Hasbro My Final Project

DONALD KEEBAUGH
THOMAS MORRIS
BUAD 4980-005
10 DECEMBER 2014

Table of Contents
Pg. 1 Title Page
Pg. 2 Table of Contents

Part I The Intro

[HASBRO MY FINAL PROJECT]

Pg. 3 Hasbro My Final Project
Pg. 4 Setting the Scene

Part II The Toy Industry

Pg. 5 The Environment of the Toy Industry
Pg. 7 Technology of the Toy Industry

Part III About Hasbro

Pg. 8 Hasbros Advantages and Competencies
Pg. 9 Hasbros Strategies
Pg. 11 Hasbros Market Segments
Pg. 12 Hasbros Newest Industry

Part IV Graphical Information

Pg. 13 Hasbros SWOT Analysis
Pg. 14 Hasbro and the Global Environment
Pg. 16 Hasbros Governance, Culture, and Ethics
Pg. 18 Financial Data Comparison

Part V The Outro

Pg. 23 Final Thoughts
Pg. 24 Works Cited
Pg. 26 Works Consulted

Part I: The Intro

Hasbro - My Final Project
(WARNING: This section contains a first person point of view for the purposes of
explanation. If the thought of a first person point of view gives you a stomach cramp, the
author would recommend taking an antacid to brace yourself. Everyone else, enjoy the
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show!)
What you are now reading is the compilation of my work in BUAD 4980, including all
homework assignments and mini-projects. It is my number one hope, above everything else, that
this project was not a waste of your time for sitting through this and my time for typing up this
Brobdingnagian monstrosity. My number two hope, regardless of the first one, is that by reading
this you understand a little more about Hasbro than what you already know.
For the purposes of this project, I have split it into five sections: The Introduction, which
you are currently reading; Information on the Toy Industry, namely its environment and
technology; Information About Hasbro, regarding its advantages and competencies, strategies,
market segments, and its most current industry branch; Graphical Data that is relevant to
Hasbro, including its SWOT analysis, global environment, governance/ethics/culture, and
balance sheet; and lastly, the Outro, featuring any final thoughts as well as the works
cited/consulted pages. As expected, this project pulls information from each of my prior
assignments, in somewhat chronological order, but some sections combine multiple assignments
into one, cut information entirely, and/or are moved to the appropriate part.
There are a number of reaffirmations in this project, things that I believe to still be true
from when I had previously of looked up data. However, there are also a number of revisions,
stuff that I either no longer to be true or new data entirely. For the sake of clarity, sections where
reaffirmations are present will have their subtitle in green font; sections where revisions are
present will have their title in red font.

Setting the Scene

Why I Chose Hasbro
(WARNING: This section of the project contains a first person point of view for the sake of
not straining the authors sanity bywell, not saying the author several times a sentence.
Those with a nervous disposition can safely skip this section. Everyone else, enjoy the
show!)
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The number one reason that I had chosen Hasbro for the purposes of this semester long
project is because I wanted to make up for a prior failure. Two years ago, I was in the Accounting
program with a more or less promising future ahead of me until I hit accounting two. It was said
that accounting two was not meant to be a weed out class, but as I am no longer in the
accounting program, I can say it was. Regardless, there was a semester long project in that
classroom that involved covering a publically traded company and I wanted to cover Wizards of
the Coast for the project. The thing was, Wizards of the Coast was bought by Hasbro some time
ago, so, I decided Next best thing. To make a long story short, I did not end up passing that
class as Ds are the new F and my assignment was a complete waste because I was not expecting
the large difficulty spike between classes. So, the reason I have chosen Hasbro was to make up
for that, if not for the grade, at least for the principle of the thing. I will now return you to your
regular, neutral point of view.
Hasbros History
Hasbro is a branded play company with a 90+ year history of revolutionizing the toy,
game, and entertainment industries. In 1923, Hasbro was founded by the Hassenfeld Brothers,
Henry and Helal, in Providence, Rhode Island. (Hasbro History) At first, Hasbro was only a
textile industry that dabbled in selling pencil boxes and other schools supplies, but in the 1940s
Hasbro expanded in selling its first toys (doctor and nurse kits, specifically) after Henrys son,
Merill, became president of the company. In 1952 and the 1960s, Hasbro released their first
truly iconic toys; Mr. Potato head and G.I. Joe. The 1970s was when the next major toy and
entertainment revolution happened because of the release of the groundbreaking classic, Star
Wars; it was during this time that Kenner released its famous Star Wars toy brand (Kenner being
owned and operated by Hasbro at this time, of course). The next decade, however, was when
Hasbro had a major period of growth as it released several, now world famous, toy franchises,
chief among these being Transformers and My Little Pony, and it also purchased Milton Bradley
and PLAYSKOOL, two of its main competitors at the time. (Hasbro History 2013 1-2)
At this time, Hasbro was already a widely respected company, but in 1983 it established
the platform that the Hasbro Childrens Fund rests on with the creation of the Hasbro Charitable
Trust and Hasbros Children Foundation. Since then, Hasbro has donated over $100 million
dollars and 25 million toys and games to children in need, and has its employees take four hours
of paid leave a month in order to volunteer for organization and programs dedicated to helping
children. In the 90s, Hasbro acquired several more companies and led the charge in corporate
social responsibility and workplace safety. In the 2000s and beyond, Hasbro has created a
breakthrough in working with companies such as LucasFilms, Marvel Studios, Electronic Arts,
and Paramount Pictures in order to become a branded play toy and entertainment industry.
(Hasbro History 2013 3-5)

Part II: The Toy Industry

The Environment of the Toy Industry
Things to consider in regards to the environment of the Toy Industry include: The
Competitive Forces; Macro Environment changes; its current stage in the life cycle and how
dynamic it is; and Globalization.
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Competitive Forces
There are six competitive forces: Risk of Entry, Rivalry, Bargaining Power of Buyers;
Bargaining Power of Suppliers; Substitute Products; and Complementors.

The Risk of Entry in the Toy Industry is actually fairly low, with new members of the
industry with a solid idea or license able to gain new consumers fairly easy. The author
previously felt that fan-following of franchises or brand loyalty was a bigger factor than it
actually was. Additionally, because switching cost is a non-issue in regards to nonelectronic toys, it allows new entrants to get a better foothold into the market.

Rivalry in the Toy Industry, concerning the previous point is a large factor. Not only is it
easy for competitors to threaten previously established toy companies, but it is just as
easy for them to be acquired by competitors as well.

The Bargaining Power of Buyers is a large force in the Toy Industry as well, because:
Toys are not an essential product, so if the economy tanks parents and the like are not
going to be rushing out to buy toys; The volatility of customer preferences in the industry
forces companies to adapt to new fads, which makes them need to constantly innovate
products instead of building on the same thing over and over again.

The Bargaining Power of Suppliers, in contrast, is not as big a deal. There are many
different suppliers for toy companies to choose from, and it does not matter to them who
are the one who supplies material for their toys, which forces the suppliers to bend to the
toy companys demands.

The threat of Substitute Products is a very big deal on the Toy Industry, as toys
companies not only against each other, but against video games, electronic devices,
television, and computers.

Complementors, also called accessories, in the Toy Industry are a common practice; most
companies don't just try to sell a basic toy, but an innumerable number of things that go
with it.

(Hasbro (NDQ:HAS) 5)

Macro Environment Changes

There are three particular trends that are affecting the macro environment in the Toy
Industry: Government regulation, Counterfeiting, and the Rise of non-traditional toys.
Recent events in the Toy Industry in regards to safety concerns have caused an increased
focus on making sure that toys are safe for children. In particular, there have been product recalls
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due to dangerous components and chemical compositions of toys. Because of this, toy companies
have begun to undergo increased scrutiny from government organizations, and there have been
an increase in laws to make sure that toy companies make their products up to certain safety
standards. (Study on the 20)
The Counterfeiting of products is another trend that is a concern for toy companies,
although not recent, it is growing rapidly. Previously, counterfeit toys were relatively
unsophisticated and of a universally low quality. Currently, they are still unsophisticated and of a
low quality, but there are now so many fakes running around it causes issues in: An increased
chance for buyers to mistake counterfeits for the real deal; As the creators of the fakes don't care
about the quality, they are likely to not have the most recent safety standards in the forefront of
the design process, meaning that when and if a kid is harmed playing with it will cause more
image problems for the industry as a whole; and, the companies themselves have to waste money
on cracking down against fakes that they could spend on product design or running facilities.
(Study on the 20)
More than the other two, the biggest negative trend in the toy industry involves the
increase of non-traditional toys that are competing against traditional toy companies. Since there
are an increasing number of alternatives for kids to turn to when it comes to entertainment, it cuts
into the market base for toy companies to appeal to. (Hasbro Annual Report)
Stage in the Life Cycle and Dynamic-ness
The Toy Industry really has two different ways of looking at the Life Cycle: where it
currently stands season by season, and where it is overall. Season by season, the Toy Industry
really does shift all over the spectrum from Embryonic to Growth to Shakeout to Mature to
Decline, depending on what the current toy trends are; if you really think about, the industry goes
through the entire cycle every Holiday season. (As an aside, this is why the Toy Industry is
considered to be very dynamic; the customer base of whom they are marketing towards, the
preferences they are exalting, and the trends that are active change so rapidly that companies
have to stay on their toys or be left behind.) As for where the Toy Industry stands overall, it
shows characteristics of being in the Growth stage in the life cycle. As is typical in the Growth
Stage, the demand in the market is always at a high due to the rate toys are churned out; also, the
threat from competitors is high due to the low barrier of entry to get into the industry.
Globalization
The toy industry, although becoming more and more global, most of the globalization is
taking the effect of exporting and importing products rather than putting factories and such on
foreign soil. For the most part, a lot of American toy companies have their products produced by
oversea factories.

Technology of the Toy Industry

Dominant Product Technology

The dominant product technology of the Toy Industry, the thing that makes it possible for
Hasbro to produce their products and for other companies in the toy industry, is factories.
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(Hasbro Report 45) The hardness of factories would be Tangible, as products are made in
regards to a blue print, and the level of sophistication for the Toy Industry at current is
Intermediate, as Chinese factories currently do have marginally intelligent technology
creating the product, it is still guided by human hands.

In regards to where the dominant product of technology is on the S-curse, it is still in

the increasing returns segment. Currently, there has not yet been a paradigm shift leading to
the creation of a product technology that can compete with the factory system, as much as
innovators have been looking to create such a thing. However, labor-intensive factories,
meaning those done by hand, are being phased out by automated factories; from a certain
point of view, one could say that automated factories are the paradigm shift competing with
labor-intensive factories.
Technological Standards
(NOTE: Because of the nature of the Toy Industry as not (currently) being as dependent as
other industries are on technical standards, the following is based purely on the authors
personal conjecture; apologies in advance for this.)
Unlike many other industries, technological standards are not important to the Toy
Industry. The main type of type of toy produced in the Toy Industry, the traditional toy, is not
designed to work with the toys of another company and the toy parts of one company are not
generally compatible with toys of another company. Put another way, you cant fix your broken
Mattel toy with Hasbro parts. From another perspective, it is of little consequence if a child plays
with two different toys from different companies or not; unlike how a Macintosh specific
program only works on a MAC, a child can play with a Mattel and Hasbro toy together just fine.
However, this is really only true in regards to traditional toys; non-traditional toys, such
as video games, have begun to encroach on the markets of traditional ones, and technical
standards are very important to such toys. To put it simply, there are three specific standards with
video game styled toys that are important to that sub-sect of the industry: Xbox, manufactured
by Microsoft; PlayStation, manufactured by Sony; and Wii, manufactured by Nintendo.
When it comes to designing games, developers usually design games to work following the
specifications that one of the three dictate, and occasionally they design similar versions of
the same game to work on the other two's consoles.

Part III: About Hasbro

Hasbros Advantages and Competencies
Competitive Advantage
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When it comes to the Toy Industry, Hasbro possesses a competitive advantage, as defined
by Debbie Handcock (Hasbro's Investor Relations Director) as: (...) delivering innovative
products that not only encompass the traditional categories of toys such as board games and
action figures, but also in electronic entertainment and our most recent trend of making toys for
recent movies such as Ironman and Transformers. The emphasis on licensing toys from popular
movies is helpful most in the idea that it will help offset the drop in sales after Christmas is
over. (Hasbro (NDQ:HAS) 8)
Pitting Hasbro's competitive advantage against the four generic building blocks of
competitive advantage, the following is seen:

Efficiency - Hasbro has actually been inefficient at reducing costs for products and
strengthening their balance sheet. (Hasbro (NDQ:HAS) 6)

Quality - Hasbro has a dedication to creating quality children and family entertainment.
(Hasbro Annual Report 13)

Innovation - When it comes to innovation, Hasbro has been fantastic at it; they know how
to respond to the market, update and create new products, and find new licenses for the
company. (Hasbro (NDQ:HAS) 5)

Responsiveness to Customers - Although Hasbro does have a website for customer

contact, and an ability to read the market to know what customers want, they aren't that
responsive to customers.
Distinctive Competencies

Hasbro has a distinctive competence at differing itself against its competition by doing
three particular things: Corporate Responsibility by giving money back to the community,
pushing sustainability with their products, and donating toys; Constant Innovation; and Diversity
of Strong Brands, meaning they have several different brands of products appealing to several
different market segments, and they are either all household names and/or have been around for a
long time. (Hasbro Annual Report 3, 11, 17)
In regards to how prior strategies have helped to shape Hasbros competencies, the
Company practiced: Growing core owned and controlled brands; and Developing new and
innovative products that respond to market insights. (Hasbro (NDQ:HAS) 5) Hasbro's recent
strategies are also focused on strengthening its core competencies, such as continuing to
emphasize its corporate responsibility and sustainability, and continuing to build innovative ideas
and products, and building new ones, such as focusing its core brands that are pulling the most
weight and bringing in the most money. (Hasbro Annual Report 3-8)
Although it seems like there no barriers stopping other companies from copying Hasbros
competencies, this is not the case. For a company to contribute to society the way Hasbro has, it
needs a culture to emphasize doing such a thing. For a company to achieve Hasbros product
innovation and reworking, it needs to dedicate the budget and effort to do so. For a company to
rival Hasbro in their number of brands in acquisitions, it will take time, determination, and a
little luck.
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Hasbros Strategies
Business Level Strategy
Hasbro practices a Broad Differentiation strategy, catering to several different market
segments and selling specialized products in each segment; additionally, Hasbro spends a great
deal of money and time in an effort to differentiate itself from its competitors. Hasbro executes
its business level strategy in this way:

Hasbro possesses a diverse product offering among its segments, making sure: Products
possess reliability in continuous function and have appealing features; Goods are sold at
the right time and place, while updating and making new products to fit with new
demand; Promoting their products so that consumers are aware of the existence of said
products. (Hasbro Annual Report 3-12)

Hasbro puts a lot of time and effort into making sure that their products have a high
quality, good features, perform how they should and are simple to play with, and are very
reliable. (Hasbro (NDQ:HAS) 5-6)

Hasbro has a page on their website dedicated to consumer care, with FAQs, product
safety info, recall information, toy/game instructions, as well as e-mail, phone, and live
chat to contact them directly. (Hasbro Consumer Care)

Hasbro makes sure that its employees act in a complementary fashion with its image,
such as by acting ethical and being responsible for personal actions. (Code of Conduct)

Hasbro puts a strong focus on sustainability for the environment, corporate responsibility,
and taking play to the next level by making sure every child has the chance to play.
(Corporate Fact Sheet)
Strategies to Strengthen its Business Model

Hasbro has formulated a number of strategies to strength its business model. The
strategies Hasbro are undertaking are: Revolution in Play, Human Capital, the Three Is, and
Focusing its Business.

Revolution in Play: Hasbro is creating a "branded play world" by doing the following:
Pushing Hasbro's presence globally by investing into emerging markets and developing
economies to become more well-known; Making Hasbro's brands be in several different
mediums, such as films, television shows, and games, allowing them to be enjoyed
anytime, anywhere; Applying a cohesive story to their brands to create better immersion,
fueling a desire in collectors, and increasing value. (Hasbro Annual Report 4-8)

Human Capital: Hasbro places a lot of time and effort into hiring people who live up to
their standards of work ethic and are committed to furthering Hasbro's corporate social
responsibility message, with at least 25,000 hours of time spent among them total and
$14,000,000 spent for the sole purpose of philanthropy. (Code of Conduct)

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The Three I's: Hasbro has a philosophy resulting from its brand blueprint of "reimagining, re-inventing, and re-igniting its existing brands" and "imagining, inventing,
and igniting new brands", finding ways to expand outward into other product categories
while keeping them relevant at the same time. The purpose of this is to provide an
immersive (drawing you in), comprehensive (all of it makes sense together), and
engrossing (taking up your full attention, the most important part) experience for their
customers. (Hasbro Annual Report 20)

Focusing Business: Despite the amount of effort Hasbro is putting into the Three I's, it
has begun to focus resources and capital toward a select few of their brands that have
been identified as exceeding their expectations. Although it seems like putting more
focus into a few brands runs counter to the previous bullet point, the direction and new
frontier which they are taking these brands still involves the above. (Hasbro Annual
Report 3-4, 20)
Horizontal and Vertical Integration Strategies

Hasbro has undergone a number of Horizontal Integration strategies, involving the

acquisition, peacefully or not, and merger of a number of different companies. (Strategic
Management Theory 289-294) Companies Hasbro has acquired or merged with include: Milton
Bradley, who was originally an arch-rival of Hasbro, and so was acquired primarily to end
competition; Parker Brothers, another former arch-rival of Hasbro, was bought to take their
products and end competition; Tiger Electronics, who Hasbro worked with to create Furby and
the FurReal Friends lines; Tonka, who Hasbro bought because Tonka was looking for a buyer
due to a debt racked up by Tonka; and Wizards of the Coast, who Hasbro bought because Magic:
the Gathering and Pokmon. (Hasbro Annual Report 35-37)
On the other axis of integration, Hasbro has done comparatively little vertical integration,
either forward, integrating into stores, or backward, producing its own products. (Strategic
Management Theory 295-302) Although Hasbro does own and operated at least two of its
factories one in Waterford, Ireland and one in East Longmeadow Massachusetts, the rest of its
products are made by third party factories, over 115, and a third of them are in China.
Additionally, Hasbro does not sell its own products; it relies exclusively on third party vendors.
(About Our Supply Chain) There are definitely reasons that Hasbro should become more
vertically integrated, those being: If Hasbro became more backwardly integrated, it could save
costs from producing its own products and it wouldn't have to worry about political troubles in
China; additionally, its brand image might benefit from it as well; and if Hasbro became more
forwardly integrated, it would have more power of the stores selling its products, as it would own
those stores.

Hasbros Market Segments

Hasbros products are marketed into four different segments: Boys, Girls, Preschool, and
Games.
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Boys
Hasbros Boy franchises are typically marketed around action/adventure products and
include the following products among its category: NERF, a line of sports and action products;
Transformers, action figures and accessories that are supported by both television shows and
feature films; Super Soaker, squirt guns; G.I. Joe action figures, accessories, and entertainment
licensed products; and Licensed Products based on franchises such as Beyblade, Marvel Comics,
and Star Wars, each of with are supported by animated series. (Hasbro Annual Report 14-15)
Girls
Hasbros Girl franchises seek to provide a traditional and wholesome play experience,
which generally translates as meaning snuggle toys. However, Hasbro has begun marketing
former Boy franchises, such as NERF, among this category as well. A small list of toys included
in this category include: Littlest Pet Shop, which sells dolls and is supported by entertainment
fiction and digital gaming products; NERF Rebelle, the aforementioned NERF line targeted at
girls (for purchasing, not for you get it); and My Little Pony, which sells dolls and is supported
by digital gaming, comics, movies, and a television show. (Hasbro Annual Report 15)
Preschool
Hasbros Preschool franchises are targeted at infants and, as it says, preschoolers. Product
franchises by Hasbro that are exclusively meant for preschoolers include: Play-Doh, Sesame
Street, Mr. Potato Head, Rocktivity, Sit N Spin, and a number of miscellaneous edutainment
products. (Hasbro Annual Report 15-16)
Games
Hasbros Game franchises are offered in a number of mediums, including board, card,
digital, and role-playing. Game franchises Hasbro owns include: Magic: the Gathering,
Monopoly, Battleship, Bop-It, Yahtzee, and Risk. (Hasbro Annual Report 15)

Hasbros Newest Industry

The most recent industry Hasbro has become a part of, and it has already been
participating in it for a few decades now, is the Entertainment Industry. That being said, Hasbro
has recently become more relevant in the Entertainment Industry by partnering up with
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DreamWorks Picture, Electronic Arts, Marvel Studios, Paramount Pictures, and Universal
Studios. Hasbro has also outsourced to animating companies, such as Sunbow, in order to create
cartoons based on their franchises. Somewhat more recently, Hasbro has created Hasbro Studios
for the purposes of licensing its brands for television shows, and Hasbro Films for producing
films based on its products. (Hasbro History 2013 4, Hasbro Annual Report 17 - 21)
The strategy that Hasbro used to squeeze into the Entertainment Industry was a joint
venture strategy. Hasbro has pooled resources together with, in addition to the above companies
to produce movies, with the Company and Discovery networks to create the Hub channel, which
is now called Discovery Family. (Hasbro Annual Report 13 - 14) There are two primary
reasons as to why Hasbro chose to adopt a joint venture strategy: Gaining access to the licenses
of popular brands so that they can help produce entertainment based on them; and easing the
workload on Hasbro for the production of said entertainment. (Hasbro Fact Sheet)
There are a few different reasons for why Hasbro has decided to become as involved as it
is with the Entertainment Industry. The first reason is that toy franchises with a companion
storyline, either done through comics or television shows or whatever, have a tendency to be
more successful than those without. (As an aside, why this is the case is because the
entertainment fiction acts as commercials for the product, and the fiction itself brings in income
of its own, known as gravy.) The second reason is to get in good with other companys
franchises so they can license them to make toys. (Hasbro Annual Report 20)

Part IV: Graphical Information

Hasbros SWOT Analysis
Positive
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Internal

Strengths
Wide Range of Products
Large Portfolio
Strong Capital Position

External

Opportunities
New Market Expansion
Exclusiveness

Weaknesses
Dependence on China
No Self Distribution
Bad Concentration-Number
of Sellers Ratio
Threats
Electronic Alternatives
Counterfeits
Political Turmoil

Strengths
A major strength of Hasbro is a vast range of products and franchises, allowing them to
sell to several different demographics. (Hasbro SWOT)
Hasbro has a large, varied, and high-quality portfolio of subsidiaries and brands such as
Milton Bradley, Parker Brothers, Playskool, Tiger Electronics, Tonka, and Wizards of the Coast.
(Hasbro SWOT)
Hasbro maintains a strong capital position, with access to a large amount of material and
resources. Because of this, Hasbro is free to acquire other companies, expand into emerging
markets, and pour resources into product development. (Hasbro (NDQ:HAS) 11)
Weaknesses
Hasbro is heavily reliant on Chinese factories for the manufacture of their products. One
key problem with this is, due to the almost universally poor working conditions of said factories
and bias against oversea factories, it weakens Hasbros brand image. (Hasbro SWOT)
A second weakness of Hasbro is that the distribution of its products are performed
primary by other parties rather than by itself; as a result, this makes it highly dependent on those
companies to sell its products. (Hasbro SWOT)
A somewhat more complex weakness that Hasbro has is that half of its revenue comes
from three of its customers: Wal-Mart, Target, and Toys R Us. The problem with having such a
large portion of income come from just these three customers is that it gives Hasbro much less
bargaining power in dealing with them as Hasbro is so dependent on them. (Hasbro
(NDQ:HAS) 12)
Opportunities
There is an opportunity for Hasbro to increase its presence in new markets, such as the
application and video game market. Hasbro can accomplish this either by having another
company create games based on their franchise or by creating a new franchise wholesale for this
purpose. (Hasbro (NDQ:HAS) 12)
Another opportunity for Hasbro is becoming a one-stop merchandizer to companies like
Marvel, effectively, offering everything that Marvel could want in toy sales and such so that no
other toy company would be able to also make Marvel brand toys. (Hasbro SWOT)
Threats
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A recent phenomenon involves electronic products phasing out traditional toy products. As
some examples of this, tablets such as the iPad have become the number #1 requested toy
among 12 year olds; additionally, a large number of kids in the current age ask for video game
related products over normal toys. (Hasbro SWOT)
Although not recent, counterfeiting is a constant threat that Hasbro has to deal with, primarily
Chinese counterfeiters. Even though the majority of cheap counterfeits exist outside the U.S.,
they still saturate Asia and other oversea markets. (Hasbro SWOT)
Again, because Hasbro relies a great deal on Chinese factories for supporting the production
of its products, it is vulnerable to political shifts and government meddling. (China isnt the most
stable country in the world.) (Hasbro SWOT)

Hasbro and the Global Environment

Interactions in Foreign Markets
When it comes to creating value in global markets, Hasbro is taking these approaches:
Outsourcing production of its products to factories in other countries; Establishing management
in 40 different countries around the world; Selling products to over 120 countries, both major and
minor. (Hasbro Annual Report 15-16, 20) However, although Hasbro does offer different
products among its foreign markets than it does for its home market for cultural reasons, it does
not go out of its way in order to create an individual marketing message for each market or put in
detail differentiating a product from one market to the same product in another market. (Hasbro
Annual Report 25)
The major foreign markets served by Hasbro are Europe, Latin and South America, and Asia.
The primary entry mode used by Hasbro in foreign markets is exporting. The reason Hasbro is
active in these markets is because of these qualities possessed by those countries: Easy
communication between countries do to common language; Similar culture tastes and values so
toys can be marketed easily; and Convenience, because if you have most of your product
manufactured in one place, it will save on transport cost if you sell it there, too.

Local Market Pressures

Pressures for cost

reductions

High

Pressures for local responsiveness

Low
High
Where Hasbro is
Hasbro is here
headed

Low
In regards to cost reductions, Hasbro faces a high pressure to achieve low cost for production
of its products. The reason for this is, as Hasbro is a company in the Toy Industry, the
differentiation when it comes to price is considered important as toys are a commodity-type
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product. You see, children will probably play with any variety of toys regardless as long as it has
qualities that interest them, and as parents are the buyers of the product, they would have a
preference to buying the cheaper product that fulfills the child interest the majority of the time.
Because of this, lowering the cost of making their products is a key concern.
In regards to local responsiveness, Hasbro is relatively recently expanding into specific
emerging markets with unique tastes and customer trends, so pressures are not yet as high octane
as it could be. As Hasbro becomes further entrenched in emerging markets, the pressure for local
responsiveness will shift from LOW to HIGH. (Hasbro Annual Report 21-27)
Global Market Pressures

Pressures for Cost

Reductions

High

Low

Pressures for local responsiveness

Low
High
Global
Transnational
Standardization
Strategy (Hasbros
Strategy (Hasbro is
destination)
here)
International
Localization
Strategy
Strategy

At current, Hasbro has adopted a Global Standardization Strategy as the pressures for
reducing costs in its business are high while currently the pressure for reducing costs is low.
Although Hasbro focuses on differentiating themselves from competitors due to their innovation,
currently products are sold among foreign markets with little to no customizability among them.
However, as Hasbro is now branching off into more emerging markets as they are an
increasingly large source of income, it is putting more effort into taking account of unique
Customer Preferences and business climates. As Hasbro does this, it will at some point shift into
a Transnational Strategy. (Hasbro Annual Report 21 - 30)

Hasbros Governance, Culture, and Ethics

Governance
Hasbro has a focus on assembling good corporate governance as it is a critical factor to
achieving business success. At the top of Hasbros leadership structure is the Board of Directors,
fifteen people selected by Hasbros shareholders to oversee the management and conduct of the
company. Hasbros Board of Directors is divided into five committees:

The Auditing committee performs the following activities: Appoint the independent
auditor and oversee their work; Prepare the report required to be included in Hasbros
annual proxy statement; and Assist the Board in whatever capacity required.

The Compensation committee performs the following activities: Discharging the Boards
responsibilities relating to compensation of Hasbros executives; Overseeing Hasbros
incentive compensation and equity-based plans; Reviewing and discussing with
management in regards to Compensation Discussion and Analysis to be included in the

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annual proxy statement; and Preparing the report to be included with the annual proxy
statement.

The Executive committee is to act as assigned by the Board on behalf of the Board
between Board meetings, or when it is otherwise impractical for the full board to act, as
well as acting out any other function that is assigned to it by the board.

The Finance committee assists the board in overseeing Hasbros annual and long-term
financial plans, capital structure, use of funds, investments, financial and risk
management, and proposed significant transactions.

The Nominating, Governance, and Social Responsibility committee performs the

following activities: Identifying individuals qualified to become board members and
recommending them for Board selection; Developing, recommending, and overseeing
corporate governance principles, codes of conduct, and ethics; Overseeing the evaluation
of the Board; and Analyzing issues of corporate social and environmental responsibility
conduct.

The board of directors consists of: Brian Goldner, Alfred Verrecchia, Basil Anderson, Alan
Batkin, Frank Biondi Jr., Kenneth Bronfin, John Connors Jr., Michael Garrett, Lisa Gersh, Jack
Greenberg, Alan Hassenfeld, Tracy Leinbach, Edward Phillip, Richard Stoddart, and Linda
Zecher.
(Board of Directors)
Beneath the board of directors is Hasbro's executive management, with Brian Goldner as the
president of Hasbro and the other seven members as vice-presidents. Hasbros executive
management consists of:

Executive
Title
Brian D. Goldner
President and CEO of Hasbro
Barbara Finigan
Chief Legal Officer and Secretary
Martin Trueb
Treasurer
David Hargreaves
Chief Strategy Officer
Deborah Thomas
Chief Financial Officer
Duncan Billing
Chief Development Officer
Wiebe Tinga
Chief Commercial Officer
John Fracotti
Chief Marketing Officer
(Executive Managment)
The hierarchy is visualized as follows:

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Board of Directors

Barbara Finigan
Chief Legal Officer and
Secretary

DavidHargreaves
Chief Strategy Officer

DeniseClark
SVP, CIO

Michael Enright
VPand CTO, Digital Media

KrisKnowlton
Internet Development
Manager

Brian Goldner
President and CEO

Deborah Thomas
Chief Financial Officer

MarkBlecher
GM, SVPDigital
Media and Gaming

John Frascotti
Chief MarketingOfficer

Lisa Licht
GM, Entertainment
and Licensing

Martin R. Trueb
Treasurer

Duncan Billing
Chief Development Officer

WiebeTinga
Chief Commercial Officer

Eric Nyman
SVPMarketing

Michelle Paolino
VPGlobal Brand
Marketingand
Strategy

Vickie Denicola
VP, Online Media

Jan Rimmel
VP, Global Online
MarketingServices

John Doe
Manager Global
Brand East

JaneDoe
Manager Global
Brand West

(Hasbro Organizational Chart)

Culture
The culture of Hasbro is described as fun, creative, collaborative and above all fastpaced. Hasbro believes that making the world smile begins with making their employees smile.
In regards to employees, Hasbro tries to make sure that potential recruits understand what is
needed of them and check to make sure they can: Make quality decisions; Achieve results; Build
relationships; Adapt and learn; and Drive success with people. There are seven core values that
Hasbro champions to inform the actions and decisions of both the company and the employee:
Community, Innovation, Fun, Diversity, Competitiveness, Entrepreneurial Spirit, and Integrity.
(Our Culture)
Ethics
Hasbro's ethical approach to doing business is embedded in its culture. All of Hasbros
managers and employees are trained in legal and ethical issues that come up in there day to day
work environment, preparing them to be able to do the right thing. Also, Hasbro operates a
global ethics helpline and a pair of confidential mailboxes. This allows employees to
anonymously report ethical concerns without a risk of hostile action taken against them, and
these avenues are checked and responded to daily. Hasbro also possesses a code of conduct to
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help ensure: All business is done legally; Employees know about Hasbro's policies and have the
ability to raise concerns; Ethical issues can be reported without fear. (Ethics in Action)
As an example of how Hasbro has responded ethically before, during 2007 to 2008, when
a number of toys that were being made in China were discovered to have used lead paint, there
was a series of recalls and a huge blow was dealt to the image of the toy industry. Although
Hasbro's toys were not affected by this because they were not using lead paint, they took action
to differentiate themselves from their competitors with Operation Gold Standard, a marketing
plan emphasizing that their products were unaffected by the recall. Hasbro also established a
Government Affairs practice to help advocate and inform issues important to Hasbro and their
shareholders. (Levick)

Financial Data Comparison

(WARNING: This section of the project contains a first person point of view, because the
alternative is using incredibly clumsy dialogue, something he hates. The author apologizes
for any inconvenience this may cause. Everyone else, enjoy the show!)
As I mentioned previously in this report, I spent some amount of time training to become
an accountant earlier in my college career. As is typical, I have forgotten the entirety of it by this
point, so this section probably wont be as insightful as I wanted it to be. So, instead of me
awkwardly talk about the differences in Hasbros balance sheets between multiple years, I am
going to show you the differences in Hasbros balance sheets against two of its competitors,
Mattel and the Lego Group! By doing so, we can get some insight of Hasbros standing in the
Toy Industry. For claritys sake and for sanitys sake, I am not going to be including the Income
Statement and Statement of Cash Flows in this report; this whole thing has gone on long enough
as is.

Hasbros Balance Sheet

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(Hasbro Annual Report 63)

Mattels Balance Sheet

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(Mattel Annual Report 66)

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The Lego Groups Balance Sheet

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(Lego Annual Report 15-16)

Thoughts
Just looking as assets alone, the listing will go: Hasbro in 3 rd place ($4,402,267,000),
Mattel in 2nd place ($6,439,626,000) and the Lego Group in 1st place ($17,952,000,000)! In prior
years, Mattel was solidly the #1 company in the Toy Industry, but it seems recently that the Lego
Group has pulled ahead of them by an OVERWHELMING margin. As bad as this seems for
Hasbro, though, third place in a multi-billion dollar industry is still pretty good.

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Part V: The Outro

Final Thoughts
(NOTICE: You have made it to the end of the project! Congratulations! Also, first person
point of view, very icky, yadi, yadi, yada. Enjoy the show! Or whats left of it)
Well, this is the end. Hopefully by slogging through this, and I know it wasnt easy, you
have learned something about Hasbro that you did not already; Lord knows I have. Although
earlier in the semester I had said that Hasbro was number two in the Toy Industry, it is more
accurate to say that at this point they are number 3. Even if they cant make it back to the #2 slot,
or more preferably hit #1, at the very least they have the Brony subculture.
In regards to the class, I did have a lot of fun this semester, although this project was far
more of a pain in the neck than I had intended it to be; this, of course, was my own fault for
starting late. Nevertheless, I finished, I am (more or less) happy with it, and if I had more time I
would buff it out a bit more. Thank you.

See You Next Time!

Chak de, Namaste, and Good Luck.

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Works Cited
*1. Hill, C., Jones, G., & Schilling, M. (2013). Strategic Management Theory
(11th Ed.). Stamford, CT: Cengage Learning. Print Source.
2. Hasbro History. Hasbro Investor. Retrieved from
http://investor.hasbro.com/social/history.cfm
3. Hasbro History 2013. Hasbro. Retrieved from
http://www.hasbro.com/corporate-2/images/2013_HasbroHistory.pdf
4. Coffer, M., Galt, E., & Honda, M. Hasbro (NDQ:HAS). Slide Share. Retrieved
from http://www.slideshare.net/egalt/hasbro-report-5817680
5. Study on the competitiveness of the toy industry. (2013). Rotterdam,
Netherlands: European Commission. Print Source.
6. Hasbro Annual Report. (2014, April 7.) Hasbro Corporate. Retrieved from
http://investor.hasbro.com/annuals.cfm
7. Customer Service. Hasbro. Retrieved from
http://www.hasbro.com/customer-service/
8. Code of Conduct. Hasbro Investor. Retrieved from
http://investor.hasbro.com/documentdisplay.cfm?documentid=8614
9. Corporate Fact Sheet. Hasbro Corporate. Retried from
http://files.shareholder.com/downloads/HAS/3500703430x0x646556/5a456ee
e-44e8-40e7-b787-aad20365380d/Corporate_Fact_Sheet_August_2013.pdf
10. About Our Supply Chain. Hasbro Corporate. Retried from
http://www.csr.hasbro.com/ethical-sourcing/about-our-supply-chain
11. Hasbro SWOT. MBA Skool. Retrieved from
http://www.mbaskool.com/brandguide/media-and-entertainment/6016hasbro.html
12. Hasbro Organization Chart. Cogmap. Retrieved from
http://www.cogmap.com/chart/hasbro/
13. Board of Directors. Hasbro Investor. Retrieved from
http://investor.hasbro.com/directors.cfm/

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14. Executive Management. Hasbro Investor. Retrieved from
http://investor.hasbro.com/management.cfm/
15. Our Culture. Hasbro Jobs. Retrieved from
http://jobs.hasbro.com/content/culture/
16. Ethics in Action. Hasbro Corporate. Retrieved from
http://www.csr.hasbro.com/governance/ethics-in-action
17. The Year of the Recall: Lead Paint In Toys. Levick. Retrieved from
http://levick.com/experience/case-study/year-recall-lead-paint-toys/
18. Mattel Annual Report. (2014) Mattel Corporate. Retrieved from
http://corporate.mattel.com/
19. Lego Annual Report. (2014, February 26.) The Lego Group. Retrieved
from
http://aboutus.lego.com/en-us/lego-group/annual-report

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Works Consulted
1. Yuen, J. (2012, January 1). Hasbro - BUS 475: An International Perspective. Tumblr.
Retrieved from

http://yuenbus475.wordpress.com/tag/hasbro/
2. Aulet, B. Culture Eats Strategy for Breakfast. (2014, August 14.) Tech
Crunch. Retrieved from
http://techcrunch.com/2014/04/12/culture-eats-strategy-for-breakfast/

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