Pestel Analysis - Children's Toys

PESTEL Analysis – Children’s retail toys

Political Issues

Today, about 75% of toys in the world are manufactured in China. However, as seen in many countries, regulations and safety guidelines (bio-plastic, more environmentally friendly) on toys. This enables countries to have some control on importing Chinese toys into their country. This would have a huge political impact on the industry because of the currency rate. However, using this strategy could create a loss of revenue when converting profits across global borders such as in Canada, Europe, and Russia – to list a few.

Economic Issues

The oil industry and toy industry intercorrelate with each other – as oil prices are constantly fluctuating. This can be a rising problem in the toy industry because many manufactures depend on resins to produce more toys. However, there are many factors that could influence the price of oil such as natural disasters around the world. This would cause an up rise in oil and plastic prices – markets want more plastic than producers can supply. There needs to be a balance between supply and demand so that manufacturers can keep their selling prices relatively high and increase their profit margins at a low oil price. Furthermore, many businesses usually do not lower retail prices because they typically spend less on manufacturing; they lower their prices to enable more success with other competitors in the market.

Social Issues

One of the main social issues in the toy industry is licensing. Only about one quarter of toys are being licensed. The toys that are being licensed are based on entertainment today such as new movies, T.V. shows and popular games and apps – that kids tune into. Today, many Asian-pacific countries are the leading people in licensing of toys. Due to most toys being manufactured in Asia and oriental countries such as China – you can see that they have the most power in the industry.

Technological Issues

The primary key in the toy industry is technology. Since computers and internet has been developed, technology’s growth grows rapidly over the years. In which, toy manufacturers are moving quickly to adapt to change in today’s technological world. For instance, children transition from hand-held toys to using electronic toys, gadgets, and tablet based technology. Therefore, toy companies are always looking for new ways to recreate old games and develop them with new technology – to attract current and new consumers.

Environmental Issues

Environmental issues are stressed in the toy industry. Many environmental groups and associations strongly pushing towards manufacturing toys that become more “eco-friendly” for the safety of children. As seen in the Porter’s Five Forces thread, a suggestion would be to use other plastic alternatives in the toy manufacturing process such as: bio-based, bio-composite, and/or biodegradable plastics. This will promote environmental sustainability and performance in toy manufacturing companies. Furthermore, this will increase sales and profits in this industry because parents are willing to spend more money on toys and gadgets if that means that their children will be safe while playing.