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Yang Toy-land, PTE Limited Case Solution & Answer

Yang Toyland, PTE Limited Case Study Solution

Abstract

The case sets out to investigate whether Y. C. Yang Toy land – small sized family owned toy manufacturing business should accept the order placed by Gross-Veranda or not. The case discusses the benefits and drawbacks of signing the contract with Gross-Veranda, which shows that the drawbacks weighs the benefits due to which, the company is advised to enter into partnership with a reputable firm and fulfill the order, in order to grow the business in the highly competitive market arena. Y. C. Yang was in discussion with Herr Claus en when he immediately identified the weak spots in the construction and successfully convinced him that the asking price of the order was extremely high, due to which Y. C. Yang should discuss various topics with Herr Claus en, including:how to assess the viability of accepting the contract, improve certain aspects of the car, reduce the cost of production and set the price of product.

Summary of the case

Background

  1. C. Yang Toy land is a small sized family owned toy manufacturing company, which was founded by Y. C. Yang and his older sister and younger brother. Initially, when the company was established; it had only eight employees and had just launched its first toy car with battery-driven and electric model. The turnover of the company was below half a million dollar, due to which Y. C. Yang contemplated to sell the attractive models that align with that of its competitors who were selling battery-driven cars like hot cakes. For this, the founders of the company started upgrading the models. Yang dreamed of bringing innovations that could make the use of cheap micro-electronics and increase the maneuverability of toy cars.

Customers and sales analysis

The majority of the company’s customers are wholesale importers, while other purchased directly from specialized toy shops’ chains. So far, the company took not more than few orders from the department stores and other large retail groups. The major proportion of the company’s sales were shipped to the US i.e. 55% of sales, and 30% to Europe; whereas, the exports were: 3 percent of sales to Japan and 12 percent were sold in domestic markets. Currently, the company is concerned regarding finding a way to leverage in term of financial and non-financial outcomes, and to compete with its competitors.

Analysis of electronic toy manufacturing industry

The market of electronic toy was saturated, fragmented and highly competitive. The company faced competition mainly from multinational companies, such as: Mattel and Fisher-price and from a large number of small sized firms in Asia, specifically in Korea, Taiwan and Hong Kong. The electronic toy manufacturing industry is characterized by the trendy toy cars, such as: four-wheel drive cars and remote-controlled cars that tend to make traditional toys outdated. Therefore,the toy industry is subject to rapid change, and it is notoriously fickle and the lifeblood of the toy car industry is innovative and new products. The production of toy that helps children become adults in the right way, continues to be a great challenge for the industry.(Turkestan, 2019).

Problem statement

A small manufacturer of the electronic toys had received larger order from the huge European based direct mail order house. The acceptance of the order of electronic toys would require an additional investment as well as the possibility of the orders’ loss from other customers of the company. Additionally, the company is concerned about the tough terms of the electric toys’ delivery; whereas, the expected return on the delivery is only mediocre, but it provides way to the company to flourish and grow in the highly competitive electronic toy manufacturing industry, which is shaped by intense competition and saturated market.

Advantages and disadvantages in signing contract with Gross-Veranda

Over the period of time, the company started taking orders from the direct mail order houses – in which the seller’s offer is made through advertisement in trade journals and the order is placed by buyer via mail. Later on, the company presented the model of the electronic toy car to Germany based direct mail order house. There are various advantages and disadvantages in signing the contract with Gross-Veranda,which are as follows:

Advantages

  1. One of the greater advantages of signing contract with Gross-Veranda is that the company would be able to generate high profit return, hence helping Yang to make investment decision using the profit and growing the company further in the market.
  2. Since purchasing office of Gross-Sanders is located in Singapore; there would be an ease in communication with the buyer.
  3. Furthermore, the company would be able to expand the business operations in the international market and increase the business’s growth in the long run.
  4. By entering into the new market; the company would be able to gathering base of customers and cater them with high quality products, and generate new venue streams.
  5. Singing the contract with Gross-Veranda would allow the company to develop strong and positive relations with German mail houses, which in turn would help Y. C. Yang Toy land in having impressionability.
  6. The company would be able to improve the extent of the consumer recognition for the products by its name offered by Y. C. Yang Toy land, thus creating the products’ brand awareness would help the company in building brand equity, increasing the customer loyalty and sales.
  7. By ensuring the on time delivery and ability to meet the customers’ demands on scheduled deadline; the company would be able to satisfy the customers and improve the visibility of the brand.
  8. It would facilitate the cultural exchange and broaden the company’s horizons,with better understanding of the culture, knowledge, beliefs and trends in the international markets, which in turn would result in easy business operations.
  9. It would help the company in boosting its brand reputation and increasing the visibility, making it easier for the company for future entrance into new markets and for negotiation.

Disadvantages

  1. One of the greater drawbacks of singing contract with Gross-Veranda is that the procedures for getting sample would be tedious and time consuming.

Even though the company pondered to import the remote control system from Japan where it was certified not to interfere with any radio waves; the company was asked by Gross-Veranda to conduct the special test in Germany, which in turn would incur an additional cost to the company…………………

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