MGT503 Principles of Management Assignment 2 Solution Spring 2013

The toy industry, like all others, has its good points and its bad points. One person who’s trying to take advantage of the opportunities is Charlie Woo of Los Angles. Woo and his family came to United States from Hong Kong in the late 1970s. To support the family, his mother and father initially started a restaurant but found that venture to be too time consuming. They looked to start another business and settled on the toy industry. By using their contacts in Hong Kong and by bringing their four sons into the business, the Woo family opened ABC Toys. The company goal was to manufacture and distribute toys to small wholesalers who couldn’t get products from the large toy markers because they were not big enough customers as they could not buy enough volume. ABC Toys had identified a specific niche and was not even attempting to compete with the large companies like Mattel Hasbro. In the meantime Charlie, who was just about to compete his Ph.D. in management, joined the family business.

After that ABC Toys purchased several warehouses. Charlie’s vision was to encourage other small toys manufacturers and distributors to rent from them and together create a “toy town”. Charlie reasoned that this strategy was good because it would enable customers to come to one location, shop comparatively, and ending up buying more products then they would if they had to travel to separate stores. As more toy companies joined ABC Toys in Toy Town, word soon spread and customers began coming from all over. Now there are more than 500 wholesalers in Toy Town.”

Questions:

1) If someone is conducting the competitive analysis of the organization, which tool would you prefer him/her for competitive analysis? Justify your answer with rational.

Solution: 

five major forces.
1. The model provides an environmental assessment of strategically significant elements of the
organization’s task environment.
2. Rivalry is the extent to which competitors use tactics to lower the profits of their competitors.
3. The bargaining power of suppliers is the extent to which suppliers can exert power over business in
an industry by threatening to raise prices or reduce the quality of goods and services they provide.
4. The bargaining power of buyers depends on the factors such as number of customers in the
market, customer information, and the availability of substitute which determine the amount of
influence that buyers have in an industry.
5. The threat of new entrants is the threat of a price war if new competitors can enter the market.
6. The threat of substitute products or services is the extent to which businesses in other industries
can offer substitute products, thus reducing the profit potential for the industry.

and in the given scenarion we are not told abput that new entry or exit is possible and secondly if we think we have some opportunities and threats too so i think SWOT will be best regarding thie

 

2) From the given scenario, identify at least two competitive advantages of the company. Justify your answer with rational.

The Two competitive advantages of the company.

1. small businessmen will be encouraged to join the company.

2. the company is providing quality toys at cheap prices so large companies will make contract to supply them toys.

 

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