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Hasbro Interactive Case

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Kaitlyn Vorbroker

on 29 October 2013

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Transcript of Hasbro Interactive Case

Hasbro Interactive
MBA 6050
Kaitlyn Vorbroker

History of the Organization
Hasbro, Inc. was founded as Hassenfeld Brothers in 1932
Founded in Pawtucket, Rhode Island
Founded by Henry Hassenfeld, an immigrant from Poland
Began by manufacturing inexpensive products
Damage Control
Corporate realizing extent of damage caused by Hasbro Interactive division
CEO begins making more management changes to bring spending and project management under control
Hires Jackie Daya
Hasbro's Solution
After years of lost revenue and missed targets, Hasbro, Inc. sold the Interactive division to a French company
Main Problems
Approached the new division wrong from the very beginning
Hands-off approach from corporate
No management controls
No true strategic plan for the division
Strategy was to acquire as many companies as possible with no consideration to the costs
Overconfidence led to overly-risky decisions
Lack of a strong and effective accounting method
Corporate was REactive to problems rather than PROactive to preventing problems
Structural Challenges
More Issues for Hasbro, Inc.
Solutions: PROactive vs. REactive
Hasbro, Inc. chose to sell the company as their solution.
However, they had other solutions if they had been proactive from the beginning instead of reactive.
Hasbro, Inc.
1940: began manufacturing toys
Little success until 1951
Mr. Potato Head
Almost 10 years until next big hit
G.I. Joe
1968: Becomes publicly traded
1984: Acquires Milton Bradley
Early 1990's: acquires Tonka Toys (includes Parker Brothers)
1996: Mattel (rival) attempts to acquire
Hasbro Interactive
1970's: Interactive games becoming popular
Recognized potential: Hasbro Interactive created as subsidiary division
Headed by Tom Dusenberry
Outside experts hired to meet needs and demands (software developers)
Dusenberry responsible for making all decisions related to division
Generated revenues right away
Rapid growth leading to rapid success
Interactive Expansion
Began acquiring software firms
Became separate divisions
Revenue expectations very high
Overly high target sales set
Targets missed
Departments way over budget
Hasbro Interactive begins to lose money
Corporate Divides
Hasbro Interactive was its own division
Utilized Hasbro, Inc.'s manufacturing and marketing departments
Didn't report to the main division
Hasbro Interactive division experienced large revenues in the early years
Money went to large employee bonuses
Hasbro's main division didn't receive parts of revenues
Acquiring Problems
Rapid growth of division due to rapid acquisitions
Acquired firms became separate divisions with few management controls imposed
No standardization of company structure between divisions
Performance appraisals
Resisting Change
CEO, Alan Hassenfeld realized there were problems within the Hasbro Interactive division
1999: Began making management changes
Hired Herb Baum
Changed company strategy and planning
Required managers to work together more closely to develop standardization and corporate unity
Industry & Sales Projections
All divisions of Hasbro, Inc. struggled to accurately predict sales
Toy industry naturally unpredictable
Success tied to numerous factors
Success of movie-related toys tied to success of movie
Main division set very aggressive sales expectations
Hard to meet, budgets failed, product returns high
Shooting for the Stars
1999: Expected revenues around $1 billion
Hasbro Interactive taking large risks to meet ambitious projections
Senior Hasbro executives losing confidence in the division
No moves to stop Dusenberry's spending
Hasbro Interactive division continued to acquire software firms at whatever cost
No consideration to spending due to expected revenues
Losing Confidence
Other Hasbro, Inc. divisions were losing confidence in Hasbro Interactive
Three main contributors to the loss of confidence:
Division reported large quantities of returned products after the 1998 holiday season
Interactive Monopoly promotion with Burger King
Missed deadlines
Lead to revisions of financial predictions for the year
Daya evaluates spending and finances
Implements financial controls
Works to develop an accounting method suitable for the division
Remains positive
Immediately after hired, Daya reports that the company will fall very short of yearly projections
Met with resistance from Interactive division employees
Employees feel creativity and innovation is being stifled
Company no longer had to maintain the incurred costs of Hasbro Interactive's risky practices
Could focus on strong divisions of the company
Lost opportunities
Continued loss of revenues
Loss of employee confidence
Bad corporate message
Start from the Beginning
Should have designed and implemented a strategic plan from the very beginning
Organizational structure
Accounting method suitable to the business model
Standardization across the divisions
Maintain Management
Hasbro, Inc. should have implemented management controls at the corporate level to prevent things getting out of hand at the divisional level
Company eventually implemented management controls on the divisional level
Reacted too late to the situation and met large amounts of resistance
Based on Jim Harvey's speech structures
Full transcript