Internal+Analysis

You may discuss in greater details here about the firm’s history, products, markets, culture, vi-sion, and so on. Some specific questions may include:  Which functional areas within the firm are particularly strong and which are particularly weak? Why?  Are any of the firm’s resources sources of competitive advantage? Are those advantages sustainable? What are the firm’s core competences?  What do the firm’s financial statements say about its health? Trends? Comparison to competitors?  What has the firm’s non-financial performance (employment stability/growth, innovation, customer relations, etc.) been like over the past three to five years?

Internal Analysis


 * History & Products**

Hasbro was started in Providence, Rhode Island in 1923 by Henry, Hilal, and Herman Hassenfeld. The three brothers originally worked with textile remnants and soon began to manufacture pencil-box covers and pencil cases, eventually becoming Hassenfeld Brothers Incorporated in 1926. Henry Hassenfeld took over the company. In 1935, it was his decision for the company to begin manufacturing pencils, and it continued in that market for 45 years. In the late 1930s, Hassenfeld Brothers began to manufacture toys. It seemed to be a natural compliment of its school supplies. The first toys were doctors’ kits and modeling clay and by 1942 the company had focused on toys. The company started to produce plastics due to World War II. Henry Hassenfeld became CEO in 1943, after the death of Hilal, and Henry’s son, Merrill, was named as President. After the war, the company created a make-up kit for young girls and in 1952 introduced Mr. Potato Head. It was important as it was the first toy advertised on television. Hassenfeld Brothers became licensed to sell Disney characters in 1954, and by 1960 was on of the largest toy companies in the nation. Henry Hassenfeld passed away in 1960, allowing Merrill to take over the company. Henry’s other son, Harold, took control of the pencil-making unit. In 1961 the company expanded to form Hassenfeld Brothers (Canada) Ltd. In 1963, G.I. Joe was created based on a television show idea, and the first action figure appeared on shelves in 1964. In 1968 the company changed its named to Hasbro Industries and went public, with a small stock offering. However, most of the stock was still held by the Hassenfeld family. It also acquired Playskool Manufacturing, noted for its preschool toys.

The last years of the 1960s were hard, with a strike, problems with suppliers, and a $1 million loss. Another disappointment was the 1970 creation of Romper Room nursery schools, based on the popular TV show. The venture lasted only five years after facing many problems. One other famous problem that company dealt with in the 1970s was the Javelin Darts set, which the government declared unsafe. Merrill Hassenfeld was named CEO in 1974, and his son, Stephen D. Hassenfeld was named as President, continuing the family ownership tradition. In 1977, the company was licensed for Peanuts cartoons products, but still had a $2.5 million loss. Merrill passed away in 1979. In 1980, after management issues, Hasbro’s pencil manufacturing became Empire Pencil, one of the nation’s largest pencil manufacturers, with Harold Hassenfeld leaving Hasbro. Stephen Hassenfeld then was named CEO and chairman of the board. His first duties were dealing with the tough economic status and poor company performance. Due to high oil prices which increased the cost of plastic, the company had been discontinued G.I. Joe in 1975, only to return in 1982 with a new look and mission. In 1984, Transformers were introduced, along with an animated TV show. The company also decided to focus on conservative, classic products with low costs and longer sales periods.

The company acquired a manufacturer of infant products and Knickerbocker Toy Company, who made Raggedy Ann and Raggedy Andy, in 1983. Soon after, Hasbro was the sixth best selling toy manufacturer. Revenues were $225.4 million, with profits totaling $15.2 million. In 1984, Hasbro acquired Milton Bradley, the company responsible for several board games, including the Game of Life, Monopoly, Concentration, Twister, and the Playskool brand. The company was now Hasbro Bradley Incorporated. With this merger, Hasbro became the largest toy company in the world by the middle of the decade, beating out Mattel. However, although the company made many attempts, it was never able to create a doll that would compete with Mattel’s popular Barbie. Also in 1984, the company faced a failed hostile takeover attempt from a British company. After the takeover attempt, Stephen Hassenfeld stepped down as President, allowing his brother, Alan, to take over that role. They acquired Coleco Industries in 1989, owner of Cabbage Patch Kids, Scrabble, and Parcheesi.

In 1991, company President Alan Hassenfeld became chairman and CEO, after the 1989 death of Stephen. Alan focused on acquisition and international sales. The company acquired Tonka Corp and Parker Brothers. The company also expanded overseas, with operations in Greece, Hungary, Mexico, and Southeast Asia. By 1995, Hasbro had more than $1.28 billion in international sales, and almost 45 percent of total sales with international. The company faced losses in the domestic markets, though, with failed launches tied to movies and TV shows, and faced reorganization in 1994. In 1995, after staying out of the virtual game industry for years, the company released its first interactive game. Also in 1995, the company turned down a merger proposal with Mattel.

In 1998, Hasbro acquired Avalon Hill and Tiger Electronics. In 1999, it acquired Wizards of the Coast, owners of Magic: the Gathering, and Dungeons and Dragons. In 2003, Alfred Verrecchia was named President and CEO. In 2008, Hasbro acquired Cranium, Inc. Several of Hasbro’s game offerings have been named one of the 50 most influential games. Also in 2008, Brian Goldner, the COO since 2006, was named as the President and CEO of Hasbro and Verrecchia became the Chairman of the Board (“Forbes.com”).


 * Management & Culture**

Although created as a private company, Hasbro is now publicly owned. While a private company, Hassenfeld Brothers was primarily ran by family members and close employees. In fact, the first eight employees were family, and many of the family members made decisions regarding new products and ideas throughout the company’s history.

Throughout the company’s history, innovation and professionalism have been prevalent parts of its culture. Due to the quickly changing and highly competitive toy industry, innovation is an important quality in design and production. Therefore, the company strongly encourages creativity in its employees and work environment. It also focuses on community involvement, and has partnerships with several different charities and foundations, including the Hasbrol Children’s Foundation and the Hasbro Charitable Trust (“Hasbro.com”).

The company’s strategy involves continual innovation and differentiation to make the brand the industry leader. Innovation is, again, the most important aspect of the business. By developing new products or building on the brand recognition and customer loyalty to develop new variations of classic products, the company can increase its growth and demand. Through differentiation of products, Hasbro can target a wide audience and multiple consumer groups, from very young children to mature adults. Part of the company’s success is the ability to create new products, to grow the brands and continue to appeal to a wide audience.


 * Which functional areas within the firm are particularly strong and which are particularly weak? Why?**
 * Competitive Advantages**

One of the firm’s competitive advantages is its alliances and licensing agreements. Some partners are Marvel and Electronic Arts (“Hasbro.com”). Together, the companies help create games, action figures, and other joint projects that help promote and compliment each other. These agreements have helped the company weather the poor economy and may push sales above expectations in the future. They allow Hasbro to hold exclusive rights to producing certain products and product lines, most of which are extremely popular and profitable. These partnerships and agreements can be sustainable and can represent growth for the company and stability during rough economic years.

Brand recognition and brand loyalty are two important assets to the company’s success. Because consumers know and associate the Hasbro name and its brands and products with quality, fun entertainment, they will have more confidence in the company and its future products. The company can use this to increase revenue in the future.

Another competitive advantage could come in the form of the company’s vision and leadership. On the website, Hasbro states its mission statement. It reads, “ The heart of Hasbro’s business is making great games, toys, lifestyle and entertainment products that are enjoyed by people of all ages worldwide. Hasbro intends to be the number-one company in the toy and game industry; the leading provider of play; and the number-one marketer, pioneer and partner in all channels and all customers”. The CEO, Brian Goldner, is working towards innovation and reinvention for the growth of the company, to encourage the creation of new, fresh, fun toys and games.


 * Company Health**

Throughout the 2009 business year, Hasbro has been a strong competitor in the toy market and continues to lead the market. Many of its competitors have faced large losses in the slow economy and reduced consumer spending. However, because of several lines, including Transformers 2, Wolverine, and G.I. Joe, Hasbro has a strong hold on the market. It has faced problems in the highly competitive industry. In 2007, the earnings per share was $2.05 and is expected to be less by the end of 2009 (Sushinsky). It is expected to increase in the next few years, however, and sales are expected to increase to over $4 billion. Also, the company was able to reduce its debt by 23% and increase net earnings by over $100,000 over the past few years. The company has is financially sound due to these factors.


 * Non-financial Performance**

Hasbro is interested in the safety and well-being of the children who enjoy their products. Social responsibility is prevalent throughout the organization, starting with the CEO who acts as the lead of the company’s social responsibility committee. The Corporate Code of Conduct states that “Hasbro has a long-standing commitment to conducting business in a manner which complies with the highest legal and ethical standards. Compliance and ethical behavior are core values of the Company, and are reinforced by regular communications from the Chief Executive Officer and other senior officials.” The company issues a Guide to Corporate Conduct and has a strong training program designed to help employees understand all issues.

Sushinsky, Greg. "Toymaker Hasbro Ahead Of The Game." 29 Jan 2009: Web. 12 Nov 2009. . "Alan G. Hassenfeld Profile." //Forbes.com//. Web. 14 Nov 2009. . "HAS - Hasbro, Inc.." //Forbes.com//. Web. 14 Nov 2009. http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=HAS "Well Workplace Award Executive Summary." 02 May 2002. Wellness Councils of America, Web. 22 Nov 2009. .
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