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RC2 Corporation of Oak Brook, Illinois, is one of a relatively new type of commercial organizations. They are a marketing specialist in the children’s toy industry. As such, they neither invent nor manufacture the toys that they sell. Instead, they contract with large media companies and publishing houses for the rights to use popular characters conceived by others such as Big Bird, Winnie the Pooh, Bob the Builder, and Thomas the Tank Engine. RC2 then designs wooden or stuffed toys based upon those characters, contracts with low-cost manufacturers, primarily in China, to make them, ships the finished toys in low-cost container vessels to the United States and Europe, and distributes them through low-cost retail chains such Wal-Mart, K-Mart, and Toys R Us for the final sale to parents. It is a low-cost and high-volume business model that has been financially very successful: In the toy business, RC2 was the little company that could. Though much smaller and less prominent than Mattel and Hasbro, RC2 has grown steadily… thanks largely to a strategy of sewing up licensing deals with big name brands. Its revenues have risen from $213 million in 2002 to $519 million least year [2006].1 The approving words above, however, were from the lead paragraph in an article announcing that the US Consumer Product Safety Commission (CPSC) had ordered RC2 Corporation to recall 1.5 million Thomas and Friends wooden railway train sets that consisted of model engines, cars, and track sections because their paint coatings contained lead. |
