Analysis of Entrepreneurial Opportunities in Toy Industry

The provided document is a solved assignment that analyzes the entrepreneurial opportunities in the toy industry. It discusses the recent trends and innovation in the market, such as the shift from physical to digital toys, and how companies have adapted to these changes. The report also touches on the environmental factors affecting the industry, legislation, and competition, providing a comprehensive overview of the challenges faced by the toy industry.

IDENTIFYING
ENTREPRENEURAL
OPPORTUNITIES

Index
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Task 1...............................................................................................................................................4
P1. Different sources of entrepreneurial idea and innovation................................................4
Task 2...............................................................................................................................................6
P2. Rational and the market gap for specific entrepreneurial idea.........................................6
Task 3...............................................................................................................................................8
P3. Data needed to support gap analysis in the evaluation of specific entrepreneurial idea..8
P4. Market potential for toy industry....................................................................................8
Task 4.............................................................................................................................................10
P5. Swot analysis of entrepreneur idea ................................................................................10
P6.Micro and macro environment........................................................................................11
CONCLUSION..............................................................................................................................12
References......................................................................................................................................13

INTRODUCTION
Entrepreneurial opportunities can be defined as the circumstance where the products and services
are being sold by the entrepreneur on higher price which is greater than cost of goods. These
situations can assist entrepreneurs in making profit. Present study will lay emphasis on Novelty
toys which is a new start-up done by entrepreneurs. Company will produce the plastic toys for
age of students lying between 0-3. Also the start-up will design knowledge toys for children aged
between 3-8. Report will lay emphasis on different sources of entrepreneurial ideas and
innovation. It will also provide the rationale and market gap for specific entrepreneurial idea.
Study will provide data needed to support gap analysis in the evaluation of a specific
entrepreneurial idea.
3

MAIN BODY
Task 1
P1. Different sources of entrepreneurial idea and innovation
The innovative idea can be come from different sources. Different factor influence to start a toy
manufacturing unit like friends and family, interest, social factor, personal experience and talent,
mass media etc. According to the Drucker 7 sources of innovation different sources of
entrepreneurial idea are :
Interest and hobbies : Interest influence a person to do best in business. It gives internal
motivation to the entrepreneur. Toy manufacture industry have wide range of growth aspect and
there are variety of product which attract the customer and there are different ways to influence
the customer to buy the product. Interest in finding the new trends and work on them helps to
start the business of Novelty toys. It helps to introduce innovative and creative toys in the market
(Davidsson 2015).
Personal experience and talent : Through the market survey and consumer survey they find
that in toy industry there are variety of product with different age group like some basic plastic
and rubber toys for upto 3 year age group, knowledge gain toys for 3 to 8 year children,
electronic toys for 8 to 15 year age group children. The experience of work in sales department
of video game industry helps to survey the market and to find the interest of children in different
kinds of toys.
Mass media : Mass media include the television, internet, magazine, newspaper and radio are
the great source of information, ideas and opportunities. To start the business in toy industry, this
sources of mass media helps to fins the innovation and the gap in the market where an
entrepreneur can take the advantage. By watching the innovative toy's advertisement on
television and internet, to start a toy manufacturing industry come across to the mind. Thee
media also helps to find the trend, fashion and the customer needs.
Customer survey : Customer survey is the starting point of doing the business. It helps to find
the needs and wants of the customer. Children are the more influencing character in purchasing
system of a family. They influence the buying decision of their parents. Customer survey helps
to find the interest of children in toys and help to manufacture only that kind of toys. It also helps
to increase the sales.
4

Customer survey helps to find the customer need and it readily available to customer or not
(Demil and et.al 2015). If there is any gap than it influence the entrepreneur and it is an open
opportunity for the entrepreneur.
5

Task 2
P2. Rational and the market gap for specific entrepreneurial idea
Gap in the market is an opportunity for the entrepreneur to start its business in that area and fill
the unmet need of the consumer. Consumer like to have that kind of goods and services but
unavailability of that product create the gap in the market and also create opportunity for
entrepreneur. Gap is the difference between the demand and the supply of the goods and the
services.
The gap in the market arise because of the new trends and technology, the customer needs,
fashion, demographic and geographical segmentation.
New trends and technology : The market gap in Novelty toys arise because of the new trends
and technology. Children more prefer to play the electric toys rather than to play the plastic and
rubber toys. They demand the latest technology based toys like online games. The demand is
unfulfilled because mostly they are rare available in the market and if they are available than
they are costlier.
Customer needs: Children of age group of 8 to 15 year demand innovative toys which enhance
their knowledge and creativity. They demand that kind of toys which open their mind and
influence them to do the creative things.
Task 3
P3. Data needed to support gap analysis in the evaluation of specific entrepreneurial idea
They type of research which has been used in the report is secondary research. Secondary
research involves the summary, collation and/or synthesis of existing research. The information
has been collected via books, journals, article based on toy industry, information available on
internet, information obtained from various agencies such as government and industrial bodies,
trade associations, libraries and local council.
6

The toy company has been started by entrepreneurs. Various innovation and creativity has been
implemented in firm so that it can grow in competitive market. It has been analysed that the sales
of toy have been declined in United Kingdom by 2.8% in year 2017. There are various elements
which contributes to this decline, the main reason behind is Brexit. It has increased the number
of toy lines which is underperforming. Novelty toys in order to establish its market share need to
analyse current market trends and needs and demands of consumers to so that they can grow.
The collectables segment accounted for 9% of the overall value of the market and 19% of all
units sold. Other strong sectors in 2017 were doll playsets, preschool figures and action figures
(Lancaster, Massingham 2017). So Novelty toys has analysed all this report and they are going to
design the products of same category for children of the age between 3-8. It has been analysed
that London has sold the highest number of toys which accounted for 34.5%. It has also been
figured out that 25-34-year-old purchase the most toys. Most of sales is been done by them.
Consumers who has been categorised in AB and C1 income brackets purchase the most toys with
35.5% and 35.2%. Novelty toys in order to establish their market share and removing gap needs
to analyse the market trends which is going on in UK toy market. According to a survey done by
NPD, games and puzzles, collectables, action figures and building sets have been liked
millennials. Adults between the age of 25-34 also like these type of toys. So the new start-up can
go for this. Company can also go for the kidult toys, as NPD has analysed that the kidult sector
grew up by 8% in previous year.
P4. Market potential for toy industry
Figure 1 Graph of toy industry
Source: (Toy industry UK, 2016)
7

To understand the potential of market it is necessary to understand that how market is moving of
the toy industry. The study is to be done to know the impact of the market over the next 5 year.
And to analyse the market to identify the losers and player in the market. The following are the
study to understand the potential of the toy market in UK (Ramadi and et.al 2016).
The toys and games industry in UK attractive for the many manufacturers in UK. The industry is
divided into three parts i.e., games consoles, games software and traditional sector. There are 8
categories of product : infant toys, dolls, action toys, ride ons, plush toys, activity toys , games
and puzzles, and vehicles.
Market size and value
In year 2017 the sales of toy in united kingdom declined for about 2.8% there are several reasons
behind it like impact of increase in Brexit to increasing number of toy lines that are not
performing.
According to survey market value of the toys and games industry in 2018 was about 9.1 billion
euro and it was expected to increase by one billion in 2020.
Parents are now preferring toys and electronic screens for an entertainment purpose. According
to a survey by BTHA (British toy and hobby association) it was seen that about 75% parents said
that more time spent by their children on electronic screen more they become less sociable. And
63 % thinks that it is important for a child to play with toys as it is necessary for the
development of child. Currently about 600+ retailers are operating within the industry and 13000
employees are working in the industry.
About GBP 350 is spent on a child of age between 0 To 9 for a new toy. The average price of
new toy is about GBP 8.95.
UK is the 4 largest market of toy in the world. About 36 % of toys are sold through online
platform. The toy stores are increasing at a rate of 14 % per year, which shows that the online
store is still important (Ramdani and et.al 2016).
Sale increased by 50% each year about 8 weeks before Christmas. About 60% of toys are newly
introduced each year. About 400 million toys are sold by the toy industry in UK each year.
UK is second biggest country in child rate, the birth rate is declining from the last couple of
years.
8

However, this rate is slightly increased by 1.71 percent children per women.
The electrical toys will be the fastest growing category over the next 5 years. The use of apps
along with toys for example using voice control feature will increase the growth. As the trend of
keeping children away from screen play will shift the play to non digital entertainment which are
done through arts and craft, puzzles and board games.
Task 4
P5. Swot analysis of entrepreneur idea
To analyse the environment of the business the swot analysis can be done to know the strength
weakens thereat and opportunity related to the industry in which one is going to start a new
business. By internal and external factors are analysed of the industry.
Strength- There is a large and growing market in the UK for the toy industry
Rise in demand by 2020 due to innovation in the toys and games and use of new features such as
voice control etc. Successful record of developing new products. It has a strong distribution
network .It has given a superb performance in the market by innovation of new products and
using various technologies and software.
The company is not just concentrated on the particular age group but it provides or manufacture
toys for every age group (Reuber and et.al 2018).
Weakness- The product is in demand in terms of sells but the positioning of the product is not
clearly defined which can be negative for the industry. The china and Asian producers dominate
the toy market, Lack investment in design.
Opportunities – The computer games, convergence of toys and area of action is emerging thus
there is wide opportunity for the industry to grow. The toy market in UK has the large market
share it is the 4 largest market of toys.
It is a niche market with high purchasing power.
The parents are now wanting their child to play with the toys instead of using digital devices as
the parents thinks that it is necessary for the children to play with toys for their development
hence there is quite a wide opportunity for the company.
New customers can be grabbed from online channel as for the past few years the company has
invested a huge amount on the online platform.
9

Threat- the company has faced the decline in year 2008 due to decline in birth rate therefore it is
one of the factor that can be a great risk to the industry (Storey, 2016).
As there is Chinese rival the UK loses its control over the market
increase in production cost
Government intervention in the market
and unstable economic, political and policies
It has been analysed with the help of SWOT that idea of business is good as there is large
demand rising for toy industry in UK. Also in this industry there is a lot of scope to develop
innovative and creative toys.
P6.Micro and macro environment
The components of micro environment are clients, suppliers, competition, intermediaries etc.
The toy buyers are usually parents, grandparents, children etc. There is a difference between a
costumer and a consumer the customer are one who buys the product while the consumer are the
one who consumes or use the product. Monitoring the customer needs and demand is necessary
for the business to achieve success. The supplier also hamper the functioning of the industry the
quality of product and the reliability is important for the functioning of the business. If there is
any change in the quality of product provided by the supplier it will affect the companies output.
The retailers in the industry is about 300+ which shows that the competition in the market is high
as there is large number of competitors in the domestic market. Market intermediaries also plays
an important role in the success of the organisation. The activities performed by the
intermediaries helps the company to promote, sell and distribute the products. The intermediaries
can be agents/merchants, physical distribution firms, agencies such as advertising agencies,
market research firm etc., which help the company in promoting and targeting their product in
the right market.
Porter 5 model
Threats of new entrance: New entrance in toys and games industry brings new ways,
innovation and technology. It put pressure on the Novelty toys through reducing costs, lower
pricing strategy and providing new values to the customer. There is high threat of new entrance
because they bring new technology and ideas in the industry (Khajeheian 2018).
10

Bargaining power of suppliers: Almost all the toys and game company buy the raw material
from the same suppliers. There is huge influence of suppliers on the toy manufacturing company.
Suppliers are few in the number so they have monopoly in the market. They highly bargain with
the manufacturers which increase the cost of manufacture. By creating efficient supply chain
novelty toys can reduce the market gap.
Bargaining power of buyers : Buyer is the most influencing element. Buyers wants the best
product at minimum cost. They put pressure on the toy industry to bring new and innovative
product at minimum cost. The higher the influence of buyers create the higher pressure and
market gap. The influence of buyers on the manufacturer force them to cut down the price of the
product and those firms which are ready to cut down the price of their product create the
problems for the other firm by creating the market gap.
Threat of substitute products : When a new product or service fulfil the customer need in
different way it affects the profitability of business. For example, the online game applications
reduce the demand of toys in the market. This online game application differentiate their product
from the other company and attract the customer because they are more durable, cheap and easily
available. These online application create the market gap. To overcome this gap Novelty toys has
to improve their services in the market and provide more innovative product to the customer so
they can attract the customer and fulfil their needs.
Rivalry among existing competitors : If the rivalry among the existing customer is intense than it
force the firms to reduces their price and decrease their profitability in the market. The
competition is high in the toys and games industry. It is difficult to gain the stable profit in the
market. To gain the stable profit in the market Novelty toys has to differentiate their toys from
the competitors. They have to collaborate with their competitors to gain the profit rather than to
compete with one another (Kuratko 2016).
For reducing the price, toys manufacturing company may compromise with the quality of the
product which create the market gap. In compromising the quality they are unable to fulfil the
needs of the customer.
11

Macro environment:
Political factors- There are various political factors which affect the performance of the
industry. For example imposition of trade sanctions on import and export of products which will
hamper the trading relation with the china. Such factors can affect the business of the industry.
Economic factors- economic factors such as increase in interest rate, change in inflation rate,
change in exchange rate can affect the industry. For example economic crises can result in
unemployment and can lead to reduce in disposable income which will result to less expenditure
on leisure commodities by the population.
Sociocultural factors- as the culture is changing of the toy industry now the people prefer
technologically superior interactive toys over physical toys. Due to changes in the society now
the children easily got the information and are easily exposed to various aspects of life at an
earlier age. Therefore, the children demand is also changing as the impact of sociocultural
change.
Technological factors- Now the more interactive toys have been coming in the market as a
result of technological change. The demand of toys has been changed from physical to the toys
based on hardware and software functions.
Environmental factors- the toy industry affects the environment as the emissions from the toy
industry which is emitted at the time of manufacturing and also due to disposal of waste toys
affects the environment adversely (Tonț, Tonţ, 2016).
Legislation- the various legislation imposed by the government may affect the performance of
the process of manufacturing of toy industry. For example the law such as safety and
environmental law standards and other law may restrict the manufacturing process. The law such
as children television act 1990 which restrict advertisement to children, it also affects the
functioning of entity.
CONCLUSION
From the above study it has been summarised that the entrepreneurial opportunities have been
gained by entrepreneurs by analysing the recent trends and innovation in market. Organization
12

has implemented recent trends in toys which they have created. It has assisted firm in growing
and gaining competitive advantage. Also it has been analysed in report that toy industry has
faced decline in recent year. The reason behind it was Brexit. Firm has also faced various threats
to enter the new market. Enterprise has analysed that there has been various competitors that can
affect their growth.
References
Books and journal
13

Davidsson, P., 2015. Entrepreneurial opportunities and the entrepreneurship nexus: A re-
conceptualization. Journal of Business Venturing, 30(5). pp.674-695.
Demil and et.al 2015. Introduction to the SEJ special issue on business models: business models
within the domain of strategic entrepreneurship. Strategic Entrepreneurship Journal, 9(1). pp.1-
11.
Khajeheian, D., 2018. Market analysis, strategy diagnosis and opportunity recognition in toy
industry. International Journal of Entrepreneurship and Small Business. 33(2). pp.220-240.
Kuratko, D.F., 2016. Entrepreneurship: Theory, process, and practice. Cengage Learning.
Lancaster, G. and Massingham, L., 2017. The development of a strategic approach to marketing:
its culture; internal macro-and external micro-environmental issues. In Essentials of Marketing
Management (pp. 11-42). Routledge.
Ramadi and et.al 2016. Engineering graduates’ skill sets in the MENA region: a gap analysis of
industry expectations and satisfaction. European Journal of Engineering Education, 41(1).
pp.34-52.
Ramdani and et.al 2016. Innovation as a Driver for Enhancing Transient Competitive Advantage
in Volatile Environment–a Literature Review. Academy of Strategic Management Journal, 15.
pp.24-34.
Reuber and et.al., 2018. International entrepreneurship: The pursuit of entrepreneurial
opportunities across national borders.
Storey, D.J., 2016. Entrepreneurship and new firm. Routledge.
Tonț, D.M. and Tonţ, M.D., 2016. An overview of innovation sources in SMEs. Oradea Journal
of Business and Economics, 1(1). pp.58-67.
14

15

16

17

18