Plays/ Hasbro, Inc term paper 19418

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Brian Gorman 10/09/00

Business Organization and Management Prof. Cremins

Hasbro Inc.

Corporate Profile

The twentieth century, especially the past fifty years, has certainly been a time of enormous change. Products have changed, the business of manufacturing and marketing toys has changed and the needs and desires of consumers who buy toys have changed.

The majority of the world’s toys are now manufactured in the Far East.

Perhaps the greatest change in the toy industry has been in the way that toys are sold by incorporating creative and original marketing strategies into company culture.

It was Merrill Hassenfeld who broke new ground in 1951 as the first manufacturer to advertise a toy, Mr Potato Head, on television. It didn’t take long to realise the value of appealing directly to children.

Today the sophistication of branded toys that can extend from a film to a series of toys and onward to computer software and electronic games might seem incredible to an earlier generation of toy makers. Yet the fundamental values of the toy industry are the same as they have always been.

Subsidiaries and Divisions

Atari - Manufacturer of coin-operated and consumer video games. Formed in 1972.

Hasbro Germany

Hasbro Interactive-Publisher of family interactive game CD-ROM software. Formed in 1995.

Hasbro Spain

Microprose - makes 3-D video games for PC’s

Wizards of the Coast-Wizards of the Coast has built a house of cards. The company, a subsidiary of toy giant Hasbro, is best known for trading card games Magic: The Gathering (available in nine languages) and Pokemon. Wizards of the Coast's other offerings include the granddaddy of medieval role-playing adventure games, Dungeons and Dragons, and traditional games such as the Dilbert card game Corporate Shuffle and sci-fi board game RoboRally. The company also operates a Seattle gaming and entertainment center and retail stores under The Game Keeper and Wizards of the Coast names. CEO Peter Adkison, game designer Richard Garfield, and several others founded the company in 1990.

Competitors

Acclaim Entertainment-Major League All-Stars, an Indian warrior, and a bunch of foul-mouthed kids headline Acclaim Entertainment's array of video games. The Glen Cove, New York-based software publisher's titles, which include All-Star Baseball, Turok, and South Park, are available for PCs, Nintendo, SEGA, and Sony game systems. The company, which targets males ages 12-34 with dozens of adventure and sports games, also distributes software by third-party developers, publishes comic books and game strategy guides (Acclaim Comics), and owns a minority stake in the Extreme Championship Wrestling organization. Acclaim also is moving online with interactive games played over the Internet. Founders and co-chairmen Gregory Fischbach and James Scoroposki own about 13% and 12% of Acclaim, respectively.

Applause Entertainment-The company designs and markets stuffed toy versions of Sesame Street, Disney, and other licensed characters, as well as Dakin infant toys and stuffed animals. Its products, made by independent manufacturers mostly in China, are sold to department and specialty stores throughout the US. Applause also provides restaurants and other enterprises with its products for use as premiums in sales promotions. Applause Enterprises was formed by the 1995 merger of plush toy maker Dakin and a company founded by Wallace Berrie (the brother of rival novelty maker Russ Berrie). The company's management and Chicago investment firm Frontenac own the company.

Electronic Arts-Everything's a game with Electronic Arts (EA). The company is the #1 video game publisher in the US, with about 110 titles, including Madden NFL, Road Rash, and SimCity. It develops games under brand names such as DreamWorks Interactive, EA Sports, Kesmai, and Maxis and distributes more than 1,000 titles internationally for affiliated labels. In 2000 it won the right to develop games based on the wildly popular Harry Potter book series. EA generates more than 40% of sales from software for Sony's PlayStation system, but also develops games for PCs and the Internet. More than 40% of EA's sales come from outside the US, and the company has distribution centers in more than 75 countries.

LEGO-At the LEGO company, toy blocks are the building blocks of success. Since 1949 the Danish firm has made over 200 billion of its interlocking plastic toys, keeping little hands and imaginations busy in some 130 countries. The US accounts for about one-third of the company's sales. In a nod to kids' high-tech skills, it also offers LEGO software and kits to build PC-programmable robots. The company also owns LEGO theme parks in Denmark, the UK, and California; LEGO retail outlets in the US and Europe; and licenses its trademark for apparel, watches, and other lifestyle products. Comprising 50 companies in 30 countries, LEGO is owned and run by the founding Kristiansen family.

Marvel Enterprises-Marvel Enterprises' success rests on the strength of its characters. Formerly Toy Biz, the company uses its library of some 4,700 characters (Spider-Man, X-Men) in toy development, publishing, and licensing. It generates about 75% of sales through action figures, games, and puzzles based on Marvel characters, as well as proprietary toys (Kindergarden Babies, Electronic Interactive Whac-a-Mole) and toys based on non-Marvel characters, such as World Championship Wrestling action figures. Marvel also is one of the world's leading comic book publishers and licenses its characters for use in movies, TV shows, clothing, video games, and other products. Director Isaac Perlmutter owns about 38% of the company.

Mattel-Powered by everyone's favorite foot-tall platinum blonde, Mattel is the world's #1 toy maker. Its products include Barbie dolls, Fisher-Price toys, Hot Wheels and Matchbox cars, American Girl dolls and books, and licensed Disney and Sesame Street items. To satisfy tech-loving kids, Mattel has accessorized Barbie with interactive games and software. However, its disastrous 1999 purchase of educational software maker The Learning Company cost CEO Jill Barad her job. Mattel is selling the software business to Gores Technology Group. The company hopes to reduce its reliance on its biggest customers -- Toys "R" Us and Wal-Mart, which account for one-third of its sales -- through its own catalog and Internet sales.

Nintendo-It's not a game, boy, it's serious business, and Nintendo Co., one of the Big Three video game console makers, knows it. Its 64-bit N64 console system places it behind Sony (but in front of SEGA), but its Game Boy system remains the handheld console leader. Nintendo has chosen to stay with a cartridge format rather than switching to cheaper CD-ROMs (at least until its Dolphin console is launched at the end of 2000). It is the leading maker of game software with hits such as Pokemon, Super Mario, and The Legend of Zelda. Nintendo has licensing agreements with other software makers, including Electronic Arts, to make games as well as with other firms to make trading cards and toys based on its characters.

Ohio Art-Toymaker The Ohio Art Company -- like a kid playing with its best-known product -- tries to draw attention to itself without shaking things up. In addition to Etch A Sketch drawing devices, the company's toys include the Betty Spaghetty doll, drums, and Water T-Ball. About one-third of Ohio Art's sales come from metal lithographed and molded plastic products, including serving trays, film canisters, and auto trim. Ohio Art's products are sold to retailers, wholesalers, and catalog firms and through international licensees. Wal-Mart and Toys "R" Us together account for more than 25% of the company's sales. The Killgallon family owns nearly 60% of Ohio Art, which was formed in 1908.

Sega-The #3 video game console maker worldwide (behind the dueling Sony and Nintendo), the company has retired its sagging SegaSaturn home video game system in hopes of scoring big with its 128-bit Dreamcast console (developed with high-tech leaders, including Microsoft and NEC). SEGA also makes software for its games and PCs, as well as commercial amusement games, which are found in family entertainment centers worldwide. But the fun doesn't stop there -- the firm also produces Pico educational toys and operates entertainment complexes with games and rides, as well as centers featuring movie theaters, karaoke rooms, bowling alleys, and shops.

Sony-All eyes are on Sony -- or, more likely, on its PlayStation home video game system, which alone accounts for about 11% of the electronics and entertainment giant's worldwide sales. Sony, the #2 consumer electronics firm, after Matsu*censored*a, also makes a host of other products, including semiconductors, DVD players, batteries, cameras, MiniDisc and Walkman stereo systems, computer monitors, and flat-screen TVs. The company's TVs, VCRs, stereos, PlayStations, and other electronics products account for about two-thirds of revenues. Sony's entertainment assets include Columbia TriStar (movies and TV shows) and record labels Columbia and Epic. The company also operates insurance and finance businesses.

Top Management

Chairman and CEO: Alan G. Hessenfeld, age 51, $1,458,890 pay

Vice-Chairman: Harold P. Gordon, age 62, $903,100 pay

President and COO: Alfred J. Verrecchia, age 57, $1,327,201 pay

Senior VP and Deputy CFO: David D. R. Hargreaves, age 47

Gen. Manager and Sec. Head, Toys: Thomas J. Mcgrath, age 42

Gen. Manager and Sec. Head, U.S. Games: E. David Wilson, age 62, $799,700 pay

EVP, U.S. Toy Group and International: George B. Volanakis, age 52

SVP and Controller: Richard B. Holt, age 58

SVP and General Counsel: Barry Nagller, age 43

SVP and Chief Info. Officer: Douglas J. Shwinn, age 49

SVP and Treasurer: Martin R. Trueb, age 48

SVP Corporate Legal Affairs and Secretary: Philip H. Waldoks, age 47

President, Hasbro Interactive: Tom Dusenberry

Head of Human Resources: Bob Carniaux

Board of Directors

Background of CEO

Alan G. Hassenfeld was instrumental in the international growth sales of Hasbro in the late 1980’s. After his brother Stephen died of AIDS in 1989, Alan became CEO. Alan is the third generation of Hassenfeld to control Hasbro. He owns about 10% of the stock.

FINANCIAL DATA

Ticker Symbol: HAS (NYSE)

Dividends: As of July 14, 2000, the dividends are $.06/share

Shares Outstanding: As of Jun 00, 172,300,00

Number of Shareholders(institutional): 691

Big Chart Explanation

Analysts Rating: Today the analysts ratings were

5 said Hold, 3 said Buy, 2 said Strong Buy

This averages out to a 2.3

Hasbro ranks 13 out of 99. It is in the Leisure/Toys games industry. Analyst Ratings compiled using data provided by Zacks Investment Research, Inc.

Bond Ratings: As of Feb 28th, Duff & Philips Credit Rating Co. placed its ratings of Hasbro Inc. on Rating Watch Down. DCR rates Hasbro Inc.’s notes and debentures ‘A’ and its commercial paper ‘D-1’.

Word Count: 1722

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