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Question 1: What are the key success factors in the world toy industry?

(5 marks)

According to (Huang, 2014), the key success factors in the current toy industry are the following
5 factors.
(1) Developing educational, creative and engaging toys that attract more prospects. E.g. How
Lego turned a toy into an epic marketing story which led to their success of the Bionicle series.
(Young Consumer, 2005) (2) Adopt a very discipline financial control which promotes a healthy
financial structure. (3) Accepting, listening and respond to customers feedback which plays a
huge role in product development. E.g. How Lego bounced back from a 300 million loss of sales
in 2009 by creating a social media and accepting the fact that the customers own the product,
not them. (Adage, 2009) (4) Source for efficient production and high differentiation which
would be extremely beneficial in increasing the companys competitive advantage and lastly (5)
to execute and innovating research and development, retaining products competitive edge.

Question 2: What are Green Toys Key competitive advantages in the international toy market?
(5 marks)
Green Toys is a toy company that produces awesome range of classic childrens toys from
environmentally friendly materials. Their choice of approach in the toy industry is highly notable
as Green Toys uses recycled plastic materials (plastic milk jugs) which help in reducing the
amount of waste in the world. Other than being eco-friendly, Green Toys contracts with local
companies which make it easier for them to track the chemical contents of the toys better than
their competitors. The key factor of Green Toys competitive advantage in the international toy
market is how they manage to segment their customer and utilize the online approach to
promote and sell the toys before online stores were popular. Green Toys marketing team was
well aware of their customer segment which span from the age of 25 to 40 and are predominately
female who are constantly on the web searching about products and trends for their children.
http://www.sustainableproduction.org/downloads/GreenToysCaseStudy9-10.pdf

Question 3: Should Green Toys Inc. consider a higher degree of international expansion of their
products? (5 marks)
One of the best ways to grow is to capture new markets. However, such markets wont be
profitable if they were easily penetrated. Specific and effective strategies should be utilized to
triumph in this unique business environment so that companies can vastly improve their odds of
succeeding in entering new markets and vanquishing competitors.
Joseph-Armand Bombardier can be used as an effective example of why expanding should be
prioritized of the utmost importance to an organization. In 1937, Joseph invented a tracked
snowmobile bus that would be used during harsh winters in his home town. Instead of scaling up
his business with fixed costs, he became flexible and was able to shift quickly into new uses for
the technology he invented and he attained a firm position in the new market.
(Museebombardier.com, 2014)

Question 4 : If yes, which countries/regions should they target and how?


(15 marks)
Green Toys is currently very active in America, Australia and Europe. Green Toys
competitors: Mattel, Lego and Hasbro, they are the prominent brands that have positioned
themselves throughout the world and have been accepted with no major issues.
Green Toys SWOT Analysis
Strength
1. Niche market
2. Growing consumer awareness
3. Growing climate awareness
4. Healthy company structure
Opportunity
1. Participate in CSR projects. e.g. Special
Olympics, Make A Wish Foundation, etc.
2. International expansion

Weakness
1. Highly competitive market (Mattel, Hasbro,
Lego, etc)
2. Lack of international position
3. Lack of international network
Threat
1. High monetary investment
2. Cultural differences

Green Toys is strong in the toy industry because of their positioning in the niche market. In
recent years the consumers are more aware of the environmental risks pose by corporations
around the world that operates irresponsibly and unethically (Cherian and Jacob, 2012). With this
knowledge, Green Toys is operating under a healthy company structure which won the hearts of
many environmentally concerned citizens. However, Green Toys is threaten by strong
competitors such as Mattel, Hasbro and Lego who have a strong positioning and network in the
international market, which Green Toys currently do not have.

Green Toys should consider participating in CSR projects to boost their brand awareness, they
can partake in the Special Olympics, Make a Wish Foundation and so on. According to (Weber,
2008), CSR projects are believed to bear a positive relationship that influences the companys
image and reputation in a more profitable angle.

Continents, Regions and Countries

As mentioned earlier, Green Toys is currently active in America, Australia and Europe. To seize
the opportunity of international expansion, this segment will discuss about the specific continent
Green Toys should venture on in which particular region and countries.
Green Toys an authentic, high quality, environment friendly toy company which produce toys
tagged with premium pricing. With that being said, Green Toys should expand to either
developed countries or advanced countries to loss of sales due to consumers poor purchasing
power.

Among 7 continents: North America, South America, Europe, Africa, Asia, Australia and
Antarctica, Asia holds the record of the largest continent spanning 17.21 million sq miles (44.58
million km) and they are the most populated continent with 4.14 billion (Whatarethe7continents,
2014).

Based on the statistical data from (World Bank, 2013), Japan and South Korea are the 2 Asian
countries that are positioned at 3rd and 14th placing in the List of countries by nominal GDP
with 4,901,530 million USD and 1,304,554 million USD respectively. Besides that, South
Korean is also one of the top densely populated nations with 492 Population / km in their
capital, Seoul (nationsonline.org, 2014). According to CIA World Factbook, the literacy rate of
Japan and South Korea is at 99% which brings a positive impact for Green Toys international
expansion plan.

Among the 2 countries, only South Korea has a Free Trade Agreement with the United States of
America, namely Korea-US FTA (KORUS FTA). The purpose of a FTA is to cultivate healthy
business relations between countries, which simultaneously removes or lessens the trade barriers.

Market Entry Strategy: Japan and South Korea


The market entry strategy for Japan and South Korea can be broken down into 3 stages:
Exporting, Joint Venturing and Merges & Acquisition.

Stage 1: Exporting
Exporting is the most traditional and well established form of operating in foreign markets.
Exporting can be defined as marketing of goods produced in one country into another. Whilst no

direct manufacturing is required in an overseas country, significant investments in marketing are


required.

By opting for exporting, Green Toys are able to lower the risk of manufacturing in foreign
territory that hold higher risk compared to manufacturing home based. Exporting first gives an
opportunity to learn overseas markets before investing in bricks and mortar, therefore it
reduces the potential risks of operating overseas greatly.

Stage 2: Joint Venture


Joint venture is an enterprise in which two or more investors share ownership and control over
property rights and operations. This is a very common strategy of entering the foreign market. A
joint venture may be brought about by a foreign investor showing an interest in local company
by both the foreign and local entrepreneurs jointly form a new enterprise.

Join venture is beneficial for both parties because the parties involved in the joint venture shares
the risk and owns joint financial strength. However, the parties may not have full control of
management and it may be impossible to recover capital if needed. The other disadvantage of
joint venture is also partners may have different views on expected benefits which may result in
arguments on what is better for the company.

Stage 3: Mergers & acquisition


Mergers and acquisition is another strategy what is also known as an expansion strategy. This
method has been an important and powerful driver of globalization. It is found that this increased
the market power and it is a method that promotes the optimum utilization of resources with
minimal risks and also tax benefits. However, there are still risks in the M&A method. The firm
may not have the experience and expertise to manage the unit taken over if it is an entirely new
field.