An Analysis of Toys and Games Industry in the Philippines

In Partial Fulfillment of the subject Applied Business Economics Program

San Beda University

Professor:
Mr. Jonce Mendoza

Submitted By:
Flores, Monica
Leaño, Danielle
Lim, Merari
Macaradi, Normidah
Salazar, Phoebe V.
Ticman, Francis Miguel
Villamor, Celie Mae L

Date: November 25, 2019

EXECUTIVE SUMMARY
 I. BACKGROUND AND HISTORICAL ACCOUNT OF THE INDUSTRY

A. WHEN AND HOW DID IT START IN THE PHILIPPINES

According to the research, children’s toys and games constantly grow in the Philippines.

With the advancement in technology happening in time, most toys are more advanced then

computers were two decades ago. Video games are also being used by younger children.

Children became more aware on how to play and use technologies recently. Children change

rapidly. They are more influenced than before. There’s no definite time when and how toys and

games generally started, but specific toys and games in the Philippines could be known, but only

in each specific toy and games. Just like the history of the famous toy in the Philippines is the

yoyo. It really started in China. The yoyo is supposed to have originated from Ancient China and

Ancient Greece even though we don’t have clear evidence about the Greek origins of the toy.

The Ancient Chinese yoyo represented the starting point for the later Diablo and the regular

yoyo. Its newer “yoyo” name came from the Tagalog tribe language from the Philippines

meaning “come-come” and was brought by the Pedro Flores (Sebastian, 2019). While in games,

it could vary. It may be traditional or technological. Traditional games in the Philippines include

Tumbang Preso, but it cannot be sold because it only needs your body and fellow playmates.

Technological games are play station games which can be sold in stores. The history of the

PlayStation begins in 1988 as Sony and Nintendo were working together to develop the Super

Disc. Nintendo was dominating computer gaming at that time. Sony had not yet entered the

home video game market, but they were eager to make a move. By teaming with the market

leader, they believed they had a good chance for success (Bellis, 2019). Children do really loves

toys and games as do their playthings and so does the market make them change. If you’re in the
business of toys, it can be near impossible to stay on top of all the shifting tastes and trends while

making sense of retailer consolidations and closings (The NPD Group, Inc., 2019). Toys and

games were not limited through inventions by technology. It could be invented and discovered

from art, hobbies, and likes of people. Just like clay which is an art from dirt before, cars which

most of the boys like, and even sports such as basketball and volleyball. These toys and games

can be seen in stores which are innovated in smaller or idealistic way for kids. Clay which is

originated from people who first began to fire clay in China and Japan about 14000 BC.

Probably they started by lining baskets with clay so they would hold water better, and then they

started leaving off the basket and just making clay containers. They may have used these early

clay pots to ferment fish, or maybe to make beer, or both. Now it has been innovated for kids to

use it as a toy and play for with colors on it. The cars which we use daily for transportation has

been innovated by the toy stores and distributors. They use it as a toy for kids who loves cars.

Toys and games may not have generally definite timeline of how it has been started, but it came

from different aspects of the world as it continues to grow rapidly in every country, including

Philippines.

B. SIGNIFICANT PERSONALITIES AND FIRMS INVOLVED IN THE INDUSTRY

There are numerous firms that are involved in the industry of toys and games in the

Philippines. This paper will only name firms that have a big aspect of selling in the country. It

will also include the companies who supply for toys and games in the Philippines. First firm that

is widely known is Toy Kingdom. Toy Kingdom has plenty of toy stores in the Asia-Pacific

region. It is seen in SM Malls nationwide, inside SM Department Stores and in SM

Supermarkets, Hypermarkets, and Save More. Second is Toys R’ Us. 2. It is best known as the
“World’s Greatest Toy Store.” The international specialty toy retail brand was officially launched

in the Philippines in June 2006 under the management of Robinsons Toys, Inc. Third is the Big

Boys Toy Store. It strives to be a full line Hobby and Toy Store. They carry products that satisfy

the young at heart. Fourth is Comic Alley. It is a chain retail store and is a pioneer in selling

Anime Specialty products in the Philippines. Fifth is Hobime Toy Shop. It has been serving the

Filipino, and some international, toy enthusiasts since the year 2009. They carry brands like

Bandai, Banpresto, Megahouse, Goodsmile Company, Kotobukiya and many more. Sixth is

Great Toys online or Philippine Registered Company GToy’s marketing. This company is

committed to be the leading Philippines online Toys and Sports Superstore.Founded in 2001,

GreattoysOnline.com now has five retail stores, two eBay stores which are GreattoysOnline and

GreattoysOnline-com and their main online website www.GreattoysOnline.com to serve all

customer needs. Seventh is Hobbes and Landes. It is a unique specialty store created to enhance

precious family moments and reminisce a playful childhood. Some of the toy suppliers in the

Philippines are 3 Kids General Merchandise in Las Pinas City, 3ACE Supermart, Inc. in

Zamboanga City, 3JS Toys in Western Samar, Academy Plastic Model Toy in Cavite, Aeroe

Games and Gadgets in Cainta, and All Value Holdings in Muntinlupa. There is also Toyz Hauz

Company which is a retail toy products store in San Nicolas, Manila. Keywest Internationale

Sales that is a trading and Distributor Company located in Quezon City. Retail toy stores in San

Nicolas, Manila include Keigo Toy Haus, Gophee Toy Haus, El Toro Toy Haus, D.S.Q.P Toy

House, and Consuelo Retail Toy Products. While in Tondo, Manila, it include Saidamen Retail

Toy Products, Natividad Retail Toy Products, and Michael Toy Store. Some toy stores in Manila

are Corazon Toy Accessories and 8MB Enterprise-Selling Merchandise Toy. These are just few

of the firms involved in the toy and games industry of the Philippines.
A. SIGNIFICANT EVENTS, MAJOR BREAKTHROUGHS AND MILESTONES OF

THE INDUSTRY

The Philippines has had history on toys and games from generation to generation to

generation. The widespread of this sensation has become a large scale, especially with the

present generation, Generation Z. The Philippines has had a history of traditional games such as

Luksong Baka, Luksong Tinik, Patintero and the like has become an important event in the

lifestyle and also in the growing up stages of Filipino children. These traditional games became

common to children as they learn this by playing on the streets of their hometown (Autriz, et al.

2016). This has become and event and milestone for Filipinos as this becomes a part of growing

up of each and every generation. Traditional games has become a major factor in relationships

with families, the community and the society. According to Mella (n.d.), parents should teach

their own children to further narrow the gap between parents and children. Filipino games and

toys were a source of entertainment back then when there was no technology in the past years.

Generations has passed, and the phenomena has become more modern and technology

has made its way into toys and games in the Philippines. Generation Z has become exposed to

online applications, mobile games, and it is now a rare occurrence to see this generation to play

traditional toys and games. According to Fasttrack IT Academy, mobile app development has

become a widespread amongst Filipinos because of the internet. Mobile application programmers

and developers have become inspired by just simply watching videos about developing mobile

applications — all because of the internet. The future of mobile applications in the Philippines

has become a large scale, and is now making these mobile applications into sports and lessons

for mobile users to learn. The Filipinos has made these mobile games and applications a
popularity. Applications such as Twitter, Instagram, and Facebook are now popularized by the

Filipino community. As for games, Mobile Legends: Bang Bang, Call of Duty Mobile, Rules of

Survival and the like made it on its list for popular games in the Philippines.
II. INDUSTRY PROFILE

A. WORLD INDUSTRY TRENDS

The Toy and Game industry as the majority know has been growing for the past few

years, and it has been indicated in the report of growths and trends by Mordor intelligence

(2019), that the Toy and Game industry will still continue to improve as for the reason of the

rise of popularity rate, and also because of the observation of movement and likes of children,

that results in being most likely to have more fun with toys, such as plushies, and also by

playing certain video games.

The rise of technology and its influence plays one of the most important or vital role on

the rise of the Toy and Games industry. It is both good and bad for the industry itself for

technology itself is promoting video games, which is entirely included in the toys and games

industry, and it also plays a huge role, for these so-called video games are being supported to

rise by technology itself. Wherein technology also expands with the help of these video

games, it is also found in the report of Toys and Games trends analysis report by

GrandViewResearch (2019). They have indicated that the use of technology wherein to play

video games is very casual now in this generation because it is very accessible and that they

could just play with their phones, and this is just not a trend for children, but also for the

adults.

Because of the sudden rise of consumer needs and wants, the varieties of products that

are being produced are also trying to be at par with the rise, it is indicated also in the webpage

of Mordor intelligence (2019), that having technology on the side of the Toys and Games
Industry is a huge factor, for the sales of toys, and other video games are based on characters

that can be seen in movies or television shows, which is a huge boost on advertising because it

can be seen in the part of a person’s everyday life.

Figure INDUSTRY
A. STRUCTURE OF THE LOCAL 1. Exports in 2008

Figure 2. Exports in 2017

Food & Beverages Textile & Garments Machinery & Electronics Others

Food & Beverages Textile & Garments Machinery & Electronics Others

The toys and games industry are a part of the manufacturing industry where based on the

data it shares 24% of the total Philippine exports in 2008 and only garnering 10% in 2017. It

can be deduced that the production of traditional toys has decreased throughout the years.
 The exports of Machinery and Electronics show a significant increase going from 66% in

2008 and 75% in 2017. In this context we can say that traditional toy manufacturers are

leaning towards technological advancements to keep up with the digital world.

A. BASIC DEMAND CONDITION

Basic Demand
Figure 3. Basic Demand Condition by Age
Condition

According to Euromonitor International’s report in the toy and gaming industry in the

Philippines, last 2014-2018 they offered a report on a comprehensive guide to the size and shape

of the market of toy industry at a national level. The products provided by the toy industry

includes the production of action figures and accessories, arts and crafts, baby and infant,

construction, dolls, dress p and role plays, games and puzzles, vehicles, other traditional toys,

outdoor and sports, plush, pre-school, remote control toys, ride on vehicles, educational toys and

etc.
 Figure 3 shows the demand of toys and games in the Philippines by age category. As

seen from the figure above, the 25-34 years of age has the most percentage with the usage of toys

and other recreational gaming materials while the ages ranging to 55-64 years of age has the

lowest percentage when it comes to the usage of toys and other recreational gaming materials.

Figure 4. Basic Demand Conditions by Gender

Figure

4 shows the demand of

toys and other gaming

materials

based on gender. As

seen from above,

results are close

enough from each

 Figure 5. Basic Demand Condition by Income

other but the majority of the demand of toys came from the male population which has a

percentage of 52.6 percentage while the females has 47.4 percentage.

Figure 5 shows the demand of toys and gaming materials based on the user’s income.

The figure shows that the highest percentage which is 52.53 are the users with low income, the

44.28 percentage is for the users with medium income and while the remaining percentage of

3.19 are the users with high income.

Price and Income Elasticity

Price elasticity is defined as the percentage change in consumption in response to 1%

change in price. It is usually negative indicating that when the price goes up, consumption goes

down and vice versa. Income elasticity is usually positive indicating that when income goes up,

consumption also increases. The greater value of income elasticity, the more sensitive is demand

to income change..
 Figure 6. Revenue of Toy Industry in 2019

The figure above shows that the revenue of Toy Industry in the Philippines in 2019 is

roughly $150 million. Ranking the Philippines #65 in overall ranking in toy industry. All

monetary figures refer to the annual gross revenue and do not factor in shipping costs. According

to the statista.com, revenue is expected to show an annual growth rate (CAGR 2019-2023) OF

12.9% Figure 7. Average Annual Revenue Per. Paying Users

resulting in a market volume of $243 m by 2023. The market’s largest segment is DIY, Garden

and Pets with a market volume of $48 m in 2019.

 The

figure above

shows the

measure the

factors that are

contributing to the industry’s overall revenue. Calculating ARPU is a great way for a business to

continuously track their annual growth progress. It also measures the amount of money that an

industry can expect to generate from an individual paying customer. It’s calculating by dividing

the total revenue to the total number of users.

Substitutes

According to Will Kenton (2019), a substitute or substitute good in economics and

consumer theory is a product or service a consumer sees as the same or similar to another

product. Substitutes play an important part in the market place and are considered a benefit for

consumers. As the years passed by threats has come to the toy and games industry. Substitute to

toys such as tablets, computers, smart phones which offers gaming within their technological

platforms. This phenomenon urged the toy industries to compete with the emerging digital device

alternatives. As a result, to this, the profit margins of the more traditional products is

significantly lower, adding to the need to sell more units per product to make profit in today’s toy

industry.

Another major factor for the toy industry is that children or the users at different ages have

shifted preferences. Young children are expecting more stimulation from their playthings than
before to Figure 8. Penetration Rate capture and hold

their attention. The completive rivalry in the toy industry is fierce and diluted with numerous

alternatives popping up every day, with new platforms arising continuously within this business

industry.

Rate of Growth

Figure 8 shows the penetration rate or the percentage of your target market that you

reach with a product, service or brand in a period of time. This is also the percentage of a

industry’s target market that you sell to in a period of time.

 Figure 9. Rate of Growth

The figure above shows that the revenue for the toy industry is increased by $34 m or

16.4% in Figure 10. Seasonal Character of Toy Industry overall

percentage of revenue of toy industry while the users of toys was increased by 6.4% or 9.4

million users.

Cyclical and seasonal character

A seasonal pattern exists when a series is influenced by seasonal factors. Seasonality

is always of a fixed and known period. Hence seasonal time series are sometimes called periodic

time series. Cyclic pattern on the other hand, exist when data exhibit rises and falls that are not of

fixed period. The duration of these fluctuations is usually of at least 2 years.

 Given the

example above, the toy industry is in demand during the months of September – December

because of holiday season or Christmas season which increased the sales of toy companies to

$2000 aside from the usual sales of $500 from January to July.

A. BASIC SUPPLY CONDITION

The value chain analysis reveals the business activities which comprise the global toys &

games market value/supply chain. The toys & games market includes retail sales of action

figures, activity toys, dolls, games, infant and baby toys, miniature models, plush toys, puzzles,

ride-on model toys, and toy vehicles.

The global toys & games market is expected to generate total revenues of $98bn in 2017,

representing a compound annual growth rate (CAGR) of 5% between 2013 and 2017. Sales

generated through hypermarkets, supermarkets and hard discounters are expected to be the most
lucrative for the global toys & games market in 2017, with total revenues of $13.7bn, equivalent

to 14% of the market's overall value. Study shows that toy shops continue to be the most popular

distribution channel for the toys & games market.

The Toys “R” Us operates in 39 countries worldwide and although it has filed for

bankruptcy in the US, but elsewhere the company is thriving and even expanding in countries

like China and Singapore. The increase in the number of children globally, along with an overall

increase in disposable income will drive growth in the market. The strong growth will be mainly

driven by the Asia-Pacific region, especially China, India and Indonesia. The toys and games

retailers often feature some interactive elements that will entice the children more.

B. INDUSTRY INTERDEPENDENCE

In the world of business, one can’t stay long without the help of suppliers and

consumers, just like with the industry. An industry can’t produce an output without any input –

and the only way to have inputs are from different producing industry as well. And that’s

TOP 15 INPUT SOURCES OF THE TOYS AND GAMES INDUSTRY AND THE SHARE

IN TOTAL INPUT (VALUE IN MILLIONS)

INDUSTRY: VALUES: SHARES:

Manufacture of knitted and crocheted 0.024828 0.97%

fabrics
Manufacture of knitted and crocheted 0.026124 1.02%

articles, n.e.c
Manufacture of carpets and rugs 0.026186 1.03%
Generation, collection and distribution of 0.026877 1.05%

electricity
Manufacture of cordage, rope, twine and 0.029160 1.14%

netting
Manufacture of paints, varnishes and 0.029299 1.15%5

similar coatings, printing ink and mastics

Manufacture of chemical products n.e.c 0.034876 1.37%
Manufacture of products of bamboo, cane, 0.041524 1.63%

rattan and the like, and plaiting materials

except furniture
Crude oil and natural gas 0.084107 3.30%
Spinning, weaving and finishing of textiles 0.088747 3.48%
Pearl culture and pearl shell gathering 0.111397 4.37%
Manufacture of refined petroleum products 0.125399 4.92%

Manufacture of knitted or crocheted 0.130372 5.11%

hosiery, underwear and outwear when

knitted or crocheted directly into shape

Wholesale and Retail Trade 0.249280 9.78%
Manufacture of Games and Toys 1.083229 42.49%
SUM OF THE VALUES AS A WHOLE 2.549531

(INPUT):

Table 1.0 Top 15 Input Sources Based on Vertical Analysis

 The table above shows the top fifteen (15) industries that contributes to the manufacturing

process of games and toys. The said fifteen (15) are the needed input sources, used for the

creation and production of goods of the industry. The table and values shown are placed in an

ascending matter, smallest to biggest value, with the corresponding share to the production of

games and toys. The total sum of the values as whole in terms of input is 2.549 in millions. The

data starts with the 15th placed, manufactured with knitted and crocheted fabrics with a

corresponding value of ‘0.024828’ and share of ‘0.97%’. The top five (5) input sources with the

biggest values and shares starts with, Pearl Culture and Pearl Shell Gathering (top 5) – a

‘0.111397’ value and ‘4.37%’ share. Manufacture of a Refined Petroleum Products (top 4) –

‘0.125399’ value and ‘4.92%’ share. Manufacture of knitted and crocheted hosiery, underwear

and outerwear when knitted or crocheted directly into shape (top 3) – ‘0.130372’ value and

‘5.11’ share. The second to the highest input source is, Wholesale and Retail Trade with a

corresponding value of ‘0.249280’ and share of ‘9.78%’. And lastly, the top one (1) for the input

sources of games and toys industry is, Manufacture of games and toys itself – with the highest

value of ‘1.083229’ and share of ’42.49%’. All those fifteen (15) industry mentioned in the

table, are important and needed to produce a proper input of goods. And the total sum of the

values as a whole in input, ‘2.549531’ per 1 million is the contribution of Toys and Games

Industry in the economy.

TOP 15 OUTPUT DESTINATION OF TOYS AND GAMES INDUSTRY AND THE

SHARE IN TOTAL OUTPUT (VALUE IN MILLIONS)

INDUSTRY: VALUES: SHARES:

Private education services 0.000022 0.0019%

Beauty treatment and personal grooming 0.000023 0.0020%

activities
Restaurants, bars, canteens and other 0.000026 0.0023%

eating and drinking place

Architectural. Engineering and Other 0.000032 0.0028%

technical Activities
Other Accommodation services 0.000046 0.0041%
Miscellaneous Business Activities, n.e.c 0.000046 0.0041%
Steam and Hot water supply 0.000055 0.0049%
Hotels and Motels 0.000080 0.0079%
Advertising 0.000092 0.0083%
Other Services Activities, n.e.c 0.000129 0.01%
Radio and Television Activities 0.000618 0.06%
Tour and Travel Agencies and Tour 0.002477 0.22%

Operators; Tourist assistance activities,

n.e.c
Manufacture of Sports Goods 0.003330 0.30%
Other Recreational, Cultural and Sporting 0.012989 1.18%

Activities
Manufacture of Games and Toys 1.083229 98.12%
SUM OF THE VALUES AS WHOLE 1.104034

(OUTPUT):

Table 1.1 Top 15 Output Destination Based on Horizontal Analysis

The Table above depicts the top fifteen (15) Output Destination of the Manufactured

Games and Toys with it’s corresponding values and share. The table and its values are
structuralized in an ascending manner, smallest to biggest number. Which makes the top part as

the top fifteen (15) and the bottom part as the top one (1). The total sum of values as a whole in

terms of output is ‘1.104’ in millions, upon using the Horizontal analysis. The top fifteen (15) or

minor output destination of manufactured games and toy goes to, Private Education, with a

value of ‘0.000022’ and corresponding share of ‘0.0019%’. Meanwhile, the major output

destination of the said industry starts with, Manufacture of Games and Toys (top1) – with a

‘1.083229’ value and ’98.12%’ share. Top two (2) is Other Recreational, Culture and Sporting

Activities, with a ‘0.012989’ value and ‘1.18%’ share. Manufacture of Sports Good (top3) –

‘0.003330’ value and ‘0.30%’ share. Tour and Travel Agencies and Tour Operators; Tourist

assistance activities, n.e.c (top 4) – a value of ‘0.002477’ and share of ‘0.22%’. And lastly,

Radio and Television Activities with a value of ‘0.000618’ and share of ‘0.06%’. The top one

(1) or the most major among major output destination is still ‘Manufacture of Games and Toys’,

it signifies that the industry has a lesser direct forward linkage.

F. REGULATRY ENVIRONMENT

The regulatory environment serves as the rules or standards that has to be followed by all

industries/companies in order to produce the utmost honest product or service, and as published

in the Republic Act No. 10620 or also known as the Toy and Game Safety Labelling Act of

2013. This law applies to all major toy and games companies, which orders them to apply the

following: LTO number, age grading, and cautionary statements that are readable and that can

be easily understood by consumers, whether it is a child or an adult. Every product that is being

produced should also be checked always by the manufacturer before being releasing it and

selling it to the people.

III. MARKET AND COMPETITIVE ANALYSIS

A. MARKET SIZE AND SEGMENTATION

Figure 11. Market Share of Traditional Toys and Video Games Producer

Structure Analysis
The toy and game industry can be structured into two categories: traditional toys and

video games. Hasbro, Lego, Mattel and Bandai Namco are companies dominating the traditional

toys sector which includes the production of action figures, building sets, dolls and other similar

toys. For the video games sector Nintendo, EA and Activision are known for games like Super

Mario Bros., Resident Evil and the ever-popular Call of Duty series.

Hasbro Lego Mattel Nintendo EA Activision

Bandai Namco Sony Entertainment

With the rise of technology, toys and games industry continue to see a strong growth and

value rate or that of the more advanced counterpart of traditional toys known as e-games. Mobile

penetration plays a huge part in this because of the strong position of internet retailing within

video games. While the growth of video games is expected to continue, traditional toys and
games are producing a low value rate. This is due to the shift of children from action figures to

smartphones that affects the birth rate of toys and games dramatically. According to Wohler’s

Associates, the 3-D printing market is expected to quadruple in size over the next five years on a

global scale and will have a big impact on the toy industry (Allen,2015). This is in line with
Figure 12. Sales of Traditional Toys and Games in the Philippines
technological advancements that forces companies to start thinking outside the box and focus on

the new target market of tech-savvy kids and a more mature generation.

As shown in the figure below (figure 12.), outdoor and sports toys emerge as the most

popular type of traditional toys and games in the Philippines with a high difference percentage

of 36% having games and puzzels and, infant and preschool toys following behind. However,

there are differences among regions. Toy sales patterns anf amounts spent on toys are correlated

with purchasing power. It is possible that more toys are produced and distributed in the cities as

compared to provinces because it is not deemed as a commodity in rural places.

Games and puzzels Infant and preschool toys Construction Toys

Dolls and accessories Outdoor and Sports Toys
 Focusing in the video games industry, the upstream market is being dominated by the

manufacturing of hardware and software development. The hardware manufacturing business

consist of four different sectors: consoles, PC's, online and mobile. Vickey predicted in 2005 that

the mobile market will be the market of the future, fast forward 14 years later and the Philippines

is now known as a mobile-first country. The three big manufacturers: Microsoft, Nintendo and

Sony, has a 73% market share in the console market. Microsoft's Xbox360 was the industry

leader with 18.2 million units sold in 2007.

After being distributed, it will again be examined in terms of software and hardware

offerings in the downstream market. The software sector is organized by publishers that must

obtain a license for the rights to sell a game and pay the manufacturer royalties for every sold

console.

Microsoft for example has their own-in-house publisher known as Microsoft Game

Studios. Microsoft is identified as the only manufacturer that integrates all three functions;

software development, hardware manufacturing and publishing.

B. STRUCTURE-CONDUCT-PERFORMANCE (SCP) ANALYSIS

1. STRUCTURE

1.1 INDUSTRY CONCENTRATION

The Toys and Games Industry is a stable, low-growth industry that is subject to highly

fragmented retail channel of distribution. Its competitors include small and large
manufacturers, and as well as the marketers which has strong capabilities in respect to

recognizing shifting consumer interests and bringing such new products to the market.

Because it is a low-growth industry, the Toys and Games Industry experiences a short product

life cycle, which is varying from six months to two years.This requires periodic renewal of the

product range.

The demand for toys has a seasonal character with most important toys sales peak being

the pre-Christmas period with a 70% of toy sales taking place before, during and just after the

Christmas period (EC, 2008). Since the toy market is highly unpredictable and volatile, the

toy market actors face high risks in terms of costs of obsolete inventory and markdowns.

(Rotterdam, 2013)

1.2 TYPE OF MARKET STRUCTURE

Toy Industry includes the major toy corporation, “Toys R Us Inc.”, and the market

structure can be considered as an Oligopoly because the company has only a few competitors

that are major game players within the toy market. Oligopoly being defined as having a few

competitors within their specific industry, while monopolies only have significant barriers for

entry of competitors.

1.3 NUMBER OF SELLERS AND BUYERS

The global toy industry is a billion-dollar industry dominated by five main companies:

Mattel, Namco Bandai, Lego, Hasbro and Jakks Pacific. Danish company Lego, known for its

interlocking plastic bricks, was the industry leader with the highest revenue, 5.49 billion U.S.

dollars, amongst the major toy companies in 2016. U.S. toy manufacturer Mattel, closely

followed Lego, with about 5.46 billion U.S. dollars in revenue. Tokyo-based Namco Bandai,
 strong in its domestic market, ranked third in terms of revenue; Hasbro and Jakks Pacific

complete the top 5. (Duncan, 2018)

Three out of the five major players in the global toy industry are American companies.

Led by the U.S., North America is one of the most profitable and important regional markets

for these companies. In the U.S. alone, total retail sales of the toys and games market was

estimated to be over 22 billion U.S. dollars in 2015. The toy industry's annual total economic

impact in the U.S. was 80.26 billion U.S. dollars in 2015, while over 287 thousand jobs

directly related to the American toy industry were generated that year. (Duncan, 2018)

1.4 BARRIERS TO ENTRY

The industry is highly competitive with low barriers to entry, and traditional toy

manufacturers are seeing increasing competition from digital gaming products, digital media

and products that combine traditional “analog” products with digital play.

The toy industry has several barriers to entry, such as: economies of scale, high fixed costs,

slow market growth, and a concentration of demanding retailers. However, here is little in the

way of government regulations, specific patents, or proprietary knowledge. There are many

opportunities for niche markets and with the ability to sell toys via the Internet, access to

distribution channels is not an obstacle (Essay UK, 2018)

1.5 PRODUCT DIFFERENTIATION

COMPANY A (TOY KINGDOM) COMPANY B (TOYS R US)

SALES NO DATA GIVEN 11.5 B USD (INTERNATIONAL)
COST Not applicable Not applicable
CUSTOMERS Philippines (ages ranges 3+) International customers
VARIETY OF Stuff toys, board games, sport toys Lego Products, baby toys, stuff
PRODUCTS etc. toys, etc.
3+ toys 3+toys, fisher price
NO. OF OVER 100 (SM) 700 (ROBINSON’S PLACE) and
BRANCHES IN Ayala Malls
PHILIPPINES

Table 2.0 Product Differentiation

The Table above shows the comparison of the two major suppliers and retailers of toy

products in the Philippines which is the Toy Kingdom which is a part of SM Corporation ked by

Henry Sy and the Toys R Us, an international toy, clothing, video game, and baby product

retailer owned by Tru Kids Inc. and is found in Robinson’s Place mall all over the Philippines

(Bergen County N.J, 2018).

1.6 COST STRUCTURE

 Figure 13. Cost Structures

Transportation costs
Labor expense
Administratiin expenses
Raw Materials

Figure 13., shows the different expenses incurred by a manufacturer or a toy supplier that

directly produces their toy products. From the graph above, 5% is allotted for transportation costs

that includes gas expense, truck expense that is related to the moving of toy products form factory

to selling warehouse. 20% is both allotted for labor expenses that includes the factory overhead and

other costs related to production of toys. And the other 20% is allotted for the administrative

expenses which includes office expenses, employee wages and benefits and other expenses not

related to the production of toys. Lastly, the remaining 55% is allotted for the raw materials needed

for the production that includes wood, steel, rubber, cotton etc. Last 2014, data gathered shows that

Mattel Manufacturing Company who supplies most of the toy companies in the Philippines such as

Toys r us, Toy Kingdom, Lego etc. has incurred expenses of 209 million dollars in connection with

design and development expenses and royalty payments. And last 2013 and 2012, the company

incurred 201 million dollars and 195 million dollars respectively which only shows that as the years

passed by, the expenses and production increased because of the increasing demand for toy

products in the Philippines (Mattel, Inc., 2016).

1.7 VERTICAL INTEGRATION

 SUPPLY CHAIN OF
TOY INDUSTRY

Raw
material
s

Custom Manufa
ers cturing

Retail/
Distrib
Supplie
ution
rs

Figure 14. Supply Chain of Toy Industry

The figure above shows the supply chain above is related to the formation of vertical

integration of a company. Vertical Integration happens when a company acquires and controls

business operations within the same distribution channel in a vertical manner. It helps

companies to reduce its costs and improve efficiency through economies scale. It is an

expansion or extension of the company by becomes its own supplier or distributor.

 RAW MATERIALS: Jute wine, cotton,
wood sticks, plain fabric, embroided cloth,
needle, thread, beads, wool, plier, steel
wire
INTERMEDIATE
GOODS
MANUFACTURING: Mattel, Hasbro, Lego, Philippine Toy and
Novelty Manufacturers Assoc., Academy Plastic Model Toy Man.

MARKETING/SUPPLIERS: Toys R Us ,
Toy Kingdom Ph, 3 kids General
Merchandise, 3ace Supermart

CUSTOMERS

Figure 15. Vertical Integration

The figure 13 shows the vertical integration of toy companies in the Philippines. It all

starts with the raw materials and is processed by manufacturing companies such as Mattel,

Hasbro, Lego, Philippine Toy and Novelty Man. And academy Plastic Model Toy

Manufacturing which supplies toy company retailers/ toys distributors such as Toys R Us,

Toy Kingdom, 3 kids general Merchandise and 3ACE Supermart who sells finished toy

products. Some examples: Board games, Stuff toys, Card games, Dolls. Etc (Baral, B., 2019).

2. CONDUCT

2.1 PRICING BEHAVIOR

According to James Rosado (2009), even though our society changes and there are

economic trends, there will be always ways on how to introduce the products of a company
including toys' companies as long as there are demand in it which is obviously seen in our

world because children have demands for toys because they play a lot. However, there is

more competition than ever before from superstores like Walmart and online retailers like

Amazon. The best way to reach the target audience and maximize your earning potential is to

utilize an appropriate yet attractive pricing structure for your entire inventory. The industry or

a company must consider the expenses in providing such products or services like toys and

games. A company must observe the expenses used to handle and create a strategy in

formulating the price for selling. It is common and important to know the necessities in

making the products to include it in the selling price because it is also one of the most vital

part to make a profit. The industry or a specific company must also evaluate and foresee the

competition that is happening inside and outside the industry. In formulating the price of

toys, the prices of the competitors must also be considered to compare when and how to

market the price in other products offered for the target market, especially for kids.

Competitors will help you to avoid pricing yourself out of business and will give you an idea

of whether or not you are paying too much for your inventory. If a company can beat the

prices of your competitors in the same industry or in other industries while still turning a

profit, it will have a much better chance of selling your wares. The industry must also

understand the supply and demand of the products because it will become an indicator of

how high the price of certain items must be, despite to the competition’s strategy. Market

research and customer feedback is also important. Knowing the feedback make an industry

know how they feel about your pricing structure. Evaluating how the target market feels

about the price as a whole will give advices regarding whether or not to have low or high

prices. Running advertised targeted sales throughout the year is a great way for you to pique
the public’s interest and move more inventory. Having a sales strategy also provides you with

the option of keeping the original price of your toys higher. In times for sale, it is to keep the

final price of the most in-demand toys on par with competitor pricing. Meanwhile, it stands

to generate more income because of the massive marketing word of sale in its terms. It is also

stated that price matching is another great way to drive sales in your store. To utilize such a

policy in the most attractive way, it is one of the way it should be advertized. Advertising the

price does the chance to maintain the high retail price than the competitors, but it is still a

differentiation to others.

2.2 PRODUCT STRATEGY

The non-stop continuation of the population here on earth also affects how to formulate

businesses with a massive need and wants of the growing number of people. The number of

children have a numerous demand in the industries that includes toys and games. According

to Linda Ray (2019), kids in online game rooms and interactive websites provides ample

opportunities for advertising campaigns aimed at kids. Combined with an ever-increasing

number of broadcasters aimed at a children's audience, the media space for toy ads has grown

quickly. As such, marketing strategies aimed at youths are more likely to reach those with

money in their pockets than ever before. The products of toys and games may also be

strategized by the emotional association of the products itself to the target market which is

the kids in majority. According to Ray, children tend to view advertising as objective and

usually don’t think its overall nature and it is also being sold for fun. According to to

Common Sense Media, a nonprofit social advocacy group, advertisers take advantage by

creating emotional attachments to their toys. Associations with iconic Walt Disney characters

as well as movie stars and cartoons can create strong ties with the toys they represent. Tie-ins
with food and fun are also popular. In this time, children love to simultaneously play and

have fun without hesitation everywhere and any time. The product is not the only provision

they see, but the product's importance to other kids who can't afford such product that could

differ to others. Having technological advancement, games is also rampant. For kids, it is an

asset to have games at home, specifically games that are expensive. Children and adolescents

have access to technology that gives advertisers more mediums through which they can target

their audiences. For example, the National Retail Federation has reported that tablet devices

were among the Christmas gifts most often requested by children. Games are the most

popular downloads by children using computers and mobile devices, so banner ads on game

sites have become increasingly popular with advertisers. Incorporating products within the

games is another strategy proving useful to marketers. It is also strategized to captive

audience by the product itself, and making the market know what is the products' uniqueness

by using medium through online web because nowadays people don't take time to read in

paper materials. They rather choose to see visuals and read a little through their mobile

phones or pc. The product must get attention to the market. The industry of toys and games

attracts kids because they have specialization in offering idealistic materials. For example, in

playing careers like being a doctor or a nurse, toys and games could make a child be a doctor

or nurse even in just a single moment with their playmates and make them know how a

doctor could be or imitate one. Also, in pretending to control and make scenarios in using

dolls or robots, kids could comprehend what is like to make a good story on their own. It is

not being offered by other industry because people know that if it is a toy, it could make a

child happier in providing an excitement experience with their toys to have a good

imagination of the things being truly done in real life. That's why toys are different to others.
It is the simplest strategy is obviously seen by the people. It's influence to let the kids

experience doing what they are passionate about even if it is not yet practical or real.

2.3 RESEARCH AND INNOVATION ADVERTISING

In the industry of toys and games, interaction for kids had been given. It is not commonly

known as a different face of the toys and games, but it actually is. Children experience in

having a conversation with their toys in holding their robots or Legos at their home, or even

in some places. It can also apply to games but it is only specifically applied in a connection

of a toy and a kid. A toy became special as it became a sentimental to a kid. The

companionship being offered by a toy could make a toy more extra special. It also makes the

products more engaging to others as a specific kid introduces his or her toys to someone with

the experiences, he or she shared to that specific material even though it is not even alive.

Dick Ahlstrom stated that it carries the player into an artificial world where you gain points

or can trade for a better weapon by wiping out the “enemy”.

The game lets you choose where to go next but the virtual world that provides enemies to

destroy and space to move though is predetermined. Children need skill to use the weapons

and good reaction time and also experience of other games is useful to be able to guess where

secret entrances or energy or benefits might be hidden. He also added that innovation is also

being done by the target market itself which is the kids. For example, in Lego which provide

all the pieces needed to make a given object – a spaceship, a castle, a famous building. There

is no immediate assumption that the child will do any more than build the object and then

leave it sitting on a shelf. It is a privilege for the perception to the kids to build on their own
and have a product to be proud of which makes the toys differ to other products. If the child

experience to make something new on their own, to build something different, they quickly

learn that the bricks from one toy can be assembled into anything they want just by

combining them in a different way.

For the record, Lego in the olden days was a dedicated building toy with just a few

different brick sizes to work with but plenty of room for imagination and the creation of

something different each time. Ahlstrom said that the need to innovate when children play is

slowly but steadily diminishing. The requirement for creativity during play is seeping away

and the current generation of children will not be the better for it. Smartphones can do the

talking for you by allowing the device to select the words to build a text sentence. He also

included gaming as an advantage to the children. It could be an innovated one specially now

in time of technology. Games are advanced toys being used by the children through mobile

phones, pc, or etc. Innovation come forwards as time goes by because of the industrialization

happening, but it serves as an opportunity to industries to make their companies larger than

before to expand and reach the market continually. Online media could be used as a tool to

let their differentiation towards other offered products which is an advantage to a lot of

businessman.

3. PERFORMANCE

3.1 PRODUCTION OUTPUT GROWTH

 Table 3.0. Condensed Consolidated Statement
of Operations

According to Toy “R” Us (2018), Toys “R” Us has been one of the leading companies

involving the products of toys and games, but as seen in the financial statement that they

released, they have not been doing well for the past few years earning almost nothing. It can be

seen that in the year of 2016, their net loss is approximately $130M, mainly because of the

high earning loss that they got from that year itself, although it is seen that the year 2016 still

got the higher sales than 2017, but because of the earnings in 2017 resulting to be higher than

year 2016, it can be seen that the loss of the company has been reduced to $36M, despite it

being lower than the previous year. It will still be hard to predict depending on how the sales or

earnings will decrease or increase.

3.2 PROFITABILITY

The overall sales of Toys ‘R’ Us INC. is approximately $2.18M according to the financial

statement that they have released prior to the quarter before they closed. This has been a very
 devastating quarter, even the year was not doing so well. But for the last quarter as stated

above in the financial statement (refer to 3.1). The sales of Toys ‘R’ Us INC. has decreased for

over $89M, due to the rise of their other expenses, like their operating expenses resulting to

$208M. Because of their net sales decreasing over the said period, every expenses and gains

that they have produced is not enough, which results to a badly net loss amounting to $623M

in 2017, and if compared to the previous year it can be seen that it has increased and did not

improve from $156, but instead it has gotten worse.

3.3 EFFICIENCY

3.4 ECONOMIC

CONTRIBUTION

Figure 1. Economic Contribution

Figure 2. Employment Contribution

In recent news, Rosales (2019), has stated that the Philippines is aiming to set the country

as a leading creative economy in SouthEast Asia by the year 2030, namely supporting these

categories under the creative economy: advertising, film, animation, game development and
design industries. According to the DTI, the economy of the Philippines is looking forward to

help the creative industries that have significant GDP contribution to the country; namely

business-process management, tourism, and information technology.

In Figure 1. Economic Contribution, Gaming is under the Creative Services category. It

shows that the total value of creative services in 2002 — in US dollars, is $62,227.00. Moving

forward to 2008, the value now increases to $185,087. The creative services category has now a

growth rate of 17.1 in years 2003-2008, which clearly shows the highest growth rate among the

rest of the industries.

In Figure 2. Employment Contribution, the Creative Industries in 2008 has shown

statistical data of Creative Industries and its Employment Contribution. Photography with 1%,

Radio and TV with 2%, Motion Picture and Video with 4%, Music and Theatrical Production

with 5%, Press and Literature with 6%, Advertising with 1%, Visual and Graphic Arts with 0%,

and with the highest percentage among the creative industries, Software and Databases with

36%.

With the data given above, the Philippines should focus on enhancing the creative

industries as these contribute the economic stability of the country and could pursue in the

growth rate of the GDP of the Philippines, hence, could become a strong foundation for the

economy of the Philippines.

C. COMPANY PROFILE OF THE INDUSTRY MAJOR PLAYERS

 In an industry there are always dominant or major players in the market that is different

and stands out from others. According to Dun&Bradstreet (n.d.) the major companies that

manufactures electronic and nonelectronic toy and games that includes dolls are: Mattel,

Hasbro, JAKKS Pacific, Geobra Brandstatter, Lego, Namco Bandai and Sanrio. Meanwhile in

the gaming hardware division there are: Microsoft, Nintendo, Sony. Associated with the toy

and games industry. Richard Gottlieb (2018) stated that there are seven (7) companies ranked

by the market share it include the Mattel with 19%, Hasbro with 15%, Lego with 9% and

JAKKS with 3%.

• Mattel

Mattel, Inc. is a recreational product industry, where it manufactures and markets

variety of toy and game products around the world. The Incorporation has segments

that are North America, International and American Girl. And it includes four (4)

major brands in their portfolio of brands and products this are; Mattel Girls & Boys

Brand, Fisher Price Brand, American Girls Brand and Construction and Arts & Crafts

Brand (Reuters, n.d.). In 2018, the revenue of Mattel, Inc. was divided according to

its segments. In North America it earned $2, 442.11 in million US dollar, while

International earned $2, 312.23 million US dollars and American Girl earned $341.19

million US dollars (Liam O’Connell, 2019 a). It is also reported that in 2018, the

incorporation has ‘25,800’ number of employees and its current president is Richard

Dickson – acting both as a President and Chief Operating Officer. Lastly, Mattel, Inc.

believes in diversity, where it is applied to its people, product, perspective and

partners (Mattel, n.d. a, b).

• Hasbro

Hasbro, Inc. is an entertainment and play company, that manufactures and

produces toy and games. It is a recreational product Industry that has five (5)

operating segments: U.S, Canada, International, Entertainment and Licensing. The

company fulfilled its primary need to connect to children and families all over the

world with its play by producing television programming, motion pictures and digital

gaming (Reuters, n.d. b). According to Hasbro-Investors (2019), in 2018 the full year

net revenue of the company reached $220.4 million. In its segments; US and Canada

earned $2, 433.4, International earned $1, 847.6 and Entertainment and Licensing

earned $298.5. It is reported that the company’s current president is Brian Goldner

and the company has a total of ‘5,800’ number of employees in 2018. In Hasbro, Inc.,

it states that “we play with a purpose” – as the force that the company builds are

good, safe and inclusive company and world for all.

• JAKKS Pacific

JAKKS Pacific, Inc. is a multi-brand company established in 1995. It is a

recreational product industry, that is designed to develop, produce and market toys;

with such leisure products and writing instruments that will be enjoyed by both

children and adults all over the world. The company became a part of the top six (6)

U.S player in toys and leisure products (JAKKS Pacific, n.d.). The company’s current

President and CEO is Stephen G. Berman and having a total of 832 number of

employees. The annual salary of the company is said to be $578. 5 Million (Owler,

n.d.).
 • Lego

Lego Group, is one of the preeminent toy manufacturers in the world. It operates

in 30 countries and has 50 companies globally. Its main purpose is to manufacture,

develop and marketize its own Lego toy system – as the toy it releases is a

constructing- toy. Its business concept is to give the children’s their needs seriously

through the lego products and activities (Encyclopedia, 2019). According to Liam

O’Connell (2019 b), the Lego Group’s net profit in 2018 amounted to $1, 080.70 in

million euros. And it has a total of 17, 534 number of employees.

IV. MAJOR PROBLEMS ENCOUNTERED OR CURRENTLY ENCOUNTERING BY

THE INDUSTRY AND ITS POLICY IMPLICATIONS

A. PROBLEM/S THAT SIGNIFICANTLY AFFECT THE OPERATION OF THE

INDUSTRY

As the growth of mobile devices increase, the global sales of traditional toys on the other

hand has continuously decreased. Today, mobile games and apps are becoming more and more

popular becoming a big threat to traditional toy makers. In 2017, the sales of the world’s biggest
toymakers have slumped as the kids grew tired of playing will dolls, action figures and the likes.

The internet and other console-based video games are one of the main reasons of the decline in

sales, manufacturers should develop toys that will incorporate interactivity through software

integration. According to Dhar (2015), the success of such integration depends on understanding

the market fundamentals of hardware and software complementarity. The industry giants should

use the internet as a platform to promote their products, this doesn’t solely rely on

advertisements but also through partnering with famous influencers. Another problem the that

the toy industry face is market saturation. The top three companies focused mainly on North

America and Europe when they should be extending their sales in Asia, Latin America and

Middle East which in turn will give them more growth opportunity.

For years the production of toy imitation has been a growing concern. Manufacturers

readily exploit the designs of toys by putting out these cheap counterparts that undermine the

market for quality. An example of this is the Lepin copies of LEGO. In 1958, the expiry of the

patent of the original LEGO brick has led to a free-for-all production of similar products.

Although most are not up to the quality of LEGO, the company must innovate and provide

additional user experience beyond bricks itself.

B. ACTIONS TO BE DONE OR DO BY THE INDUSTRY TO ADDRESS AND REMEDY

THE PROBLEM/S

Specific actions done or doing by the toys and games industry to address/remedy the

problem/s:

1) Having high innovations would help the industry or existing companies to come up with

new products within a short period of time. Since the lifecycle of toys in the toy industry
 is short due to rapid changes in consumer preferences (Datamonitor, 2010a; 2010b), the

ability to develop new innovative products would help the firms to remain relevant in the

market.

2) New products or innovations could be in the form of entirely new products, products

targeted to a different market, products that help to sell existing products (e.g. bundles)

and improvements on existing products. (Toy manufacturing industry – key success

factors in the toy industry).

3) Organized distribution channels also help the toy manufacturers to reach their customers

in various locations. Currently, main distribution channels in the U.S. include big retailers

such as Wal-Mart and Target. Other distributors that would help increase the availability

of an entity’s toys in the market are specialized stores, such as the Toys R Us company.

Also, manufacturers could embrace a forward integration strategy by selling their toys

through their websites and promote their products through different effective and efficient

ways. (Datamonitor, 2010a; 2010b).

C. GOVERNMENT POLICY/S TO ADDRESS THE PROBLEM/S

Consumers have eight basic rights under the law namely, the rights to:

1. Basic needs

2. Safety

1. Information

2. Choice

3. Representation
 4. Redress

5. Consumer Education

6. Healthy Environment

From these, the basic rights are the implementation of laws and orders in the Philippines

such as the Toy and Game Safety Labelling Act and the Consumer Act of the Philippines.

CONSUMER ACT OF THE PHILIPPINES

(RA NO. 7394)

The policy of the State to protect the interests of the consumer, promote his general

welfare and to establish standards of conduct for business and industry. Towards this end,

the State shall implement measures to achieve the following objectives: a.) protection

against hazards to health and safety; b.) protection against deceptive, unfair and

unconscionable sales acts and practices c.) provision of information and education to

facilitate sound choice and the proper exercise of rights by consumer; d.) provision of

adequate rights and means of redress; and e,) involvement of consumer representatives in

the formulation of social and economic policies (Chan Robles, 2018).

Republic Act. 10620

AN ACT PROVIDING FOR TOY AND GAME SAFETY LABELING,

APPROPRIATING FUNDS

Section 2: DECLARATION OF POLICY - The state acknowledges its obligation to

secure the right of children to proper care and special protection from all forms of neglect
and other conditions prejudicial to their development. The state shall ensure the protection

of children against labelling of toys and games.

Section 4: LABELING REQUIREMENTS FOR TOYS AND GAMES- All toys and

games locally or internationally manufactured that are imported, donated, distributed and

sold in the Philippines shall comply with the appropriate provisions on safety labelling and

manufacturer’s markings found in the Philippines National Standards for the safety of toys.

Section 5: GENERAL LABELING REQUIREMENTS -Any cautionary statement shall

be displayed in its entirely on the principal display panel of the product’s package and on

any descriptive material which accompanies the product. The cautionary statement shall be

displayed in English or Filipino or both written in common language.

Section 8: TREATMENT ON MISBRANDED OR BANNED HAZARDOUS- A balloon,

ball, marble or toy or game which packaging is not in compliance with the requirements of

this act shall be considered a misbranded or banned hazardous substance. It shall be

withdrawn from the market at the expense of the manufacturer or importer and shall not be

allowed to be distribute, sold or offered for sale in the Philippines unless and until the

requirements of this Act are complied.

Section 9: REPORT TO THE DEPARTMENT OF HEALTH- A manufacturer,

distributor, retailer and importer of a marble, small ball, or latex balloon, or a toy or game

that contains the following shall report to DOH any information obtained by such

manufacturer, distributor, retailer or importer which reasonably supports the conclusion that

an incident occurred in which a child regardless of age choked with such marble, small

ball, later balloon or other small parts and as a result of that incident the child dies, suffered
serious injury, ceased breathing for any length of time, or was treated by a medical

professional.

Section 10: PENALTIES- Any person who shall violate any provision of this Act

shall be subject to a fine of not less than Ten thousand pesos (Php 10000) but not more than

fifty thousand pesos (Php 50000) or imprisonment of not less than three (3) months but not

more than two (2) years, or both, at the discretion of the court.

Section 11: DISPOSAL OF SEIZED MATERIALS- Any toys and games found to be

in violation of the provisions of this Act shall be confiscated and forfeited in favor of the

government and shall be disposed in accordance with pertinent laws and regulations.

Section 12: RULES AND REGULATIONS- The DTI, in consultation with the DOH,

shall promulgate the rules and regulations for the implementation of this Act. The DTI shall

regularly publish every 6 months, the list of all manufacturers, importers, distributers and

retailers. Likewise, the DOH shall publish every 6 months, the list of all misbranded or

banned hazardous substances the sale, offer for sale and distribution of which shall not be

allowed under this Act.

Section 13: FUNDING- The DTI and DOH shall include in their respective annual

budget the amount necessary for the effective implementation of this Act.

Section 14: GRACE PERIOD- Manufacturers, retailers, distributors and importers are

given 1-year grace period to comply with these requirements from the effectivity of this

Act.

This act which is a consolidation of Senate Bill No.3367 and House Bill No. 6529

was finally passed by the Senate and the House of Representatives on June 5, 2013.
D. THE STRENTHS AND LIMITATION OF ACTIONS BY THE INDUSTRY AND

GOVERNMENT

Consumer Act of The Philippines

This policy in the Philippines protects all the consumers in the country, this ensures that

the consumers are safe and healthy from whatever danger or hazards that they could

experience from a product that they paid for. Another privilege that the consumers have for

this act is that they are safe from bogus vendors or producers. There would be no weakness

or limitations for this law, for the overall objective of this act is to protect consumers and

their right in any situation regarding economic/ business welfares (Chan Robles, 2018).

Republic Act NO.10620

An Act providing for toy and game safety labeling, Appropriating Fund.

The Republic Act NO.10620 consists of sections that protects the overall safety and rights

of children, and also in order to protect them in any harm from hazardous products, as it is

stated that the act was published for the protection of children. The main points of strengths

of this act is that it is surely effective for the DTI and DOH are included in the respective

budget for the strict and effective implementation of the act, also because of the effective

implantation, children will be safer in whatever toy they are playing with because of the

safety labeling for every toy or games that the consumers would buy. The only limitation

for this act is that not every toy is being inspected, and sometimes the government would

miss one or two toys that are incomplete/hazardous to children, despite having this law, it is
 still not sure if the toys/games that consumers buy will be safe for their child that is why

every toy is labeled and wrapped up properly.

V. AREAS FOR FUTURE POLICY

PRESCRIPTIONS

A. THE STRENGTHS AND

WEAKNESS

Figure 1. LEGO’s SWOT Analysis

The SWOT Analysis is a great opportunity to find the strengths and weaknesses of the

company to further enhance and retain what they are at best at. The LEGO and Mattel’s

company has stated very important details about how they could further improve by citing

their own weaknesses, and retain what they do best by citing their strengths.
 In the figure above, this shows the S.W.O.T (Strengths, Weaknesses, Opportunities, and

Threats) Analysis of the toy brand known as LEGO. The company stated several strengths and

weaknesses about their company. Strengths of the company is that they are widely know

globally, have a wide product line, and has a well developed global distribution channel.

Secondly, the weaknesses of the company. The weaknesses of the company is that their brand

image is finite, they are not focused in their own key businesses, have mediocre cultural

knowledge, and are easily copied by different toy companies.

Figure 2. Mattel’s SWOT Analysis

The SWOT Analysis of Mattel Company has stated various strengths and weaknesses of

their company. What is good about their company is that they have less weaknesses than

strengths unlike the LEGO Company. The strengths of the company is that their brand has

strong recognition, has a strong work force, and has a variety of toys that can range from
different ages of their customers. The weaknesses of the company is that they have a total of

19 million recalls from China, they are losing partnerships, and have gender age products

which means that they target their products based off of one gender.

Based on the SWOT Analysis of the Mattel Company, the strengths that they have are

more of their own brand, however, their weaknesses show more of a downside to the inflow

and outflow of income in their company because of the products that the company has, which

is a negative result especially that they are a known brand for toys and games.

In conclusion, the toys and games in the Philippines should further enhance their brand

recognition but also being able to maintain a positive inflow of income as this could generate

the economic contribution of the country. There will be strengths and weaknesses of each

company in the toy and game industry in the Philippines but this will further help the industry

enhance and generate income for the betterment of the economy of the Philippines.
 Figure 16. Market Summary

B. PROSPECT OF THE INDUSTRY

Toys and Games Market

The Global Toys and Games market is forecasted grow at a Compound Annual Growth

Rate (CAGR) of 4.5% during the forecast period (2019 - 2024).

1) In recent years, a rise in popularity of interactive and multi-functional toys and games has

been observed among children, which has been positively impacting the toys and games market.

2) Due to rise in consumer spending, there is an increasing demand for toys, such as action

figures, plush toys, puzzles, sports equipment and pre-school products. The sales of toys and

games based on cartoon characters, TV shows, and movies are escalating, which is further

promoting the growth of the market.

Construction Toys being a Popular Choice (Research and Market)

Parents are increasingly encouraging their kids to buy outdoor and sport toys due to the

growing prevalence of child obesity and other health problems in many countries across the

globe. Apart from outdoor and sport toys, demand for construction toys is also growing a fast

rate mainly driven by their vast cognitive and intellectual benefits among kids of different age

groups. Currently parents as well as teachers are recognizing the overall importance of these

construction toys for fostering spatial and creative skills among pre-school kids, thus the sales of

this traditional toy variety are increasing. Also, the rising usage of construction toys among adult

kids for boosting their learning capabilities is one of the key factors driving the overall growth of

this traditional toy category.

In last few years, a number of toy manufacturers have focused on bringing new shapes

and design options that allow children to create an array of innovative constructions.
BIBLIOGRAPHY

Ahlstrom, D. (2019, January 10). Building toys teach innovation, a lesson missing from screen

games. Retrieved from https://www.irishtimes.com/business/technology/building-toys-

teach-innovation-a-lesson-missing-from-screen-games-1.3750261.

Aldaba, R. (2017). The Philippine Manufacturing Industry Roadmap: Agenda for New Industrial

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