Planning the Future at Galaxy Toys

To succeed in a highly dynamic and competitive environment, business organizations must effectively execute their planning activities. They must judiciously formulate their long- and short-term goals and objectives. This ensures better anticipation of the ever uncertain future (Hill & Jones, 2013). Effective planning also ensures better utilization of organizational resources (Wittman & Reuter, 2008). With reference to Galaxy Toys, an American toy manufacturing company, this paper explores the planning process. In the first part, a SWOT analysis of the company is provided, along with a choice and justification of the best long-term planning decision for the company. In the second part, the paper differentiates between goals and objectives based on a formulated list of goals and objectives.

Founded in 1956 by George Jepson and his wife, Galaxy is involved in designing, manufacturing, and selling space-themed children's toys primarily in the U.S. The company has over the years grown to be one of the largest toy companies in the U.S., with a portfolio of approximately 2500 different toys since inception. Its products have a reputation for ingenuity, durability, playability, safety, affordability, and action; which has been a crucial source of competitive advantage for the company in the rigorously competitive toy market. The company's competitive advantage further stems from the uniqueness of its toys. Rather than the ordinary toys, the company mainly manufactures space-related toys. This largely reflects the company's mission, which is "to create toys that inspire children all over the globe to dream of space exploration and provide a yearning to achieve that dream." Some of the company's most popular products include the Apollo Space Rocket, the Canaveral building set, Create a Moon Surface Kit, and Astronaut Training Center.

In addition to an extensive operational history as well as unique and quality products, Galaxy boasts a strong partnership with NASA, the world leader in actual space exploration. Through the partnership, the company has managed to introduce and sponsor the Annual International Rocket Launch, as well as to manufacture and sell NASA toys in the U.S. and worldwide. Other significant strengths include an employee-friendly culture (characterized by a clan and collaborative atmosphere), a hybrid flat functional structure, as well as fairly strong financial performance. The structure and culture have been crucial for decentralizing decision-making and motivating employees.

Despite the above strengths, a number of weaknesses cannot be ignored. First, the company is significantly dependent on NASA toys, which account for nearly 60% of its total annual sales. History has demonstrated that dependence on a single product line can be dangerous for a company since products generally go through a lifecycle (Hill & Jones, 2013). In addition, the company is predominantly dependent on the U.S. market. The company's limited or no presence in the global market, especially in Europe, South America and Asia Pacific, puts it at a major disadvantage, particularly in terms of exposure to unfavorable events in the domestic market such as economic recession and market saturation (Hill & Jones, 2013).

Nonetheless, there are a number of opportunities the company can capitalize on to enhance its competitive advantage. For instance, technology is a crucial driver of growth in the toy industry. 3D printing and other cutting-edge technologies have increasingly provided significant opportunities for the toy industry, especially in terms of quickening production and reducing input costs. Sustainability has also presented opportunities for the industry. By incorporating environment-friendly materials in new product development and instituting toy recycling programs, the company can considerably drive business growth. Innovation would actually be crucial for minimizing the company's dependence on one or a few product lines. Further growth opportunities are presented by global expansion. Presently, the company has production facilities in the U.S. and Mexico only. Expanding to other parts of North America and Latin America as well as Europe and Asia Pacific can significantly improve the company's position in the domestic and global market.

The viability of international expansion is particularly informed by the strong growth the global toy market has exhibited in recent years. In the third quarter of 2015, for instance, global sales grew by 7%, the largest growth since 1999 (NPD Group, 2015). Statistics further indicate that growth will be even stronger in the foreseeable future, with Latin America, Asia Pacific, the Middle East, and Africa being the largest sources of growth (Global Industry Analysts, 2015). The growth has been and will be driven by the increased affluence of the burgeoning middle class, greater exposure of children to technology at a younger age, increased dominance of digital lifestyles, as well as the rising popularity of smart and interactive toys (Global Industry Analysts, 2015).

The ability of the company to take advantage of these opportunities may, however, be hindered by some threats. First and foremost, the threat of competition in the industry is strong. The U.S. toy market is extremely competitive, with brands like Lego, Spin Master, Nintendo, Mattel, Hasbro, and Toys R Us dominating the scene. There are also tens or hundreds of small and medium-sized toy manufacturers, which add further competitive pressure. Even though Galaxy has differentiated itself as a producer of space-related toys, its market share can readily be invaded by its competitors. Other important risks include unfavorable economic events such as inflation and recession, political instability, and low market reception. These threats may result in undesired outcomes such as reduced consumer expenditure, slower sales growth, and increased business costs. Table 1 below summarizes the SWOT analysis

Strengths

• Extensive operational history

• Largest privately held toy company in the U.S.

• Broad product line

• Unique, stimulating, durable, and affordable products

• Strong partnership with NASA

• Employee-friendly culture

• Fairly decentralized organizational structure

• Fairly strong financial performance

Opportunities

• 3D printing

• Sustainability

• New product lines

• International expansion

Weaknesses

• Dependence on NASA sales

• Limited global presence

Threats

• Competition

• Unfavorable economic events such as inflation

• Political instability

• Low market reception

Table 1: Galaxy SWOT analysis

With a clearer understanding of its strengths, weaknesses, opportunities, and threats, Galaxy can more prudently lay out its long-term plan. Though the company has a strong reputation for quality, uniquely designed space-related toys, it cannot afford to rest on its laurels. The company must enhance its strategic plan if it is to retain its spot in the stiffly competitive toy landscape. As mentioned earlier, one of the major weaknesses of the company is overreliance on NASA toys. To overcome this, the company plans to increase sales unrelated to NASA toys by 22% in the next 30 months by introducing a new product line. In this regard, two products have already passed the approval of the board of directors: Payload Nine Toys and Moon Mission to Jupiter's Europa 1 (MMTJE1), each of which has different features and production requirements.

The most appropriate choice for Galaxy would be the MMTJE1. This is because of a number of reasons. First, MMTJE1 has far superior features compared to Payload Nine. The product is not only based on 3D printing technology, but also allows children to explore Mars remotely. Pictures can as well be taken remotely via its rover. Results from focus group studies have actually described the product as a "wow" product due to its breathtaking, interactive features. This is unlike Payload Nine, which has been found not to be a "wow" product. Moreover, MMTJE1 targets a broader market (the 11-15 age group as well as younger children) compared to Payload Nine, which targets the 7-10 age group. With its status as a "wow" product as well as its wider market scope, MMTJE1 is better placed to increase unrelated NASA sales compared to Payload Nine. In fact, estimates indicate that MMTJE1 would increase unrelated NASA sales by 15% if introduced in 2016 and by 21.6% if introduced in 2017. This is unlike Payload Nine, whose forecasts indicate that it will increase NASA sales by 6.8%, implying that the company would remarkably fall short of achieving its 22% target for increasing unrelated NASA sales.

Whereas MMTJE1 is not production-friendly at present due to the substantial capital and human resource costs needed, it is still a better option compared to Payload Nine, whose production requires insignificant adjustments to production costs. The additional costs may be substantial in the beginning, but the expected benefits would significantly outweigh the associated costs in the long run. In the long-term, the company would be better off rescheduling its current production than embarking on a project whose returns may be less significant. More importantly, MMTJE1 to a large extent resonates with the company's aspiration and mission. The company has recently acknowledged that 3D printing technology presents a bright future for the toy industry in terms of reducing input costs and shortening production time. Therefore, MMTJE1 presents an ideal occasion to take advantage of this opportunity. In addition, the company is committed to creating toys that stimulate the space exploration desires of children. With its interactive and spectacular features, MMTJE1 is certainly better placed to achieve this vision compared to Payload Nine.

It is important to understand the difference between goals and objectives during the planning process, especially when formulating short-term goals and objectives. In addition, the goals and objectives should be properly aligned to the mission and vision of the organization. Though the terms "goals" and "objectives" are often used interchangeably, they have distinct meanings. A goal is essentially an aim or an aspiration for the future of the company (Simerson, 2011). For instance, a company might aspire to be the largest toy company worldwide. Though such an aspiration reflects where the company wants to be in the future, it does not specify how that position will be achieved.

An objective seeks to fill this gap. It reflects a future that is specifiable, measurable, achievable, and realistic. In addition, as per the SMART (specific, measurable, achievable, realistic, time-bound) framework, an objective provides the timeline within which the desired future should be attained (Simerson, 2011). For instance, a company might say that it will grow sales by 10% by opening new production facilities in the next two years. With such an objective, a company is better placed to track the progress of its goals. Based on this premise, table 2 below sorts Galaxy's list of short-term goals into three categories: appropriate short-term goals, appropriate objectives, and abandoned goals and objectives (those that do not fit with the vision and mission of the company).

Appropriate Short-Term Goals

Appropriate Objectives

Abandoned Goals and Objectives

• MMTJE1 quality toys production.

• Production of quality MMTJE1 toys must start by July 1, 2017.

• Additional personnel must be hired by February 20th 2017.

• 3D printers must be purchased by February 20th, 2017.

• 3D printers must be purchased and installed by November 1, 2016

• Safety standards should be determined by QC by May 1, 2016.

• Materials must be purchased by and delivered by July 1, 2016.

• New packages should be palletized by May 1, 2017.

• IT must confirm programming for 3D printers is complete by June 1, 2016.

• 3D machine operators must be trained by October 31, 2016.

• Training on new equipment must be done by October 31, 2016.

• Dates for starting production set.

• Production of quality MMTJE1 toys must start February 20th, 2017.

• Completion dates for new personnel hire set.

• Materials must be state of the art.

• Completion dates for material purchase and delivery set.

• Shipping start dates should be determined.

• Completion dates for 3D programming, training and installation set.

• Maintenance for 3D printers must be done daily.

• Personnel must be cross trained on the 3D printers.

• Marketing will determine shipping start date

• Dates for personal hire set

• Completion dates for QC standards will be determined by QC.

• Shipping should begin immediately upon the nod from Quality Control.

• Shipping should begin July 1, 2017.

• The first MMTJE1 toys should be produced by December 1, 2016.

• QC should evaluate first toys by December 31, 2016.

• Personnel for all production functions must be organized by March 31, 2016.

Table 2: Appropriate short-term goals, appropriate objectives, and abandoned goals and objectives

References

Global Industry Analysts (2015) The global toys & games market: trends drivers and projections. Retrieved 27 September 2016 from: http://www.strategyr.com/Marketresearch/Toys_and_Games_Market_Trends.asp

Hill, C., & Jones, G. (2013). Strategic management: an integrated approach. 10th ed. Boston: Cengage Learning.

NPD Group (2015). Global toy sales rise by 7% heading into the holiday season, NPD group reports. Retrieved 27 September 2016 from: https://www.npd.com/wps/portal/npd/us/news/press-releases/2015/global-toy-sales- rise-7-percent-heading-into-the-holiday-season-npd-group-reports/

Simerson, B. (2011). Strategic planning: a practical guide to strategy formulation and execution. New York: ABC-CLIO.

Wittman, R., & Reuter, M. (2008). Strategic planning: how to deliver maximum value through effective business strategy. London: Kogan Page.