1. Draw a systems diagram of the business showing the relationship between Rose Toys
Activities,
Inputs and outputs,
Goals
Measured performance,
Environmental influences
Strategies used

2. Identify the strengths, weaknesses, opportunities and threats of the business in the case study data and through the use of the MINTEL Market Report on the UK Children`s Toy market (mintel.com).

3. Carry out SWOT analysis and use Ansoff`s matrix to generate potential strategies that could reverse Rose Toy`s fortunes.

4. Make a choice of strategy and explain the `positioning` and marketing mix for that choice.

5. Suggest how they might improve the management of the quality of their existing product and any future products they might make.

1. Background to the Company
Rose Toys was founded in the early 1950`s by Harold and Roy Rose, who were brothers. The firm remains family owned with Harold`s two sons, Richard and Michael being in the business. Roy`s widow, Ann Rose is a non-executive Director.

Rose Toys manufacture high quality, hand crafted model train sets. The 1970`s and 1980`s were periods of great prosperity for the company. Now, however, they are facing a situation of declining sales as the markets for their traditional product face increasing competition from new types of toys and games in the UK and overseas. In the last three years sales have declined to such an extent that a loss is predicted for the current year. This will be the first time that the company has made a loss. They have paid little attention to the market and have carried out no market research as Harold and son Michael Rose, strongly believe that `quality` will sell and assuming traditional toys are still desired by children. They have ignored the advice of their financial controller who is rarely included in decision making despite being a competent business graduate with 8 years commercial experience in small business.

A further problem has arisen: conflict between the operations director and the general manager. The operations manager to whom the general manger has to report has been constantly blaming him for problems in production and has then refused to listen to what his subordinate has to say. Geoff is considering leaving as the resentment that has built up over the months has become too great.

Further more, the quality of the product has fallen as staff`s commitment to the company has waned. Recently they have received some bad publicity regarding the safety of their products. A small child electrocuted their hamster whilst using one of the trains. Management have paid little attention to employees concerns that machinery is becoming increasingly old and unreliable and they are not able to produce the quota of trains to receive there full pay. Some of the employees have ignored quality control checks simply to produce more trains. Scrap rates are high at around 10%. Bad feeling has evolved with the manufacturing and assembly staff as the operations manager Michael has blamed them for the major lapses in product quality. Staff, although highly trained and loyal to the company are becoming increasingly dejected and absenteeism is on the rise.

2. Organisation and Structure
2.1 The Organisation
The Company`s management organisation is as follows:
? Harold Rose Managing Director
? Richard Rose Sales & Marketing Director
? Michael Rose Operations Director
? Geoff Holland General Manager
? Gillian French Financial Controller
? Dave Martin Purchasing Manager
? Ann Davis Administration Manager
? John Preston Engineering Manager
? Jean Anderson Technical Development manager

The Company employs 155 people in total.

2.2 The Structure
The manufacturing is structured around two specific models

The Traditional Model: Engine section, rolling stock section, ancillary section, packaging and dispatch section

Push-along Model: Injection moulding section, Assembly Section, Packaging Section.

The Push-Along model is a radical departure for the Company into a simple, injection-moulded toy aimed at pre-school children. The traditional model operation employs some 120 people and the push along operation employs some 15 people.

3. Sales and Profitability
The sales and profit figures for the past four years are as follows:
Year Model Sales (£,000) Profit (£,000)

Current (C) Traditional 4,100 20
Push-along 700 90

C-1 Traditional 5,100 600
Push-along 300 70

C-2 Traditional 5,400 850

C-3 Traditional 5,100 920

3. Benchmarking Exercise
Rose Toys have conducted a basic benchmarking exercise to compare themselves with six other similar manufacturers based in Europe. The results are shown below:

Benchmark factor Rose Toys Competition Average
Profits (% of sales) 1.82% 6.5%
Unit cost price
Traditional £35.00 £22.00
Push-along £3.99 £1.75
Marketing support (pa)
Traditional £40K £65K
Push-along £40K £95K
Delivery times (weeks)
Traditional 12 8
Push-along 6 2
Scrap rates 10% 5%