Question 1: How have the personality and goals of the owner of Tiny Tots Toymakers affected the way in which the firm has developed?

Question 2 What are the strengths and weaknesses of Tiny Tots Toymakers as a business?

Question 3 Recommend some actions which you might take to improve the sales and marketing of this business, especially exports and international sales.

Question 4 How international a company is Tiny Tots Toymakers?

Question 5 If this was your business what plans might you make for the future?

(Read the attachments before answering the questions)

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other employees carrying out drilling worlt, flat timber component machining, painting, assembly of products, packaging and dispatching. After turning, the components are put into rotating tumblers {like wooden barrels) which smooth the surface of the wood to give a high-quality nish. These machines were home made with small electric motors to drive them. There are some cross cut saws and drills for carrying out other nishing operations on the components before they are painted. Painting the wood components and the nished products is a skilfui process, which has been developed over time. This process is considered condential because it provides a competitive advantage and several other rms have tried to learn these secrets for their own products. The paints are non~toxie, specially made for children's products. Components are then put into cardboard boxes and stored on shelves in the warehouse ready for assembly into nished products. Assembly work is done on small benches in batches. Each batch of product takes either four or eight hours to complete. Products are assembled and packaged according to customer demand. SmaIl logos and faces are printed on some products by hand using a pad printer. There are two different logos one for New Zealandeustratian products and one for Japanese products. Fifty per cent of products are currently made for the home market and these are 1Wrapped in tissue paper and then couriered directly to the customers. The Japanese products are sent in plastic bags as covers to irther protect them during transit. Generally Japanese products are exported in batches of l SUD to 2500' items in large cardboard boxes. SALES AND MARKETING The main selling points of the products are: I designs and colours are all very attractive to children and to adults; I products are all made from native timber [not plastic); I all products meet high safety standards for children's toys; I high-quality nish on all products, with no splinters or cracks and only non-toxic paints used; I there is little competition for ehiidren's toys made in New Zealand; I similar wooden toys produced traditionally in Europe have now become expensive, due mainly to the cost of the timber. Sales orders come in from customers by post on a standard order form, by telephone, fax or by email. The order form is availabie from the company website so a few orders come in from this. Most orders come in from past customers and from word of mouth contact. The factory has a small showroom area and a few sales are made to visitors. Products with minor blemishes are generally offered for sale in the showroom. The factory is located off the beaten track in an industrial area so there are very few casual customers passing by. The products are not advertised on radio or in newspapers for cost masons. Sometimes they are included in local newspaper advertisements as part of a retailer's promotion. The business has a well-designed set of product brochures and these are sent out to new customers on request and to existing customers whenever new products are introduced. These are also shown on the company's website which attracts some enquiries. There are approximately ll shops in New Zealand that buy directly from Tiny Tots. These are mostly specialist toy shops. Ray used to make selling trips to shops throughout both islands in New Zealand but has stopped making these trips because they were not cost effective. There are four or ve Tiny Tots Toymakers Tom Batloy Driving to the factory one day during a hot dry scanner. Ray wondered about the state of his small business. The factory is in a small country town in Central Gtago, in the South Island of New Zealand. Ray had been producing small wooden toys for infants for about 25 years. He was fullling a market need throughout Australasia for natural wooden toys, brightly coloured with non-toxic paint, and he was regularly selling to the Japanese market. No doubt he had been successful, but why? He enjoyed working with wooden toys and there was a lot of job satisfaction in having his own business. But was be making as much money as he would if he had stayed with farming or agricultural work for which he was trained and qualied? He had gained a lot of job satisfaction from making and selling children's toys and earned a reasonable living but what was this worth compared with earning a higher income? There were no simple answers to his questions but the business had survived despite the risks and many problems along the way. BACKGROUND AND BUSINESS START-UP At the start of Ray's career he gained a Bachelor's degree in Agricultural Science from Lincoln College after which he worked as an agricultural adviser. He then decided to be adventurous and experience life overseas. He enjoyed three months travelling through Asia and Russia, then Europe. He managed to get some agricultural work in Switzerland and it was there that be had his rst experience working with wooden toys. There was not enough agricultural work for him so he was offered work in a wooden toy making factory assembling and painting the toys. This experience gave him the ideas for starting a wooden toy factory in New Zealand when he returned. He had the ideas and some production experience but needed some help in starting a new business. Most of Ray's business plans were carried in his head so he spent six months seriously researching the business potential and seeking contacts to help him finance the new business. One contact was with Business Advisers at a University Business Development Centre where he presented his ideas for the new business. The Advisers were not very complimentary or encouraging about the new business idea, especially without a written business plan. Nevertheless he decided to start the new businesa in Central Diego where his parents had a holiday home and he could get free accommodation. He needed working capital to start the business so Ray's parents loaned him $N2600 as \"business angels1 to help start up the business. Initially Ray was not convinced of the long-term viability of the new business so he treated it more as a hobby. For the rst two years he worked as a waiter in a nearby restaurant in the evenings in order to suppiement his wages. He also did part-time farm work and developed fruit trees on his own property which provided some seasonal income. Regional Development funds and assistance were customers who buy directly from Australia. Japanese orders come from two customers who have several shops. PERSONAL MANAGEMENT OF THE BUSINESS Ray believes that his personal strengths and abilities are in the production and operations management of the business. He has designed all the products and developed all manufacturing processes and if necessary can personally carry out all the work required to make the products. He has also trained all the employees. He runs most of the ofce systems and operates a computer both at the office and at home. One of Ray's sons recently designed the company's website. Ray would admit that he is more comfortable with the production and operations side of the business rather than dealing with sales and marketing and sales promotion. Rosaline does all the sales dispatching. invoicing. wages and accounting work in the ofce on a part-time basis. She is also involved in the managerial decision-making and major strategic decisions about where the business is going. Ray does some charity- and sports-related activities also during business hours and these can be a distraction from business-related work. Dfien it is difcult to separate time spent on sports and charity work from business time requirements and pressures. FINANCIAL MANAGEMENT ASPECTS The annual accounts require minimal work inside the company. Annual stocktake is carried out and put together with all the sales and cost gures and all the paperwork is sent to a public accountant. The accountant checks all the accounts. queries any missing or incorrect information and then draws up the balance sheets and prot and loss statements ready for the taxation department. Most office paperwork, including wages and accounts. is done by Rosaline. She pays all the invoices for ntatcrials and parts. sends out the sales invoices. collects the money 'om sales. and reconciles all the accounts. Many customers pay within one month. Collecting debts from customers is not the big problem it is for many small rms because customers are well know. and reliable payers. There is a factory costing system designed by Ray. All work operations in the factory are recorded and batch completion times recorded for each operation. These are intended to indicate operation times on each process to put an acmal labour cost on each finished product. This can be useful when analysing costs and comparing with prices. especially when price changes are needed. BUSINESSRELATED PROBLEMS There are many problems related to the business which occur. some each week and some long term. and they all take up management time and decision-making skills. In fact. time management is a problem in the bushtess with many routine activities and a lot of daily distractions. For example. sometimes Ray has to be pressed into leaving the ofce duties and working on the lathes in order to supply machined components for the other workers. Much has been written about the uctuating value of the New Zealand dollar and its effects on New Zealand experts. This can change the sales income and the gross margins on export sales very rapidly. The company cannot possibly afford to change their prices every month so prices have largely remained the same for the last ve years. So the effects on Tiny Tots sales income have been quite small. Some small increases (about 1.5 per cent) were made to the Japanese export prices recently. The Japanese yen has reduced about 6 per cent against the SNZ in the last four years. The $NZ has appreciated against the SA in the last two or three years. which is to the nancial advantage of Tiny Tots. But if the business had been exporting products to Europe or to America then the uctuating dollar value would have caused more severe problems. in sales and marketing. especially export sales. there is very little work done on sales promotion. Market research can be expensive for a small company and little usetl information has been gathered recently. Sales resulting from Internet sites uscd by retailers selling Ray's products have been disappointing. A lot of work was put into developing an attractive Internet display recently for Tiny Tots products, mainly by one of' Ray and Rosalinc's sons. The actual fees to design and maintain the site were kept low by using a do-it-yourself website design. lnternet selling does present a new opportunity and the new site has brought several new customer enquiries during the few months that it has been operating. Ray and Rosaline both draw money from the business each week to pay expenses and living costs. They do not have an accurate gure ol'how much the business makes month by month. but have an indication from the sales income and the net value of stock put into the warehouse. They manage the cash flow by monitoring the bank overdrali regularly. A few years ago there was a crisis when the bank refused to authorise a large enough overdraft to keep the business mnning. The bank could have closed the business. The problem was overcome by changing banks and negotiating a larger overdraft. CONCLUSIONS The business has been a strong interest for Ray. almost a passion, with good job satisfaction and employment for both him and Resaline. Their three sons have also worked in the business during their holidays from school and university. but do not show any signs at the moment of wanting to take over the business in the future. The business runs reasonably smoothly these days, but could it be developed thher to provide more income? This would need a lot more work, heavy overtime maybe, and this would conict with many other interests outside work. These family and social interests are clearly enjoyable but can take up a lot of time. For example. the main computer at work has been taken home so that it is not a distraction at work and many tasks can now be done on the computer in the evenings at home. Ray gets job satisfaction from the design and making of new toys. Should he diversify into more new toys and possibly other products in order to expand the business further? But this would probably conflict with other interests, which make demands on his time. Decisions about the business and the best strategies for the future have always been difficult and there never seems to be enough time to plan things properly and avoid future crises. available to subsidise some businesses at the time, but an application required a business plan and further evidence. Ray decided not to apply. EARLY YEARS OF BUSINESS For the next seven years Ray operated the wooden toy-making business from home, where a large double garage was built and used as a factory. He made rattles and teething rings for babies, puppets and small wooden toys for children. He used local timber and ordinary doit-yourself type machinery to make the toys and employed one person part-time in the factory. Ray did most of the wood machining work while the only employee carried out the assembly work and the painting. The business operated on the money generated by sales with only a small overdraft ageed by the bank. Sales orders came from shops and throughout New Zealand but very little was spent on marketing. New business was created largely by customers seeing the shop displays or experiencing other children playing with the toys. Ray originally visited shops throughout the South Island, then later throughout the North Island. and demonstrated his products to shop owners. which generated enough business to keep him and the factory busy. At about this time Ray decided to travel to Switzerland for three months to source materials. He managed to get work again in the toy factory to gain further experience. While he was there he checked out the supply of high-Quality wooden components and beads from Germany, which he found to be a good service. He also investigated the painting methods used involving non-toxic paints suitable for children. Later when he returned to New Zealand he arranged a supply of components and paints from Germany suitable for his ovm toy products. This made the factory work a lot easier and the painting process was also much improved. Increasing sales at the factory created a need for more working capital and Ray was fortunate enough to have supportive parents who loaned him a trther 51? DDU. The bank overdraft was increased to 52001:}, which indicated that the local bank manager was also supportive. Despite difcult times making a living from the business, Ray was proud of the fact that he had never applied for the dole or any other form of t'uiancial assistance from the Department of Work and Income. About this time Ray married Rosaline, who was also interested in the toy-making business. She had several years' useful experience working in shops and in accounts. Rosaline came into the business and worked on the accounts in the office and product assembly and packaging. Initially she worked full-time in the business but when they started a family she worked only part~time. They later had three children. Shortly after this the company achieved an annual sales turnover of $1 (l {IUD for the rst time. Ray was still working part-time on farms to supplement his income and the fruit trees on his land also brought in some seasonal income. Then an independent sales representative contacted the business from Auckland and asked if he could sell the toys on commission to the larger shops and stores in the North Island. Ray was happy to agree to this because he considered himself more of a production person than a salesman. He was hard working, but more comfortable with timber and wood-working machinery than with selling, and he had the resilience and tenacity to solve production problems. In 1935 the company sold their first products to Australia. This came about through a woman sales agent who was on holiday in New Zealand and saw the products for sale. Shortly afterwards the rst products were exported to Japan. This was as a result of contact from a Japanese exporttimport agent living in Christchurch. in little the quality of components coming from Germany deteriorated. The components then required a lot more work to make them acceptable for the nished toys. Ray was very particular about high enality and would not let poor quality products out of the factory. He considered high quality to be a major selling point. Despite discussions with the component suppliers in l[.icrn'tany the quality of imported components did not improve and the company looked at alternative suppliers. These investigations did not offer any better alternatives. Ray was very concemed about this turn of events and seriously looked at the possibility of closing down the business and becoming a hill-time fanner. The only other altemative was to make all the components in the factory but the staff did not have the skills or the appropriate machinery for this. Quite by chance several wood working lathcs came up for sale second hand at this time. from a rm in Christchurch. Ray decided to buy the machinery and make his own wooden components. He had to teach himself new skills to operate these machines properly and this took time. By this time the business was considered fully viable and a brand new factory building became available as a shell only. This was bought with a mortgage. and the building was tted out with all the machines and equipment. a small warehouse, a display area and a small ofce. Another full-time employee was taken on. The buainess ran successfully in these premises for more than 12 years, with three full-time employees. PRESENT BUSINESS OPERATIONS AND STAFFING The present sales turnover of the business is about $140 flil per annum. The highest ever sales turnover was about $130 ilflll. which was Ill years ago. The business now employs two hill-time workers plus Ray and Rosaline (part-time). The higher turnover was achieved during the time when the business employed three workers. A wide range of products is produced with various designs offered in several different colours. About [It] different toys are made. most of them with standard components which t onto several designs. Wooden display stands are also produced for the toys. The production process starts with the purchase of timber once per year. The preferred timber is hardwood and is very lightly coloured. It is relatively smooth and easy to machine and does not splinter easily. Maple has traditionally been used in Europe for toy making but this is now expensive and not easily available. After extensive experiments with different timbers available in New Zealand. this hardwood was found to give the best results for toy making. |Once a year the raw timber is delivered then milled on site by a portable mill, which is brought in. The miii ownerioperator. who works on contract. does a good job. He is also a good source of information about timber availability throughout the South Island. The timber then requires nine months to dry out under cover before it can be used elfectively. There is no need to kiln-dry the timber because the summer climate in Central Otago is hot and as good as a kiln. The rst production process is to saw the timber into one metre lengths, minimising the wastage. These lengths are buzzed on a machine to provide two planed surfaces at right angles. The timber is then put through ripping saws to produce rough sawn square section blanks. These are suitable for turning wooden components on the wood-taming lathes. To buy the same timber in this form from a merchant would cost four times as much as the present cost. To make the components the blanks are put through one of three lathes. depending on the items. There is a variety lathe and a rotary lathe {copy lathe). which were bought second hand some time ago. A Spanish lathe. bought new. is also used. Ray does most of the lathe work himself with the