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Mattel SWOT & PESTLE Analysis

ID : 52507453| Feb 2019| 15 pages

COMPANY PROFILE -Mattel

Business Sector :Toys and Games

Operating Geography :United States, Global

About Mattel :

Mattel, Inc. designs, manufactures, and markets a range of toy products around the world. Headquartered in El Segundo, CA and headed by Ynon Kreiz, the company's segments are North America, which consists of the United States and Canada; International, and American Girl. Founded by Elliot Handler, Ruth Handler and Harold Matson as a family-owned business in 1945, it has grown to become a premium global leader in the industry. Currently, it employs approximately 31,000 people in 40 countries and sells its products in more than 150 nations.

Mattel Revenue :


US$4,881.95 million (FY ended Dec 31st 2017) (year-on-year growth of -10.5%)
US$5,456.65 million (FY ended Dec 31st 2016)

Competitive Analysis of Mattel

SWOT
PESTLE
The SWOT analysis of Mattel is presented below:
Strengths
Weaknesses
1. Strong Brand Portfolio and licensing agreements
2. Highly-diversified sales mix both by brand and by region
3. Broad franchise management consisting of iconic brands
4. Employee benefits amongst the best in the industry
1. Product safety issues
2. High Seasonality of business
3. Heavy Long-term debt
4. Slow to pivot to digital demand creation
Opportunities
Threats
1. Creating content to reinforce positive values of the brand
2. Tapping onto Chinese market
3. Fisher-Price could solidify its position in emerging markets
4. Creating opportunities beyond toys and games
5. Increasing online toy sales
6. Social media to be a major influencer for buying toys
1. Bankruptcy of retailers
2. Free-to-play gaming becoming the dominant activity in kids free time
3. Potential impact of global trade barriers and tariffs
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Detailed SWOT Analysis of Mattel

 

Strength

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Weakness

1. Product Safety issues: Safety of the products offered by Mattel, worldwide, is of the prime importance to the company as the products are to be used by small children. Stringent safety measures and high-quality checks have to be done to make sure products do not cause any injuries or harm children. Many products of Mattel like Barbie dolls, Hot Wheels cars or Sarge cars etc. are made in China as it offers low-cost manufacturing and labour. The safety of these products has proved to be a big concern and a threat for Mattel operations. This is because of the past instances in which products received and distributed by the company were found to have lead tainted or had dangerous magnets in it. The magnets posed a threat of choking when swallowed by small children. As a result of such harmful products which were already out in the market, the company had to recall its 19 million toys sent from China in 2007.

2. High seasonality of business: The sales of the toy industry are highly influenced by the time of the year especially by the holiday season. Thus, a large percentage of all the toy purchases at Mattel too occur during the traditional holiday season. This seasonality is its weakness because it creates the problem of managing raw material inventory at manufacturing side as well as finished goods inventory at supplier or retailer side. The company may not be able to meet the demand for certain products at peak demand times because of inaccurate anticipation of demand and thus under producing. It may also anticipate heavy retail sales in the traditional holiday season and significantly increase its production in advance of the peak selling period, resulting in a corresponding build-up of inventory levels which may not be sold in the season. These fluctuations may cause its sales to vary significantly from period to period, increase the lead time and create the problem of requiring seasonal working capital financing.

3. Heavy long-term debt: One of the major and primary sources of liquidity for Mattel is its Long-term debt, along with short-term borrowings and senior secured revolving credit facilities. Along with lower stockholders’ equity, the prime reason for increase in Mattel’s debt-to-total capital ratio from 49.1% at December 31, 2016 to 71.3% at December 31, 2017, including short-term borrowings and the current portion of long-term debt was higher long-term borrowings. Mattel’s total long-term debt is $ 2,873,119 as of December 31, 2017. Having high long-term debt is a weakness for the company because repayment of the debts is dependent on the company operations which are affected by external factors which are not in the company’s control. Factors such as decreased in demand for Mattel’s products, changes in consumer preferences, increased costs associated with manufacturing and distribution of products, shortages in raw materials or component parts, or global economic crisis could adversely affect operations of Mattel and thereby make repayments of heavy long-term debt difficult.

4. Slow to pivot to digital demand creation: Changing in the way kids play games these days have a major implication on the way toy producer’s business strategy focuses. New generation kids are more active on digital platforms than their counterparts in earlier generations and thus same business strategy would not be applicable to them. To remain competent in the industry a company not just have to manufacture physical toys but also has to work on other aspects of business and target its consumers where they are present i.e., on digital platforms. Mattel was slow to embrace this transformation and step into the world of creating apps, movies, digital content etc. Mattel’s business strategy over the years has remained traditional whereas its competitors like Hasbro have quickly adapted to and moved onto having digital transformation. Hasbro with its ad tech, social media and Omni channel marketing is expanding reach of its business. A slow start to digital transformation acts as a weakness for Mattel as its competitors have already moved ahead in the game and

Opportunity

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Threat

This section is available only in the 'Complete Report' on purchase.

Major Competitors :

Major Brands :

  • American Girl
  • Barbie
  • Fisher-Price
  • Hot Wheels
  • Monster High
  • Thomas & Friends
  • Mega Bloks
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Check out analysis of other relevant companies

TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Mattel Analysis Report

1. Seasonality https://mattel.gcs-web.com/static-files/3ad8db55-3088-419d-b83c-2a4b20999156

2. Financial figures https://www.nytimes.com/2018/12/13/business/mattel-barbie-movie-ynon-kreiz.html

3. Liquidity and Capital Resources https://mattel.gcs-web.com/static-files/3ad8db55-3088-419d-b83c-2a4b20999156

4. Sustainability commitment information from http://citizenship.mattel.com/

Copyrights and Disclaimer

Mattel SWOT and PESTLE analysis has been conducted by Aishwarya Tirthgirikar and reviewed by senior analysts from Barakaat Consulting.

Copyright of Mattel SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Mattel SWOT & PESTLE Analysis
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