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Tiny Tots Toymakers Case Analysis

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International Business                                                                        

  1. EXECUTIVE SUMMARY

The purpose of this report is a critical analysis of the case study “Tiny Tots Toymakers”, which produce natural wooden toys for kids in high quality for premium customers in New Zealand.  Tiny Tots Toymakers also operate in Australia and Japan.  In addition, this report will use the SWOT analysis to investigate Tiny Tots Toymakers and defined relevant context of the events and forces surrounding the decision process.  

Although Tiny Tots Toymaker is very competent on high quality and low cost operations, it runs poorly in marketing and promotion in both domestic and international markets.  Hence, based on SWOT analysis, an evaluation will be given on its international sales and marketing activities. The results will provide possible actions on improving such as standardized international marketing in fluctuating dollar value countries and bulk sales promotion.

  1. INTRODUCTION

Tiny Tots Toymakers, a wooden toys manufacturer is located in Otago, New Zealand.  Despite the business has been operated for 25 years, there are many internal and external environment issues associated with Tiny Tots’ business.  

From an internal environment perspective, inefficient time management, lack of marketing experience and research especially in export, are also major challenges of Tiny Tots Toymakers.  From an external perspective, even though $NZ has appreciated from the exchange rate development against $A and Japanese yen in the last two to four years, if the goods had been exporting to Europe and America which have hard currencies, it would result in reducing Tiny Tots sales income and gross margin.  All above issues could be serious obstructions on Tiny Tots further expansions and sustainability in future.

  1. TINY TOTS TOYMAKERS ANALYSIS

The SWOT analysis is a common tool to examine a company’s internal and external environment, which includes four parts, strengths, weaknesses, opportunities and threats (Griffin & Pustay, 2010).

Tiny Tots Toymakers SWOT analysis

  • Strengths
  • Owner has 25 years experience with strong skills and knowledge on whole production processes
  • All products meet high safety standards for kids’ toys; all finished goods which have no splinters or cracks and only non-toxic paints used with well-designed set of product brochures
  • Use local timbers to save cost of transforming from Germany
  • Existing customers have strong loyalty and products can be assembled to meet customers’ needs
  • Weaknesses
  • Poor marketing and sales promotion plan on both exporting products and in domestic market
  • Lack distribution channels in Australia and Japan
  • Weak market research
  • Focus on Internet marketing but ignore other channels
  • Ineffective Internet sales from retailers
  • Management cover insufficient
  • Opportunities
  • The $ NZ has appreciated against $A and the Japanese yen in recent years  
  • Little competition for kids’ toys made in New Zealand
  • Due to the cost of timber, similar wooden toys which are made in Europe have become more expensive than before
  • Threats
  • Have fluctuating issues on exporting goods to countries which are hard currency such as Europe and America

The effect of owner’s personality and goals on company development

Ray’s goal is to pursue highest quality of products but he has a lack of time management and does not separate his personal live and business times which cause trouble concentrating on business operations.  On one hand, the personality of Ray is passive and tries to avoid social activity at work such as marketing and promotion which need to contact customers.  On the other hand, he is good at dealing with production process and operations.    Hence, from past periods up till now, although Tiny Tots has high quality products, without effective marketing and promotion function, the company’s income is still quite low.  These factors can be seen as a risk in terms of the company’s sustainability in future.

The strengths and weaknesses of Tiny Tots Toymakers

According to above the above conducted SWOT analysis, it clearly points out the strengths and weaknesses Tiny Tots Toymakers has from a business perspective.  Tiny Tots Toymakers are pretty good at operations and customer service but have a deficit marketing and promotion.  From a strategic manager’s point of view, if Tiny Tots Toymakers can utilize its strengths and overcome its weaknesses, the company will develop more competitive advantages and carve a sustainable niche in the global market.

An evaluation on international sales and marketing activities

There is still room for Tiny Tots on improving international sales and marketing activities.  Currently, Tiny Tots exports its products to Australia and Japan with limited distributions.  The similarity of these two markets is that both the sales and export agents contact Tiny Tots directly.  This means that the issue of Tiny Tots Toymakers is pretty passive on marketing.  Also, there is rare work down on sales promotion and market research for cost reasons.  Without promotion and market research, the customers may reduce the incentive on consuming products and the company does not have effective data about a particular target market or competition.  Therefore, in the concept of the marketing 5Ps, “Product, Price, Place and Promotion”, successful businesses have to promote the right products to the right people in the right place with the right price (Griffin & Pustay, 2010).  So, the urgent need for the company is to seek the ways to develop its international sales and marketing activities.    

Current strategy

The corporate strategy of Tiny Tots Toymakers is the single-business strategy.  The advantage of this strategy is that Tiny Tots can concentrate all its resources and capability on producing wooden toys with various designs.  Nevertheless, it also can be a weakness if competition or the external environment changes.  Next, in business strategy, Tiny Tots Toymakers adopts a focus strategy, which targets children segment within that segment try to reach a cost advantage.  In general, when company uses focus strategies, the customers often have a strong loyalty and this phenomenon may reduce competition directly.  However, Tiny Tots should be aware the risks of a focus strategy such as forgery and changes in the target segment (Griffin & Pustay, 2010).

Possible actions on improving the sales and marketing

The possible actions could be made in order to improve sales and marketing in both domestic and international markets as following:

  • Bulk order promotion: Bulk order can attract customers to buy more toys then the total sales volumes will increase.  As the volumes increase, the gross margin will increase as well, especially from international market.
  • Adopting standardized international marketing: According to a focus strategy, the strength of Tiny Tots is low cost operations.  Adopting standardized international marketing can reduce marketing cost effectively and result in economics of scale in production.  Particularly in Europe, because the cost of timber, similar wooden toys which are made in Europe have become more expensive than before.  This is a great opportunity to enter this market but should be careful in fluctuating dollar value.  However, some advantages need to be concerned such as different conditions of product use, difference in consumer behaviour and restrain local marketing initiatives (Griffin & Pustay, 2010).  

4.0 CONCLUTIONS

Overall, Tiny Tots is a successful small family company.  The owner has strong skills and passion in his own business.  The competitive advantages of the company are high quality products, customer loyalty, low cost operations, competitive production skills and capability.  As long as Tiny Tots Toymakers can develop marketing and promotion function in both domestic and international markets, the company can grow sustainable in the future.

  1. RECOMMENDATIONS
  • Based on the SWOT analysis, the weakness can be defined as a lack in marketing and promotion activities whereas the opportunities are a mere competition in New Zealand, toys become more expensive in Europe and fluctuating dollar value is favourable against Australia and Japan.  Hence, Tiny Tots Toymakers needs to set a strategic goal on extending distributions to reach 80-90% of retailers in New Zealand in one year, and achieve at least 30-40% more retailers in Australia and Japan.  Because there are only a few competitors in New Zealand and fluctuating dollar value are favourable for $NZ.  The faster they can extend their market share, the more competitive advantages they will have.  
  • The next step of Tiny Tots is to develop tactics, which focus on the details of applying the company’s strategic goals, for example, the ways to contact and convince retailers to sell Tiny Tots’ toys (Griffin & Pustay, 2010).
  • If there is any change on fluctuating dollar value in Europe, Australia and Japan, Tiny Tots Toymakers should pay attention to it.

Reference List

Griffin, R. W., & Pustay, M. W. (2010). International Business. Upper Saddle River, NJ: Pearson Education, Inc.

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