1.

0 Introduction

As a newly founded games company Strand Game Group LTD is developing a new board game
product to launch soon in the U.K market.
On the first part of this report an analysis of the external environment in the form of a PEST analysis
is presented. The external analysis was primarily focused on the U.K market in which Strand Game
Group LTD will mainly operate for the present time. Parts of the PEST analysis e.g. Technological,
present information and opportunities on how Strand Game Group LTD can explore in future
editions of the developing products and future products. Additionally a brief competitor analysis is
presented as well.
The second part of this report is focused on a brief description of the development of the new board
game. Through this part some backbone information of the initial planning of the board game is
drawn.

2.0 Analysis of the External environment

2.1PEST analysis

2.1.1 Political

Safety measures - The political aspect that affects the industry is mainly the safety measures. Safety
measures are depended on the age group of the intended user and the material used for the
production of the game. The main users within the industry are children. While considering the
safety regulations it comes to materials used to make the game, playing conditions and selection of
themes.

The national authority has a major role in ensuring the safety of the games. The games are vital tool
for the development of the children. The market for the games is very high; the responsibility for the
manufactures is high in ensuring the safety and also the theme of the game. The latest standards
help in improving the rules for marketing the games produced or imported. The authority also
supports the export of quality products to the third world countries. (European Commission, 2009)

Government policy for innovation – The Government has many policies to support enterprises
producing innovation in all sectors. The relaxations for the industries in the stage of growth are high.
According to the reports, UK is the best market to do business because of the low tax. The tax rate is
28% and is the lowest among the G7 countries and it is 21% for smaller companies. The government
also helps to maintain a good demand for European products by restricting the external games at
times. (European Commission, 2009)

2.1.2 Economical

Economic Recession –Although it was expected for the UK market to steadily come out of recession
as sources from BBC news and The Guardian are reporting the UK is still in recession. According to
BBC news (2009) The UK economy unexpectedly contracted by 0.4% between July and September,
according to official figures, meaning the country is still in recession.

Furthermore as Guardian reports the latest crisis in Dubai has led shares in the FTSE 100 index to
drop by 170 points which led in losing 44 billion pounds of their value.

Market economic situation - According to Datamonitor (2009) the market value of the Toys and
Games industry has grown by 3.7% to reach a value of 3.3 billion pounds. Board games and puzzles
represent the 11.10% of the whole industry. Furthermore it is forecasted that the market will have a
growth of 20.6% by 2013. The spending on the industry has been steadily rising since 2004 according
to Keynote (2009).

U.K inflation rates - According to Keynote (2009) Inflation has been low since 2004, with average
prices across the economy actually falling in 2005 and 2008 and the rise in household disposable
income levels translated to a high level of consumer spending in the economy. This may have a
positive impact on the sales of the new board game, but other factors must be taken in
consideration like the credit crunch.

Board games in advantage - The credit crunch had a big impact on the economy and the consumers’
confidence. Consumers are more careful on what they spent their money on. However according to
Mintel (2008) although tougher economic conditions are likely to mean lower volume sales, it could
benefit sectors perceived to offer better value such as games and puzzles. Furthermore parents do
not want their children to feel deprived in any way if they can avoid it so this industry is believed to
be one of the last market sectors to feel tightening of budgets.
According to Mintel (2008) adults are the primary purchasers within the industry. However children
are the ones that drive the success and the failure across much of the market as according to the
report four in ten parents cannot say no to their children

2.1.3 Sociological

Segmentation – The main buyers of board games during 2008 are ABC1’s with families. There is a
strong presence of purchasing of board games in families with children in all the age groups (0-15).
The demographic segmentation information reveals that there is a fall of the under 14’s however
there is a rise in child birth (Mintel, 2008).

Market Trends – Within the Toys and Games industry one of the strongest trends are board games
and puzzles. The trend, with respect to board games, is that they are classified into Party games,
Family games (Couples or with children) and Guest’s games (Target.com, 2009). Sampling and
consistent communication maintained between customers and companies helps discover newer
themes and ideas (Garon, 2008).

Board Games as an alternative to Video Games - The health hazards that the computer and TV
generate opens up a dimension of opportunity as far as the board game are concerned. The board
games allow parents to bond with the children and also to keep them away from the isolation
created by the TV. The board games are just a catalyst, with the reasons being social interaction,
camaraderie and competition, for people to come together to use them (Buzzle, 2000).

Special occasions generate sales - Social norms like giving away Christmas, Diwali, Chanukah or Eid
gifts are prevalent all over the world. As long as the product can be incorporated into the occasions
as an ideal gift for a child or family, the manufacturer stands to gain maximum profit (Garon, 2008).
In the UK market Christmas is still the biggest event which accounts of half of the industry’s total
sales.

Licensed products - According to Euromonitor International (2008) there is an appeal to the

consumers for licensed products. Licensing toys and games has become extremely profitable for key
players, who readily agree to pay large sums in order to acquire the licences to manufacture or sell
toys portraying well-known or popular characters.

The adult children and the childlike adults – According to Euromonitor International (2008) In the
UK, 37% of the population aged between 16 and 49 describe themselves as “active gamers” on a
console, hand-held or PC. Toys and games manufacturers are therefore increasingly targeting adults
as customers for their games, in order to expand their customer base, including women. On the
other hand, many traditional toys now have increased electronic content, which increases their
appeal to more sophisticated children who are increasingly interested in mobile phones, computers
and fashion.

2.1.4 Technological

CD/DVD Simulation - Most of the games have instructions and manuals describing how to use or
how to play the game. According to Jacques (2009) with the help of technology, there are
possibilities to create a CD or DVD and simulate a real environment of how to play the game.
Furthermore a lot of board games now include parts of the game into DVD’s e.g. Scene it! This
includes questions on DVD.

Electronic version - A lot of classical games are going launching electronic versions say for example
Monopoly. As it was stated video games are an emerging trend that imposes a threat for traditional
board games and puzzles. By introducing electronic video versions of the board games,
manufacturers can take advantage of this emerging technology.

Use of Internet - Internet can be used in many games for references, ideas and so on. Educational or
general knowledge games may interest users to find more details about a particular topic over the
internet. Internet can be used to register users of the games and they can win prizes or free board
game accessories, etc. Furthermore according to Mintel (2008) the Internet can open further
channels of distribution and provide more opportunities for smaller board game manufacturing
companies.

Use of Electronic devices - Board games can have electronic instruments to play the game. An
example of this technology is Monopoly: Electronic Banking Edition which uses an electronic system
similar to credit cards and credit card readers instead of the traditional money of the older version.
According to Jacques (2009) although such elements can add excitement to the game it can also
have some disadvantages as some important educational elements of a board game can decrease
(e.g. money counting in Monopoly).
2.2 Competitor analysis

The market in general is very fragmented. All the large companies that have worldwide presence are
strong in the U.K but there are a lot of smaller companies within the market as well. In the following
part of this report the main competitors of Strand Game Group LTD are briefly analysed concerning
their strengths and weaknesses.

Hasbro UK Ltd/Mattel UK Ltd

Both this companies are the market leaders of the industry both worldwide and in the UK. The main
strength for both companies is the many years of operations and the many traditional strong brands
under their belt (e.g. Parker bros – Monopoly for Hasbro, Scrabble for Mattel). Furthermore in 2009
Hasbro formed an agreement with Marvel to provide games of their characters. As it was analysed
before licensed games are very popular.
However Hasbro Inc had declining margins during 2008 which may have an impact to Hasbro Uk Ltd
as well.

Lego

Although Lego is primarily in the production of toys with the very popular Lego bricks in August 2009
they have introduced their game production unit with the introduction of 8 new board games that
are based around their bricks. One of these products has some similarities with the game that Strand
Game Group LTD is launching.

Sony/Microsoft/Nintendo

These companies can be considered as indirect competitors to Strand Game Group LTD as they are
the market leaders for video games hardware and software. The video game market can operate on
expense of the Games and Puzzles market.
References

Webpage

BBC News, 2009. Record recession for UK economy – UK – 2009 [online]. Available at: <URL
http://news.bbc.co.uk/1/hi/business/8321970.stm > [accessed on 10 th November 2009]

Buzzle.com, 2000. Board Games and guide to Old Board Games – USA – 2000 Available at: <URL
http://www.buzzle.com/editorials/11-21-2000-1529.asp > [accessed on 10 th November 2009]

Euromonitor International, 2009. Toys and Games report – UK – 2009 [online]. Available at: <URL
https://www.portal.euromonitor.com/Portal/DocumentView.aspx> [accessed on 10 th November
2009]

European Commision, 2009. Toys safety – EU – 2009 [online]. Available at: <URL
http://ec.europa.eu/enterprise/sectors/toys/index_en.htm> [accessed on 19th November 2009]

Gallagher, Callahan and Gatrell PLC, 2008. Social Relevance The Role of Marketing and Advertising –
USA – 2008 [online]. Available at: <URL
http://www.gcglaw.com/resources/business/social_relevance.html> [accessed on 15 th November
2009]

Key Note, 2009. Toys and Games report – UK – 2009 [online]. Available at: <URL
https://www.keynote.co.uk/market-intelligence/view/product/2272/toys-%26-games?
highlight=toys+and+games&utm_source=kn.reports.search> [accessed on 10th November 2009]

Mintel, 2009. Toys and Games report – UK - 2008 [online]. Available at: <URL
http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=280200/di
splay/id=429767/display/id=280200> [accessed on 14 th November 2009]

Searchwarp, 2009. How advances in Technology are changing the classic board game – USA – 2009
[online]. Available at: <URL http://searchwarp.com/swa520772-How-Advances-In-Technology-Are-
Changing-The-Classic-Board-Game.htm> [accessed on 19 th November 2009]

Other readings

Datamonitor Inc (2009), Toys and Games in the United Kingdom, Datamonitor UK