Takara Tomy - Building a Plan

by Darren Pierce : Radar, Radar! : 08.25.05 1:17am EST


Takara Tomy today released their new corporate vision and business strategy, beginning with the company's March inauguration.

The strategy headline was the company's focus on toys. It might seem like a foregone conclusion that the merger of industry giants Tomy and Takara would focus on toys, but the very fact that this message has to given priority one should be enough to remind most that lack of focus was a strong factor behind Takara's decline. The new company will specifically abandon electric vehicles and consumer electronics.

Fifteen percent of the combined workforce will be cut, affecting about 640 jobs, with most casualties being felt in the old Takara organization, long considered overstaffed and top-heavy.

Vice President Sato wants to create a "toy renaissance" in Japan, using the new giant's economies of scale and a massive restructuring of distribution operations to make it possible for creative talent to maximize success.

Two and half billion yen invested in advertising is a big part of the improvement plan. Neither company was known for taking full advantage of rich advertising environment available in Japan.

Another angle of attack is a ten billion yen investment in a new constraint based production management system and process overhaul. Both companies are cited with difficulty in managing a complex range of products far outclassing their limited production capacity. With a vision to right-size production, the merged company will cut its 7,800 circulating products down to the hottest selling 5,400 over three years, being especially mindful to roll-up and maximize tooling, advertising, and distribution channels.

President Toyama notes the nosewind the nascent company is burdened with from the start. The belabored excuse of the country's declining birthrate and the adolescent population's disinterest in traditional toys makes it difficult to increase the pie. Toyama also notes both companies are behind the curve in utilization of new media.

The exec expects problems with the ever important and growing amusement business, often dominated by game goods. The new company's focus on toys is at the greater exclusion of the game market; development of alliances with game manufacturers becomes paramount.

Major investor Index Corporation also chimed in to remind potential investors (their IPO is coming up) of their media and digital content contributions to Takara Tomy. Plans are to renew Tatsunoko animation favorites, and capitalize on marketing the associated property rights. Index also plans to bring the toy giant out of the electronic dark age by investing in a major e-commerce site for Takara Tomy merchandize.