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Business Proposal for Mattel

Essay by   •  February 26, 2013  •  Case Study  •  688 Words (3 Pages)  •  653 Views

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Business Proposal for Mattel, Inc.

Mattel, Inc., has 28,000 full-time employees and together with its subsidiaries; designs, manufactures, and markets various toy products. Mattel is led by Chief Executive Officer Bryan Stockton, Chief Financial Officer Kevin Farr, Executive VP of Worldwide Operations Thomas Debrowski, Executive BP of International Geoff Massingberd, and Chief Operating Officer Robert Stockton. Mattel sells its products directly to retailers, including discount and free-standing toy stores, chain stores, department stores, and other distribution centers worldwide. The company was founded in 1945 and is headquarted in California (Mattel, 2012).

Mattel's fiscal year-end statement for 2011 revealed; total revenue of 6.24 billion dollars with a gross profit of 3.15 billion dollars, and total debt of 1.59 billion dollars with an operating cash flow of 830 million dollars (Yahoo-finance, 2012). Mattel's major industry competitors are Hasbro, with 5,900 full-time employees and total 2011 revenue of 4.26 billion dollars, and JAKKS Pacific with 865 full-time employees and total 2011 revenue of 692 million dollars (Yahoo-finance, 2012). Our team project goal is to increase revenue for Mattel.

Revenue Increase

In order to increase company revenue, opportunity cost need to be viewed within production possibilities tables and curves that would reveal different combinations of goods that can be produced (McConnell, Brue, & Flynn, 2009). The production of additional units of one product in attempting to increase revenue may ultimately lead to the sacrifice of increasing amounts of other products, some of which may be lucratively successful for Mattel. Thus, strict adherence to the optimal (best) point on the production possibilities curve that represents the most desirable mix of goods and is determined by expanding the production of each good until its marginal benefit equals its marginal cost; will guide the decision regarding the implementation of new products to Mattel's line of goods in reaching a market-clearing price.

Inasmuch as the demand within the toy production industry is elastic and the substitutability of the goods are high, resulting in a positive cross-elasticity coefficient, Mattel will need to creatively distinguish its new line of goods from those of its competitors giving the company a higher equilibrium price. According to Mattel's CFO Kevin Farr, the company is working on productivity improvements through low level automation to become more efficient and free up more space, making investments in plant expansion, not new plants but getting more out of the plants

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