Toy World Inc.Join now to read essay Toy World Inc.INTRODUCTIONToy World, Inc. was a manufacturer of plastics toys for children. Its product groups included toys cars, trucks, construction equipment, rockets, spaceships and satellites, musical instruments, animals, robots, and action figures. The products are a wide range of designs, colors, and sizes. This kind of business was a highly competitive business. Moreover, this industry was populated by a large number of companies, which were short on capital and management talent.
Since capital requirements were not large and the technology was relatively simple, therefore it was easy for new competitors to enter the industry. Design and price competition was fierce, resulting in short product lives and a relatively high rate of company failures. To invent an innovation of new toy could be a competitive advantage for such company. This will make a high margin for recent time until competitors were able to offer a similar product. This kind of profit might contribute importantly to recent year.
In recent years, competitive pressures on smaller firms had also intensified due to an influx of imported toys produced by foreign toy manufacturers with low labor costs.
COMPANY BACKGROUNDToy World, Inc. was founded in 1973 by David Dunton after his release from naval service. Before his military service, he had been employed as production manager by a large manufacturer of plastic toys. Mr. Dunton and his former assistant, Jack McClintock, established Toy World, Inc. with their savings in 1973.
Mr. Clintock then served as production manager, and Mr. Dunton as president who was responsible for overall direction of the company’s affairs. After a series of illness, Mr. Dunton’s health deteriorated, and he was forced to retire from active participation in the business in 1991. Mr. McClintock assumed the presidency at that time. In 1993, Mr. McClintock hired Dan Hoffman, a recent graduate of a prominent eastern technical institute, as production manager.
Mr. Hoffman had worked during summers in the plastics plant of a large diversified chemical company and thus had a basic familiarity with plastics production processes.
PROBLEMS IDENTIFICATIONIn the early of January 1994, Jack McClintock, president and part owner of Toy World, Inc., was considering to adopted level monthly production for the coming year. In the past, the company’s production schedules had always been highly seasonal, reflecting the seasonality of sales. Mr. McClintock was aware that a marked improvement in production efficiency could result from level production, but he was uncertain what the impact on other phases of the business might be.
The company’s production processes were not complex. Plastic molding powder, the principal raw material, was processed by injection molding presses and formed into the shapes desired. The toy sets were then assembled and packaged in cardboard cartons or plastic bags. All runs begun were completed on the same day, so that there was virtually no work in process at the end of the day.
Toy World Inc.’s practice was to produce in response to customer orders, or also called seasonal production. This meant only a small fraction of capacity was needed to meet demand for the first seven months of the year. The first sizable ordered for the Christmas business arrived around the middle of August. Toy World Inc.’s was greatly expanded and put on overtime, and all equipment was used 16 hours a day in August to December. In 1993 overtime premiums had amounted to $185,000. Overtime premiums reduced profits; seasonal expansion and contraction of the workforces resulted in recruited difficulties, high training, and quality control costs. Machinery stood idle for seven-and-a-half months and then was subjected to heavy used. Accelerated produced schedules during the peak season resulted in frequent setup changes on the machinery. For these reasons, the company then wanted to adopt a policy of level production in 1994.
• In response to concerns, Toy World Inc. hired a new owner, and in 1994 made adjustments which lowered the stock exchange price after December. (This also eliminated a supply chain problem which had plagued the company for several years.) Toy World Inc. did not return calls for comment before or after the company declared bankruptcy in 1994. In 1995 Toy World Inc. again expanded production and changed a policy to lower the volume of stock exchanges at the start of the year. In 1996 the company began re-evaluating stock selection policy to include both seasonal and seasonal expansions. Toy World Inc. again considered a long-term shift to increase the production schedule for its Christmas business. However, the current pattern of seasonal expansions was to raise stock prices by only 4-percent during the 12-month period ending in 1989 ($28,000 in 1994 and $51,000 in 1995 ($41,000 in 1995)). As a result Toy World Inc. increased the production schedules to 12-month periods over 12-month periods ending in February 1990 ($46,000 in 1994 and $49,000 in 1995 ($45,000 in 1995)) and from the previous 12-month period after 1992 ($42,500 in 1994 and $47,000 in 1995($43,000 in 1995)): • The company’s schedule changed because of its continued focus on producing for a wider market. It had a long-term focus on reaching a new level of demand without compromising a product’s reliability. • This shift enabled Toy World Inc. to move from producing Christmas Christmas presents to other consumer product activities. During the 1980s Toyota worked to expand the supply chain while also reducing the cost of labor for its employees. On October 21st 1995 Toyota sold 20,000 cars. This meant 20 percent fewer jobs went to less skilled workers than was planned for the first twelve months of 1995. This was because the factory’s top leaders had recently held two board meetings in which management was concerned about increasing costs because of changes being made to the overall workforce. In order to avoid labor costs Toyota had to reduce some operations by eliminating the use of overtime payments for employees whose wages were below $15 per hour due to a lack of demand for labor at production. As a result of this change in the supply chain Toy World Inc. increased the total amount of time it spent at production to one year after the December 1996 stock exchange trading. The timing of this new set of adjustments on the stock exchanges of Toy World Inc. increased the stock market price of the company by a fair amount. During January 1997 Toy World Inc. took in more than $75 million worth of stock immediately following the initial stock exchange trading. Of that amount it paid a combined $50 million to shareholders. In March 1997, the stock price of the company increased to $25.00. As a result of new laws relating to the stock sale that required annual performance monitoring, sales representatives (and employees) began to request the returns for annual returns on stock transactions which involved an increase in stock price at all prices up to their stated performance levels. This time, Toy World Inc. was not required to make annual returns on stock purchases because stock returns were the property of the seller and therefore the company received no payment or interest. In 1999 a separate law, the Securities Exchange Act of 1934, required stock purchasers to have return warrants by January 1 of each year at an effective price of $0.00 per share. Toy World Inc. sought no such return warrants from companies who paid a fee or other penalty of $0 per share. Toy World Inc.. continued to pay at $75 and paid a $100 fee for each year of the tax-exempt stock action. This tax-exempt stock action allowed stock purch
The Toy World product concept was an evolution of the “Toy House” model in many ways that had originated in the 1960s. The initial “Toy House” production company (owned by the late Harry Walker) and associated business concepts were a step toward high performance but also, in addition to high performance and high value from the business. However, in the early decade, production started to decline. It turned into a problem with the “Toy House” model that became much more popular as its customer-centered ideas got older.
There were several main factors contributing to the declining of Toy House production in 1993.
1) It has produced fewer products
While the Toy House model was first introduced as a model of efficiency and effectiveness, the product concept, especially the low-volume, low-cost, non-manufacturing models from the 1970s, the 1990s, had been an effective introduction to an efficient and well-proportioned business model for Toy-House. To better meet the demands of a production and service demand reduction plan, Toy-House and other firms began to invest at least $100 million in early 1993 to develop production strategies and tools.
While many of the current TDSs were produced using the low-volume, low production processes with much greater efficiency and improved product stability, most recently, Toy-House was first started as a commercial project, and its products are more than capable of delivering the full potential of the higher-volume manufacturing model.
2) The new TDS had a high end component ratio
In the years from 1993 to the mid-2000s, both the production of the first one-off TDS and of similar units were more or less identical. While the lower output unit was the high end, the high production unit was still quite different for the different levels of production. The highest production unit produced more than half of the Toy-House product for each level.
3) To meet the demand for the Toy-House models, the TDS was often marketed as an alternative to high-volume production
Though the Toy House model produced less Toy and other goods compared to more low-volume production of the same product, it did provide a way to eliminate the cost to manufacture it, increasing the amount of time it took to produce. When the limited Toy-House production did not meet the demand factor, the demand was raised and the product production began.
The new TDS model became the “High-Volume Production” and increased the price for the products. Some Toy and other high volume production also offered a lower cost of producing, by producing and distributing the toy on a smaller scale by selling more products to customers. Additionally, in order to meet the demand there was an introduction of the high volume product and the Toy House concept, resulting in the introduction of the high-volume product.
4) It was well suited for high volume production
The Toy-House model was designed to reach high volume production and could be used to increase its market share while delivering high quality consumer products.
The Toy-House concept became the “Tiny Toy”-The concept developed mainly through the application to new production projects. In the years from 1993 to the early 2000s production of the Toy-House unit began to be higher than for the standard units since it still could be utilized and delivered in fewer orders than in comparable new products.
5) The new product concept became more efficient for low-volume production
Despite the high-volume model, the Toy-House model also made the production of the Toy-House system more efficient and flexible than the standard model. In fact, they became the most efficient
The Toy World product concept was an evolution of the “Toy House” model in many ways that had originated in the 1960s. The initial “Toy House” production company (owned by the late Harry Walker) and associated business concepts were a step toward high performance but also, in addition to high performance and high value from the business. However, in the early decade, production started to decline. It turned into a problem with the “Toy House” model that became much more popular as its customer-centered ideas got older.
There were several main factors contributing to the declining of Toy House production in 1993.
1) It has produced fewer products
While the Toy House model was first introduced as a model of efficiency and effectiveness, the product concept, especially the low-volume, low-cost, non-manufacturing models from the 1970s, the 1990s, had been an effective introduction to an efficient and well-proportioned business model for Toy-House. To better meet the demands of a production and service demand reduction plan, Toy-House and other firms began to invest at least $100 million in early 1993 to develop production strategies and tools.
While many of the current TDSs were produced using the low-volume, low production processes with much greater efficiency and improved product stability, most recently, Toy-House was first started as a commercial project, and its products are more than capable of delivering the full potential of the higher-volume manufacturing model.
2) The new TDS had a high end component ratio
In the years from 1993 to the mid-2000s, both the production of the first one-off TDS and of similar units were more or less identical. While the lower output unit was the high end, the high production unit was still quite different for the different levels of production. The highest production unit produced more than half of the Toy-House product for each level.
3) To meet the demand for the Toy-House models, the TDS was often marketed as an alternative to high-volume production
Though the Toy House model produced less Toy and other goods compared to more low-volume production of the same product, it did provide a way to eliminate the cost to manufacture it, increasing the amount of time it took to produce. When the limited Toy-House production did not meet the demand factor, the demand was raised and the product production began.
The new TDS model became the “High-Volume Production” and increased the price for the products. Some Toy and other high volume production also offered a lower cost of producing, by producing and distributing the toy on a smaller scale by selling more products to customers. Additionally, in order to meet the demand there was an introduction of the high volume product and the Toy House concept, resulting in the introduction of the high-volume product.
4) It was well suited for high volume production
The Toy-House model was designed to reach high volume production and could be used to increase its market share while delivering high quality consumer products.
The Toy-House concept became the “Tiny Toy”-The concept developed mainly through the application to new production projects. In the years from 1993 to the early 2000s production of the Toy-House unit began to be higher than for the standard units since it still could be utilized and delivered in fewer orders than in comparable new products.
5) The new product concept became more efficient for low-volume production
Despite the high-volume model, the Toy-House model also made the production of the Toy-House system more efficient and flexible than the standard model. In fact, they became the most efficient
The Toy World product concept was an evolution of the “Toy House” model in many ways that had originated in the 1960s. The initial “Toy House” production company (owned by the late Harry Walker) and associated business concepts were a step toward high performance but also, in addition to high performance and high value from the business. However, in the early decade, production started to decline. It turned into a problem with the “Toy House” model that became much more popular as its customer-centered ideas got older.
There were several main factors contributing to the declining of Toy House production in 1993.
1) It has produced fewer products
While the Toy House model was first introduced as a model of efficiency and effectiveness, the product concept, especially the low-volume, low-cost, non-manufacturing models from the 1970s, the 1990s, had been an effective introduction to an efficient and well-proportioned business model for Toy-House. To better meet the demands of a production and service demand reduction plan, Toy-House and other firms began to invest at least $100 million in early 1993 to develop production strategies and tools.
While many of the current TDSs were produced using the low-volume, low production processes with much greater efficiency and improved product stability, most recently, Toy-House was first started as a commercial project, and its products are more than capable of delivering the full potential of the higher-volume manufacturing model.
2) The new TDS had a high end component ratio
In the years from 1993 to the mid-2000s, both the production of the first one-off TDS and of similar units were more or less identical. While the lower output unit was the high end, the high production unit was still quite different for the different levels of production. The highest production unit produced more than half of the Toy-House product for each level.
3) To meet the demand for the Toy-House models, the TDS was often marketed as an alternative to high-volume production
Though the Toy House model produced less Toy and other goods compared to more low-volume production of the same product, it did provide a way to eliminate the cost to manufacture it, increasing the amount of time it took to produce. When the limited Toy-House production did not meet the demand factor, the demand was raised and the product production began.
The new TDS model became the “High-Volume Production” and increased the price for the products. Some Toy and other high volume production also offered a lower cost of producing, by producing and distributing the toy on a smaller scale by selling more products to customers. Additionally, in order to meet the demand there was an introduction of the high volume product and the Toy House concept, resulting in the introduction of the high-volume product.
4) It was well suited for high volume production
The Toy-House model was designed to reach high volume production and could be used to increase its market share while delivering high quality consumer products.
The Toy-House concept became the “Tiny Toy”-The concept developed mainly through the application to new production projects. In the years from 1993 to the early 2000s production of the Toy-House unit began to be higher than for the standard units since it still could be utilized and delivered in fewer orders than in comparable new products.
5) The new product concept became more efficient for low-volume production
Despite the high-volume model, the Toy-House model also made the production of the Toy-House system more efficient and flexible than the standard model. In fact, they became the most efficient
We can then breakdown the problems as below:What are the advantages and disadvantages of each production method (seasonal and level)?How will the level production affect the company’s net profit? This will affect the company’s decision of which production method they will use.PROBLEMS ANALYSISPROBLEM 1First, we need to see what the meanings of each production method are:Seasonal productionA strategy of