JAKKS BUS599 Case Study

BUS599 Case Study

In a systems thinking context, there are two main kinds of feedback that could be encountered in an organizational setting. These are balancing feedback and reinforcing feedback. A reinforcing feedback could be described as a “situation where change continues to change and grow; a response to something happening makes it happen more frequently” (Askew, 2004, p. 134). On the other hand, a balancing feedback tends to minimize change and triggers a restoration of balance (Askew, 2004, p. 134). More specifically, a balancing feedback loop, according to Johnstone (as cited in Askew, 2004, p. 134) “is where the response to something happening makes it happen less.” Several formations of both reinforcing and balancing feedback loops could be demonstrated in the case of JAKKS. These have been described in both Figure 1.0 and Figure 1.1 below.

Figure 1.0: Reinforcing Feedback Figure 1.1: Balancing Feedback

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Marketing

With regard to figure 1.0., the expertise as well as experience of JAKKS’ top management leads to the formulation as well as implementation of strategic decisions. It is important to note that as has been highlighted via previous analyses of JAKKS, the company seems to identify the relevance of employees as a key resource. It is for this reason that its top managerial team is made up of persons who not only have the relevant experience, but also the appropriate academic background needed to effectively run the enterprise. These are the persons responsible for the formulation as well as implementation of JAKKS strategic direction. Strategic decisions could include, but they are not limited to, the appropriate competitive strategy to embrace. The company’s leadership could, for instance, adopt Porter’s generic strategies. These, according to Schermerhorn (2009), include cost leadership and differentiation. With regard to cost leadership, the approach adopted could include the reduction of costs so as to further enhance sales via reduced prices. On the other hand, differentiation could include ensuring that the toys JAKKS makes have a differentiating or unique aspect that sets them apart from the other toys in the market. The differentiating aspect could be better quality. If the strategy implemented by the company’s top management is effective enough, it leads to enhanced performance which could be in terms of increased market share or enhanced profitability. With increased market share and perhaps enhanced performance, the company has the appropriate financial as well as strategic muscle to further improve the performance of its top management, either through enhanced remuneration, making of better hiring decisions, or implementation of an executive training and development package.

Figure 1.1 represents a balancing or stabilizing feedback loop. The production of a wide array of product leads to greater market share and, perhaps, enhanced sales. Sales could increase over time but then become stagnant, or even start to decline at some point. It is at this point that the company could consider adding a new product category so as to protect its bottom-line. It is, however, important to note that unknown to the management of JAKKS, its customers at some point loose interest in the company’s toys and it is at this point that sales stagnate or decline. The loss of interest in this case is a consequence of failure by the company to continue its efforts on the marketing and promotion front, i.e. via the creation of new story lines.

There are various definitions of organization learning that have been proposed by a number of theorists in the past. This is to say that there is no standard definition of organizational learning. One of the more interesting definitions of the concept was offered by Lee (as cited in Baets, 2012) who views organizational learning as a process whereby “individuals’ action leads to organizational interaction with the environment; the environment responds; and environmental responses are interpreted by individuals who learn by updating their beliefs about cause and effect relationships” (p. 41). Another definition of organizational learning which could be useful in this case is that offered by Argyris and Schon (as cited in Baets, 2012) who point out that organizational learning “is a process in which members of an organization detect error or anomaly and correct it by restructuring organizational theory of action, embedding the results of their inquiry in organizational maps and images” (p. 41). Several parallels could be drawn from the definitions of organizational learning offered above. The first is the concept of people. Both definitions allude to the fact that organizational learning cannot take place without people. The second concept is that of feedback, whereby organizational learning takes place in the context of the continuous responses offered by the environment with which the organization interacts. In that regard, therefore, organizational learning could be discussed in light of the feedback loops identified in the case of JAKKS. The two concepts I have identified above are present in both cases, i.e. ‘people’ is represented by JAKKS top management, product development teams, and sales and promotion teams. Further, it is also clear that responses are given at every stage of both loops. For instance, with regard to the reinforcing feedback loop, it is the strategic decisions made by the management that leads to enhanced performance which in turn leads to changes with regard to better compensation or redeployment of top managers.

In essence, JAKKS has already undertaken some learning activities in each of the two feedback loops. With regard to figure 1.0., which represents a reinforcing feedback loop, the company deliberately hires skilled and experienced managers to advance its business. The company’s CEO, Stephen G. Berman, has extensive experience in toy companies. In addition to having served as Toymax’s president, Mr. Berman has also served at THQ International as managing director. His extensive experience in this particular industry is therefore a strategic asset for JAKKS Pacific. The company’s chief operating officer, Mt. Jack McGrath, on the other hand, is also a toy world veteran whose experience in this particular industry spams over 16 years. McGrath is a holder of an MBA in marketing. This is an indication that the company is aware of the relevance of piecing together a stellar cast of managers to oversee its operations so as to further enhance its performance through the formulation as well as implementation of better decisions. When it comes to figure 1.1., it should be noted that JAKKS is known for its wide array of product categories. This is more so the case given that the company has been seeking to further enhance its market share by way of developing and offering for sale a wide array of products and toy items that appeal to a wide client base. Towards this end, 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). This way, the company is able to maintain a certain sales level which motivates it to continue the product divarication strategy.

It should, however, be noted that a review of each feedback loop reveals that there are numerous learning opportunities available for JAKKS. When it comes to the reinforcing feedback loop, JAKKS could identify the specific managerial approaches that bring about enhanced performance. This is more so the case given that, as Khan et al. (as cited in Wahab, Rahmat, Yosof, and Mohamed, 2015) point out, “leadership undoubtedly has a major role in the outcome of any project in which all identified leadership styles have variable outcomes under different situations” (p. 594). This is to say that various leadership styles have different impacts on the performance of a business entity. For instance, as Wahab et al. (2015) observe, transactional leadership styles offer a sense of job satisfaction as well as satisfaction to employees. JAKKS ought to determine exactly how various approaches to leadership interact with the various organizational realities for enhanced organizational effectiveness and performance. This is knowledge that could be applied in HR management and in recruitment and selection efforts to find the most appropriate persons to lead the company’s various divisions. Next, when it comes to the balancing feedback loop, there are also plenty of learning opportunities. The most obvious one is the relevance of continued marketing and promotion efforts in seeking to not only maintain a certain level of sales but also promote the same. While the company has an impressive catalogue of products, failure to further promote the said products and rejuvenate their storylines effectively gets in the way of continued market dominance. It is important to note that although the company’s customers are actually toddlers and young children, it is parents who make purchase decisions. These buyers must continuously be educated on why they should get their children toys produced by JAKKS as opposed to those offered for sale by the competition. This would get rid of customer disinterest and eventually lead to enhanced sales which could in turn lead to enhanced innovation.