Last Updated on December 23, 2019 by Danielle
Margo Georgiadis, CEO of Mattel, outlines a plan to reinvent the struggling toy company and get it back on track.
In recent memory, Mattel, one of the world’s largest toy manufacturers known for Barbie, Hot Wheels, and Fisher-Price, has been struggling in comparison to rivals like Hasbro and Lego. Mattel’s CEO, Margo Georgiadis, announced a plan to reinvent the toy company in a turnaround effort. But this question remains: Can Mattel get back on track?
Georgiadis’ plan is to focus its efforts on emerging markets, optimize toy production efficiency, and deliver digital play experiences. Because of the direction the world is going, it’s necessary to reinvent Mattel, according to Georgiadis. As a business leader, you have to challenge the status quo if the company is not on track to meet its performance expectations and do whatever it takes and then some to turnaround performance – even if that means restructuring the company from the ground up.
In the last three years, Mattel’s revenues have slid from $6.5 billion to $5.5 billion and they’ve consequently lost over a quarter of its share value. In comparison, over this same period of time, Hasbro, Mattel’s biggest rival, reported record-breaking sales and its share value actually increased 29 percent in comparison. In fact, according to reports, Hasbro is worth a whopping $6 billion more than Mattel.
Clearly, it’s time for Mattel to make some difficult business decisions to turn around the flailing toy giant. Mattel has plans in the works to reinvigorate some of its major brands, including Thomas & Friends, American Girl, and Mega Bloks to name a few but these efforts will undoubtedly take some time to have the full impact.
According to Mattel’s business analysis, its toy business in China could potentially grow up to four times what it is presently. In China, there are more than 200 million children, but, interestingly, spending on toys is only one-ninth of that in the United States.
According to Mattel’s research, over the course of the next four years, the worldwide toy market is forecast to expand by roughly $20 billion, with emerging markets anticipated to deliver roughly sixty-seven percent of Mattel’s sales growth. Therefore, Mattel plans to capitalize on these emerging markets as it seeks to return to form.
In addition to tapping into emerging markets, Mattel also has plans to design and produce toys for the increasingly digital world in which we live. Nowadays children are engaging more and more with digital, therefore toys need to adapt accordingly to align with these new play patterns.
In relation to this, Georgiadis has noted that the Hot Wheels brand will be an area of concentration. More specifically, they plan on integrating Hot Wheels with education.
Mattel’s vision is to inspire the wonder of childhood through play, as a worldwide leader in children’s learning and development. Georgiadis stated that the company will be aggressively changing the way it runs its business with this new strategic direction. She not only firmly believes Mattel has what it takes to achieve their vision, but also believes it can help boldly shape the future of the toy industry in the process.
Considering Mattel’s core strengths, a thriving global toy market, and the digital and mobile world in which we live, it has a perfect opportunity to deliver value over the long run to its stakeholders. It will be interesting to see how much of an impact Georgiadis’ strategic plan will have on Mattel and whether or not she can successfully turnaround Mattel and position it for growth in the coming years.