Imaginative Toys Essay

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41747_ch07case01 5/3/02 2:29 PM Page 1 CASE IMAGINATIVE TOYS When Gerald Kramb arrived at the company offices early on Monday, July 1, 1991, to review the end-of-the-year sales and operating figures, several pressing matters commanded his attention. Sales had been much stronger than projected in 1990 to 1991, and existing production capacity had been fully utilized, with excessive overtime, to meet demand. Sales forecasts for the coming year indicated further rapid growth in demand, and Kramb knew that added capacity was needed. Several alternatives were available to the company, and he wanted to be sure that all the key factors were considered in making the decision. Imaginative Toys was founded in Seattle, Washington, in 1975. When he founded the company, Gerald Kramb envisioned that Imaginative Toys would develop and produce toys that “reach children’s imagination and bring out their creativity.” He liked to call these toys “learning toys.” Two product lines quickly emerged as the mainstays of the company: construction toys that were similar to Lincoln Logs and Legos and maze and mind toys that focused on solving puzzles and developing hand–eye coordination. The toys were quickly accepted in the marketplace and became a popular choice for day care centers, preschool facilities, and elementary schools, as well as for parents. Keys to success in this market were continual development of innovative products and a high level of product quality. Toys needed to be both creative and durable. Two other important factors were timing and availability. New products had to be ready to be introduced at the spring toy shows. Then sufficient capacity was needed to fill retail orders by late summer in order to be ready for the Christmas buying season. Hence, Kramb knew that any capacity expansion decisions had to be made soon to meet next

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