Klassic Kinetics Reinvents with Next Gen Leadership Strategies

Abstract

Module 2 Exercise 1: Klassic Kinetics 10 points Submit in Sakai Assignment no later than 10 pm 9/21 Read the following mini-case. Address the tasks below with a brief Word document. Do not write a large report or one long paragraph; write “Task 1” followed by your answer, “Task 2” followed by your answer etc. Include your name And Module 2 Exercise 1 at the top. Task 1: Apply the concepts and methods described in the reading assignment to identify and describe the five elements of the firm’s current competitive strategy (i.e. after all of Beth’s changes). Product Focus Geographic Market Focus Target Customers Value Proposition Business Model Task 2: List the STRATEGIC CHANGES Beth implemented. Task 3: List the new/additional TACTICAL ACTIONS Beth implemented to help execute her revised competitive strategy. Klassic Kinetics: Reinventing with Next Generation Leadership Founded in 1978 by George Baker, Klassic Kinetics has successfully established a niche position in the kinetic (involving motion) toy industry. Competitive pressures, though, have made it tough for the firm in recent years and growth in revenues and profits have been disappointing. In 2017, George handed over top management to his daughter Beth who had been with the company since completing her MBA in 2010. Starting as an accounts receivable clerk, Beth rose to be the firm’s controller, chief financial officer, and then chief operating officer. With nearly two years of transitioning into the top leadership position, Beth is now executing her plan to reposition Klassic for greater long-term performance in a much more competitive market. Based on a handful of items George designed and built for his own young children, George started Klassic with a small line of wooden blocks and aluminum building sets. The brand evolved in the 1990s to emphasize a broad portfolio of plastic snap-together building sets designed to stimulate curiosity, creativity, and manual dexterity in toddlers aged 3-5. Product and packaging design is performed inhouse at their Baltimore headquarters. Manufacturing and packaging is performed through strategic alliances with two factories in Monterrey, Mexico. The core products are made of a mix of recycled plastic resins in order to keep costs, and prices, low. This supported Klassic’s historic market position as an affordable option for parents and educators with solid profit margins for specialty retailers who must compete with mass merchants such as Amazon and Walmart. Bulk-packaged products ship from the Monterrey factories directly to the company’s six regional distributors located across the continental United States (and one in Ontario, Canada). These distributors account for virtually all of Klassic’s revenues, with a small portion coming from the firm’s direct sales of slightly damaged and discontinued items which are sold through inventory liquidators (who re-sell such items to retail outlets such as Big Lots). The distributors, who handle multiple specialty product lines in the toy market, sell and supply Klassic’s products to roughly 300 specialty educational and preschool toy and supply retailers throughout North America. Klassic’s relationships with and service to the distributor accounts are handled by three regional sales managers. Support to the retailers is provided by the distributors. Due to the severe competition in the toy industry, from intense price competition at the retail level and pressures from low-cost producers competing directly from Asia, Beth’s plan to jump-start the firm’s performance involves a great deal of change. She and her father know the risks, but they have decided the firm must change a great deal to survive and succeed. The first move...