Therein lies the problem. The Four Horsemen's overall strategy - the direction they wish to take to gain a competitive advantage in their industry - is to utilize the strengths of their staff and design their own toys, selling them independently. The company's core competencies lie within their ability to create very well designed toys and sell them at a reasonable price while still garnering excellent margins. The company has always been very capable at accomplishing their design strategies, but when the Four Horseman Toy Co. started out, they were struggling to gain brand awareness, and were not selling any toys.
Early on, as a struggling toy design start-up, Four Horseman Co. made a critical decision that both gained the company brand awareness, and at the same time misaligned two of their S's, Strategy and Structure. The company was offered a contract by Mattel that would employ them to design Mattel's toys according to Mattel's specifications. They would be well paid, and the bills would be covered. Work was suddenly plentiful, and the whole company was employed in the designs and creation of Mattel's toys.
Strategy: When possible, Four Horseman would design their own toys and offer them for sale to collectors and online. Their independent designs sold out a year and a half before they were even finished. The Four Horseman, thanks to their work with Mattel, had better brand awareness and were able to easily sell their own designs. They had finally become capable of completing their core strategy: to utilize the strengths of their staff and design their own toys, selling them independently. Although they were finally able to capitalize on their strategy, they were not doing it.
Structure: The Mattel contract had in fact changed everything. The organization of Four Horseman was structured to complete the contract with Mattel. The employees, work load distribution, and overall business was structured around their $500,000 contract to make Mattel's toy designs. Even though Four Horseman was finally gaining profits and popularity from their designs, the company was structured to handle the Mattel contract, not their own designs.
Until the company structure or company strategy changes, the misalignment will continue to create stress within the company. I think that if there exists a high demand for their own designs, then the company should take the leap of faith and discontinue their contract with Mattel to pursue the original core competency and strategy of the company. Four Horseman should realign their structure with their strategy.
