Strategic Response that Would Help the Toy and Games Industry Cope with Globalisation Effectively - Coursework Example

Emerging Themes Project: The Toys and Games Industry By Tables of content Executive summary 1. Introduction 4 2. Literature review 5 3. Methodology 6 4. Results 4.1 Globalisation 7 4.2 Toys and game industry 9 4.3 Impacts of globalisation on toys and game industry 11 4.4 Recommended strategic response 14 5. Personal reflections 16 6. References 17 Executive summary Toy and game industry is a very competitive field. It has commanded a huge influence in the international markets. The objective of this study is to find out the appropriate strategic response that would help the toy and games industry cope with globalisation effectively. Globalisation is currently one of the most active topics. Globalisation is broad and demands a deeper research to find out its effects. The research relied on various sources in order to gain important information about the strategic response. The internet and various articles and books were the crucial sources in the research that contributed in this report. 1. Introduction Various strategies are in place for toys and games industry to apply in order to cope with globalisation. The industry is aware globalisation is trending in the current market environment. With this in mind, the management has to be aware of the cultures in different countries. They should then pay attention to the contemporary issues in marketing and management. The issues mainly relate with globalisation. Example of the contemporary issue is postmodernism. In addition, the management has to promote creativity and innovation in the corporations system. In the end, it would be easy for toys and game industry to cope well with globalisation. 2. Literature review The toy industry is trying hard to cope with various themes in the market. In her report, Ferguson argues that globalisation has resulted to production of more improved toys. The toys have felt the need to adapt globalisation for the purpose of internalisation (Ferguson, 2010, pp. 1-8). It requires the ability of toy manufacturers to show their global advocacy skills. The skills require certain marketing strategies for it to be effective according to (Toy Industry Association, 2014, p. 1). 3. Methodology The research relied on survey instrument to gather necessary information. The survey would cover a wide range of research tools such as experienced individuals and lecture modules. Gathering enough information was the rationale for using survey. The research for the report took place in most international toy industries. All respondents in the survey had adequate information on the strategies for coping with globalisation. 4. Results 4.1 Globalisation Globalisation is very broad. There are various types of globalisation, such as political, technological, economical, and educational. Currently, the world is experiencing the effects of globalisation and there are evident results of these effects. Globalisation has changed the way people conduct businesses across the world. Globalisation has made it easier for companies operating in different countries to run their businesses with much ease. It has resulted to increase in demand of various products and services due to the improved systems of transportation and communications. In addition, IT is the main reason for the positive effects of globalisation (China Labour Watch, 2005, pp. 6-23). The countries that adopted international business early have enjoyed the benefits of globalisation. The problem is that, these countries are developed. The less developed countries, which are the third world countries, are behind when it comes to globalisation. They do not enjoy its benefits. Furthermore, globalisation has caused outsourcing of third world countries by the developed countries. Outsourcing happens because the developed countries own the multinational companies that reduce the costs in the developing countries (Wes, 1996, pp. 40-60). The world currently is experiencing situations where large corporations find single nation markets to be small for them. Globalisation is the reason for these situations to happen. Big corporations can cross borders and establish businesses all over the world. Businesspersons across the world are working tirelessly to reduce costs. Outsourcing has been the main and popular solution for this problem. By making outsourcing to be effective, big corporations shift their attention to poor countries because it easy and cheap to obtain labour in those countries. Globalisation is very wide. In addition, it has attracted many controversies. The effects of globalisation started in the early 1970s. The economic field felt much of these effects. It was the basis for introduction of competitive era. Most companies nowadays want to improve their competitive margins. It is their first priority ahead of maximising their profits (Brill, 2011, p. 2). Globalisation has changed in the recent years. It has affected all aspects of human life. The aspects are social, political, economical and technological. The new globalisation is much different from the first globalisation. The increased use of IT has resulted to turmoil in divisions of labour across the life aspects. There is experience of turmoil because the traditional Keynesian theory on employment has not worked with the new globalisation. The new globalisation has forced the markets to adopt the competitive strategy. Firms have realised competition nowadays is the source of pride. These firms have to identify strategies to cope with globalisation as a way of maintaining the ever-changing consumption patterns. The consumer patterns have followed the cultural way of choosing products because the markets have adopted globalisation. Different management have restructured their systems to cope with the global economic system (US Department of Commerce Industry, 2010, pp. 1-5). 4.2 Toys and Game industry Toy industry is very developed. The industry has improved its competitive margin and their performance has been sky rocketing in the past years. Toy industry has found the EU markets as the convenient place to conduct business. EU is well known for being the largest single market place in the world. According to statistics, the toy industry owned approximately 15.8 billion Euros in the EU retail market. In addition, it owns a further 14 billion Euros in the US retail market. It owns a 4.8 billion Euros in Chinas retail market. The industry has implemented certain market strategies to help improve their income levels (DG Enterprise and Industry, 2013, pp. 2-69). Certain factors across the world have influenced the demand for toy products. External factors are the main factors. Mature markets across the world experience its population ageing. The population in these markets, especially US and EU markets, have stable number of children. In China, the government passed the one child policy to help mitigate the increasing population problem. In addition, there are high incomes in China. The factors have resulted to reduce in number of children in China and in the end, affect the demand of toys. (Little&King, 2010, pp. 1-6). The toy industry has experienced increase in competition. The increase in inventions in the IT sector has seen introduction of close substitutes. Example of the substitutes is video games, smart phones, laptops etc. Nowadays, children invest more in mature markets. Parents have opted to shift their attention to emerging markets that produce these substitute goods. Technology has seen the introduction of electronic toys, which pose a threat to the traditional toys (Linders, 2012, pp. 8-70). Experts argue that the toy industry may face an uphill task in recovering the previous demand. There has been uncertainty in the growth of toy industrys markets, especially the US and the EU. In addition, the industry is experiencing global crisis and there are emergence of new markets. It requires the industry leaders to lay down marketing strategies to increase their income levels. Experts predict a 7.5% annual growth in the toy industry, up to 2016 (DG Enterprise and Industry, 2013, pp. 2-69). The industry is a big contributor to the economy. They produce approximately 5.8 billion Euros in the markets (DG Enterprise and Industry, 2013, pp. 2-69). The industry has offered employment opportunities to many citizens across the world. Most of the companys production takes place in China. The industry has many employees in China. Most of the employment in the industry is seasonal, because demand is often seasonal. There are times when demand is at its peak, and the production team has to work for many hours to maintain the supply. The industry mostly uses seasonal employment in their retail structures. ((TIE), 2014, pp. 1-2) COUNTRY PRODUCTION IN EEUROS CONSUMPTION IN EUROS DIRECT EMPLOYEES EU 28 EU 28 TOTAL 15828.40 5,833.61 50,902 Other US 13,971.70 4,382.33 35,037 CHINA 4,802.80 16,011.30 128,012 JAPAN 5,201.10 2,200.08 17,590 The industry has organised certain regulatory conditions. They are measures that aim at improving the safety of traditional toys. The Toy Safety Directive is the body that oversees safety in the European markets. The body assess the safety conditions of each toy before placing it in the markets. 4.3 Impact of globalisation on toy markets Globalisation has significant impacts on the toy markets. The industry has faced many competitors in the end. Globalisation has allowed more corporations to participate in businesses. Most industries have opted to concentrate on domestic markets because of fear of competition, for example, India (Industrial Promotion and Technology Branch, 2005, pp. 1-31). Most toy industries lack skilled personnel who would help in understanding globalisation. It has caused the industry to miss many international opportunities in the end. In addition, globalisation has increased the rate of imports in different countries. The toy industry has failed to balance their balance of payments. They show slow response to imports, which would pose a future threat to the industry. Globalisation has caused international bodies to formulate international standards for market players across various fields, toy industry included. Most toy industries do not have institutional facilities that would accommodate the standards. It has resulted to poor product designs that would match international expectations (Farnham, 2005, pp. 69-97). Most toy industries are not adequately prepared to provide resources to advance the technological and marketing structures. Globalisation demand firms to keep their competitiveness by advancing factors such as technology and marketing. It would result to extra costs from the toy industry in order to advance these factors. Globalisation has increased the risks in the markets. Different countries across the world have their own way of regulating risks. The toy industry has to be flexible in adapting to different regulations. In addition, the number of regulatory restrictions increases due to restrictions. It has caused the toy industry to encounter protectionists who support these restrictions. The industry has to spend extra in reducing the activities of protectionists. International trade has resulted to various corporations interacting. Globalisation is the causes internalisation. It requires the toy industries to research further on methods of leveraging relationships with other businesses that participate in international trade. The toy industry is experiencing counterfeiting in various international markets. It is among the impacts of globalisation. The industry is facing counterfeit toys. Most governments are trying very hard to reduce the problem. The industry is experiencing unstable market competitiveness in international markets. There are places such as the US and EU markets where there is moderate growth. In China, there is high growth of the markets. Globalisation has seen changes in management structure. Various international branches of the toy industry, especially EU and the US, emphasises on serving the changing markets. They neglect quality assurance. It is a method of reducing costs. The management in these markets conducts their ways different from other international markets such as China. It is the main reason for unstable market conditions. 4.4 Recommended strategic response The toy industry has to build on their global advocacy capability. It would assist in coping with the effects of globalisation effectively. In addition, the industry has to improve on programs that would promote export capabilities of small players in the toy industry. It would assist in tackling with the threats of the competitors. Furthermore, improving on export capabilities will see an improvement in exports to the international market, and in the end, increase the levels of production. The industry leaders should engage various international business stakeholders. They would assist in giving the way forward for the industry in order to compete in the international markets effectively. For example, the industry leaders may engage the US department of commerce, if the industry wants to improve its American markets base. The industry should create a body that would assist in advocating on behalf of the industry in foreign countries. The body would assist in analysing the international trade requirements. The requirements are important in avoiding any legal risks. In addition, the body would assess the issues that affect the toy industry in international markets. The industry should ensure all toy companies in the world have a good relationship with the International council of Toy industries. It would create a common ground for solving global issues that affect the industry in the global stage. The industry should ensure they liaise with various international governments to ensure the safety of customers. The governments would be the best body in preventing protectionists in the international markets (DG Enterprise and Industry, 2013, pp. 2-69). 5. Personal reflections The project would assist toy industry tackle the negative effects of globalisation with much ease. It became easy to understand the various approaches useful in tackling competition brought by globalisation. During the collection of data, articles and books added more knowledge on the issue of the toy industry. I became aware that the industry in an underdog in the markets. In addition, I understood the reason people nowadays are shifting from traditional toys to more electronic toys. Globalisation played a big role in this shift. The internet came in handy when learning the extent of globalisation in the industry. I prepared my SWOT analysis for my performance. One of the strengths is the ability to connect the effect of globalisation to the production level of toy industries. In addition, the ability to conduct a successful survey is a strength. My weakness was the inability to connect the management issues which globalisation has brought. Furthermore, I lacked the audacity to evaluate business executives of the toy industry. 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