment industry. Through identifying the possible risks facing the operations of Hasbro Company as well as developing strategic approaches that could be utilized to curb the issues, this paper will avail a reliable proposal to the Pierre Group on the possibility of acquiring 10% of the Hasbro firm.

Hasbro Company and entertainment industry strategic analysis

Hasbro toys and entertainment company is currently struggling with various market and operation problems that pose heightened financial risks to the business operations of the company. Further,  market changes in the entertainment industry have facilitated potential impacts on the returns earned by the firm across different investment ventures. The stiff competition posed by the other entertainment firms as well as consumer conviction power is some potential risks affecting the effective performance of the company in the entertainment industry(Sadgrove, nd). Relevancy of the tools utilized to counter the poor performance of the company in the global market has proved inefficient. Thus, the firm is still struggling to achieve better market popularity.

Moreover, the lack of essential capital facilitation to enhance diversification of profitable business operation in the company is a critical challenge inhibiting effective business performance and growth. According to the recent financial reports availed by the company, the total revenues generated during the 2018 fiscal year amount to, $ 4.58 billion a decline by 12 % from 2017 value of $ 5.21 billion. On the other hand, the net income achieved from the 2018 operations declined by 49% % from $ 397 million to 202.2 million. The figures one the revenues and net income generated for the two years reflect the unstable financial performance of the company in the toy and entertainment industry(Clarke et al., nd). Additionally, the market popularity of the company depicts declined consumer satisfaction and poor adherence to market trends.

Porter’s five forces analysis

Using Porter’s five forces analysis of the Hasbro company business, I would be able to identify the potential threats affecting the company as well as the essential opportunities and strengths that the firm can focus on to improve its current performance. Further, the analysis process will avail the relevant strategic measures that can be used to counter critical issues during future operations (Graetz wet al., pg. 590). Establishing the current competition level in the entertainment industry as well as highlighting the substitution alternatives in the market, I would enable the Pierre Group to develop a reliable business investment approach. Developing key bargaining influence of the customers in the global market I will assist in generating cultivating customer relation measures that will facilitate the business performance.

Levels of competition

The toys and entertainment industry is currently experiencing intense competition that influences the companies in the market to enhance the production, marketing and consumer satisfaction ability to counter the eminent competition. Hasbro was a famous toy generating firm until the onset of the second millennium, where the emergence of new and potential companies in the industry challenged her monopoly impact on the market. Currently, the market share of Hasbro in the North American market is approximately 28.64 %, and the international market share grew to 43.41% depicting declined growth in the home market and increased growth on the global market. On the other hand, the key Hasbro competitors increased both global and local market share. Lego, Mattel, Jakks, MAG Entertainment Company, Leapfrog, Vetch, and Play Mobil are the key competitors of the Hasbro toys and Entertainment Company. Relatively the market share controlled by Mattel Company in the North American region is 57.24%, LegoCompany increased its market share during 2019 in comparison to the 2018 market share by 16.67%. The competition posed by the competing companies in both the American and global market is a potential challenge affecting the financial performance of the Hasbro Company in the market.

Threat of substitution

Currently, there are different toys and entertainment companies in both the US and global market; hence the products generated by Hasbro Company face stiff competition in the market and are prone to substitution. Substitution possibility of the toys, as well as the electronic games produced by the Hasbro, is very high and the firm ought to determine necessary measures that they can utilize to curb the relative substitution likelihood in the market(Andersenet al., nd). The key competing companies to the Hasbro toys and entertainment company are the key producers of the major substitution products in the market thus, through initiating measures that regulate the competition the firm can control the possibility of substitution in the market.

Supplier power

Most supplies used by the Hasbro Company are raw materials such as paper, plastics, cardboards, and electronic designs and graphics. To facilitate effective regular production of the necessary products in the firms, the Hasbro relies on the suppliers who avail relevant raw materials to the firm. The influence of suppliers in the business operations of the company determines the successful production in the long run. Generally, suppliers have the potential to affect the production level achieved in Hasbro Entertainment Company as well as control the availability of demanded products in the market.

Consumer influence

The customer demands in the market effectively influence the commodities produced in the Hasbro Company and advise the production of profitable products to be sold in the market. Further, market changes in terms of taste and preferences affect the purchasing ability of the consumers in the market. Current demand for technologically designed products has facilitated electronic production in the Hasbro Company (Porter et al., nd). Through developing regular market researches, the company can effectively identify the current market changes as well as implement the relevant production approaches to satisfy consumer needs. Moreover, cultivating strong customer relations can enhance customer loyalty and increase shopping volumes made by individual customers.

The threat of new entrants

The entrance of new companies in entertainment products production and trade in the American market is a significant threat to the existing companies in the industry. Since the new companies will come up with new and modernized products than the real commodities in the market, competition is expected to increase and the existing firms ought to introduce efficient and customers satisfying products (Louche et al., nd). Hasbro, as one of the existing firms in the entertainment products generation and sell, is under potential threat of substitution after entry of anew and competent company in the American market. Moreover, the current technological innovations have availed various opportunities, such as the production of electronic entertainment products that new companies can venture in and improve the quality of products sold in the current market. Since Hasbro Company is focused on the production of physical toy designs introduction of electronic models would increase the competitive advantage of any new firm in the industry. Further investing in the production of wide-ranging electronic commodities for the entertainment purposes the Pierre Group can enhance the productivity of the Hasbro firm in the industry.

Eminent risks identified in the analysis

The possible risks identified across the study conducted can facilitate declined market performance of the firm in the industry as well as affect its survival in the industry. Some of the potential risks identified include, stiff competition, the threat of substitution, the threat of entry of new firms, poor customer relations and satisfaction, declined supplier cooperation, poor future planning and market prospection, and defective decision making processes (Yang et al., 35). For instance, the challenges posed by competition eminent in the entertainment industry can reduce effective market performance as well as the revenues earned by the Hasbro Company. Moreover, poor relations between the firm and its suppliers can reduce the efficiency of routine business operations as well as returns made. Further, poor planning and future prospection on the business operations can decline the ability of the company to address the consumer utility since the quality of their commodities is deficient in serving the desires of the customers in the market. Generally, the decision making processes of the firm should be reviewed to enhance the production of products that will suit the consumers’ desires in the current market.

Possible strategic risks mitigation measures

Fortunately, the challenges encountered by the Hasbro Company can be adequately be addressed; however, via implementing strategic actions to counter the eminent problems as well as develop strong future guidelines on the operation of the business. Currently, the sales revenues earned byte Hasbro Company have declined compared to the previous annual earnings depicting that there have been decreasing customers interested in their products. Therefore, the firm can focus on cultivating customer interest and loyalty, thus, improving the possible revenue earned(Hillson et al., nd). Through establishing intensive market research programs, the company can identify the various aspects that motivate consumers to purchase entertainment products and incorporate the identified features in their products. Further, developing reliable marketing approaches the company can enhance its popularity in both the American and global market.

Developing better customer relations as well as supplier relations Hasbro Company can increase the consumer trust as well as improve the provision of supplies hence, facilitating better operations and performance. Through increasing, financial investments in the firm Hasbro company can diversify its production processes and improve its annual return in the market. Further, the firm can effectively counter the threat of stiff market competition as well as the entry of new firms by focusing on technological entertainment products. Regular updating of the entertainment products can increase the reliability of the commodities produced as well as maintain customer confidence(Soltanizadeh et al., nd). Investing in innovations the entertainment firm can develop a new taste for both technological products as well as toys; thus, influencing the consumers to purchase the products on a regular basis. Identification of the possible opportunities in the toys and entertainment industry as well as taking advantage of the business niches Hasbro Company can increase its business operations as well as enhance the level of revenues earned. Developing effective business plans as well as prospecting on the possible market canes the Hasbro Company can determine the most effective methods they can utilize to remain relevant in the changing market.

Conclusion

In conclusion, the essential challenges experienced within a firm have negative impacts on the production as well as the market relevance of the company. Via identification of the risks facing a particular company, one can develop reliable strategic approaches that can be used to improve the performance of the company. For instance, Hasbro Company is experiencing various business threats that can affect its regular performance as well as future survival in the entertainment industry. Developing key mitigation measures that can address the problems eminent in the company, better and effective production can eventually be achieved.

Work cited

Sadgrove, Kit. The complete guide to business risk management. Routledge, 2016.

Clarke, Brian, et al. “Strategic management accounting: CPA program.” (2019).

Andersen, Torben Juul, and Johanna Sax. Strategic Risk Management: A Research Overview. Routledge, 2019.

Hillson, David, and Ruth Murray-Webster. Understanding and managing risk attitude. Routledge, 2017.

Soltanizadeh, Sara, et al. “Business strategy, enterprise risk management and organizational performance.” Management Research Review (2016).

Louche, Céline, and Samuel Idowu. Innovative CSR: From risk management to value creation. Routledge, 2017.

Yang, Songling, Muhammad Ishtiaq, and Muhammad Anwar. “Enterprise risk management practices and firm performance, the mediating role of competitive advantage and the moderating role of financial literacy.” Journal of Risk and Financial Management 11.3 (2018): 35.

Graetz, Geordan, and Daniel M. Franks. “Conceptualizing social risk and business risk associated with private sector development projects.” Journal of Risk Research 19.5 (2016): 581-601.

Quelch, John A. “Companies Need to Start Marketing Security to Customers.” (2016).

Porter, Michael E., et al. HBR’s 10 Must Reads 2018: The Definitive Management Ideas of the Year from Harvard Business Review (with bonus article “Customer Loyalty Is Overrated”)(HBR’s 10 Must Reads). Harvard Business Press, 2017.

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