JAKKS Pacific Nadler Trushman Congruence Model Essay

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JAKKS Pacific’s Strategy



JAKKS has largely been seeking to expand and further consolidate its position in the market via strategic acquisitions and offering of numerous classes of products that appeal to a wide client base. As a matter of fact, from the company’s internal analysis, one of its key strengths is the production and marketing of a wide array of products. This the company accomplishes via the numerous licensing agreements it has in place with well-known toy character trademarks. In essence, JAKKS Pacific “designs, produces, markets and distributes toys and related products, pet toys, consumables and related products, electronics and related products, kids indoor and outdoor furniture, and other consumer products” (Reuters, 2018). However, the company spends little on R&D efforts, unlike is the case with some of its key competitors such as Mattel. The differentiation strategy would not fit too well with JAKKS Pacific’s strategy as it calls for excellent research, innovation, and development. This is more so the case given that as Schermerhorn (2009) points out, “a differentiation strategy seeks competitive advantage through uniqueness” (p. 147).



On the basis of an informed review of JAKKS’s current strategy, I am convinced that the competitive strategy most likely to fit with JAKKS’s approach is the cost leadership strategy. In essence, the cost leadership strategy is a generic strategy demanding that at a specified level of quality, an entity becomes the industry’s low cost producer and offers its products and/or services at the prevailing prices in the industry or below the industry’s average prices so as to rake in more profits than competitors. This particular strategy would fit with JAKKS’s current approach for a number of reasons. The fact that JAKKS offers for sale a wide range of products means its revenue streams are largely diversified. From its mission, i.e. the engagement of “children in creative play with products that encourage learning and interaction, and most importantly – fun!”, it is clear that the company is keen on the provision of a broad array of products that are likely to have market-wide appeal. Given its wide array of products it designs and produces, including kids’ outdoor and indoor furniture and pet toys, price wars initiated by competitors in response to JAKKS adoption of the low cost strategy would not, therefore, cripple the company’s operations. Further, the market in which JAKKSs operates is broad enough to further enhance the strategy’s implementation. JAKKS could successfully adopt the strategy by way of accessing lower cost materials, outsourcing some of its processes, etc.



Inputs

In basic terms, Nadler-Tushman Congruence Model postulates that an organization ought to be understood as a system made up of a number of elements. It is via this understanding that an organization’s performance can be fully understood. The input category identified in this model includes the environment, resources, and history. These are the factors and realities with which JAKKS has to work with and which affect it in one way or another.



a. The environment

Just like is the case with its peers, JAKKS is impacted upon by various factors within its larger environment.

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These include, but they are not limited to, the government and various regulatory bodies, and competitors. With regard to the government and regulatory bodies, it is important to note that the toy industry is one of the most closely regulated industries due to the risks toxic, dangerous, or poor quality toys could occasion on their end user, i.e. babies. The key body that highlights safety standards in this case is the United States Consumer Product Safety Commission, with some of the regulations it oversees being the small parts regulation. This particular regulation “prevents deaths and injuries to children under three from choking on, inhaling, or swallowing small objects they may ‘mouth’” (United States Consumer Product Safety Commission, 2017).



Competitors, yet another key input, are inclusive of all the firms in the toy industry with which JAKKS has to compete. It is important to note that the actions and moves by the competition could impact upon JAKKS bottom line and market share. These actions and moves could include new product offerings, price reductions, aggressive marketing campaigns, mergers and acquisitions, etc.



b. Resources

Another key input in this case is JAKKS resources. These include, but they are not limited to the employees of the company, the capital at the company’s disposal, technology, as well as the company’s reputation. Two of these will be discussed herein, i.e. the company’s employees and technology. Employees are in most cases deemed to be one of the key resources of an organization. This is more so the case given their contribution to the company’s overall direction and strategy. The company’s top executives are Stephen G. Berman – C.E.O. and Jack McGrath – Chief Operating Officer (JAKKS, 2017). While Berman has been with the company for the last two decades and therefore has perfect understanding of the company’s corporate culture and structure, McGrath is a toy industry veteran who has worked in with other toy makers in various capacities. Recent data indicates that the company has in its employ approximately 850 employees spread across the world, with half of these being located in the U.S. (Statista, 2017). When it comes to technology, it should be noted that although JAKKS is not at par with its peers on the R&D front, the company has in the recent past embraced several technological innovations with its flagship innovation on this front being DreamPlay technology. This particular technology “enhances and extends the play of toys by instantly linking a physical toy to video content, animation, and interactive game play” (JAKKS, 2017).



c. History

The various events JAKKS has initiated or encountered in the past have an impact on its performance as well as functioning today. Some of the events that have, in the past, shaped JAKKS to what it is today….....

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References

Business Wire (2018). JAKKS Pacific Taps Jared Wolfson as Senior Vice President, Digital Marketing & Studio JP. Retrieved from https://www.businesswire.com/news/home/20180102005111/en/JAKKS-Pacific-Taps-Jared-Wolfson-Senior-Vice

JAKKS Pacific. (2018). Jakks Pacific. Retrieved from https://www.jakks.com/

Reuters. (2018). JAKKS PACIFIC Inc. (JAKK.O). Retrieved from https://www.reuters.com/finance/stocks/company-profile/JAKK.O
Schermerhorn, J. R. (2009). Exploring Management (2nd ed.). Hoboken, NJ: John Wiley & Sons.

Statista. (2017). Number of employees of JAKKS Pacific in 2016, by country. Retrieved from https://www.statista.com/statistics/698015/number-employees-jakks-pacific-by-country/

United States Consumer Product Safety Commission. (2017). Small Parts for Toys and Children's Products Business Guidance. Retrieved from https://www.cpsc.gov/Business--Manufacturing/Business-Education/Business-Guidance/Small-Parts-for-Toys-and-Childrens-Products

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