Hasbro 2014 Annual Report Download - page 23

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other factors beyond our control, our operations and our ability to obtain products would be severely disrupted
while alternative sources of product were secured and production shifted to those new sources. The imposition of
trade sanctions by the United States or the European Union against a class of products imported by us from, or
the loss of “normal trade relations” status with, China, or other factors which increase the cost of manufacturing
in China, such as higher Chinese labor costs or an appreciation in the Chinese Yuan, could significantly disrupt
our operations and/or significantly increase the cost of the products which are manufactured in China and
imported into other markets.
Competition
We are a worldwide leader in the design, manufacture and marketing of toys and games and other
entertainment offerings, but our business is highly competitive. We compete with several large toy and game
companies in our product categories, as well as many smaller United States and international toy and game
designers, manufacturers and marketers. We also compete with companies that offer branded entertainment
focused on children and their families. Competition is based primarily on meeting consumer entertainment
preferences and on the quality and play value of our products. To a lesser extent, competition is also based on
product pricing. In entertainment, Hasbro Studios and Discovery Family Channel compete with other children’s
television networks and entertainment producers, such as Nickelodeon, Cartoon Network and Disney Channel,
for viewers, advertising revenue and distribution.
In addition to contending with competition from other toy and game and branded-play entertainment
companies, we contend with the phenomenon that children are increasingly sophisticated and have been moving
away from traditional toys and games at a younger age. Thereby, the variety of product and entertainment
offerings available for children has expanded and product life cycles have shrunk as children move on to more
sophisticated offerings at younger ages. This has been referred to as “children getting older younger” but may
also be referred to as developmental compression. As a result, our products not only compete with those
offerings produced by other toy and game manufacturers, we also compete, particularly in meeting the demands
of older children, with entertainment offerings of many technology companies, such as makers of tablets, mobile
devices, video games and other consumer electronic products.
The volatility in consumer preferences with respect to family entertainment and low barriers to entry as well
as the emergence of new technologies continually creates new opportunities for existing competitors and start-
ups to develop products that compete with our entertainment and toy and game offerings.
Employees
At December 28, 2014, we employed approximately 5,200 persons worldwide, approximately 2,700 of
whom were located in the United States.
Trademarks, Copyrights and Patents
We seek to protect our products, for the most part, and in as many countries as practical, through registered
trademarks, copyrights and patents to the extent that such protection is available, cost effective, and meaningful.
The loss of such rights concerning any particular product is unlikely to result in significant harm to our business,
although the loss of such protection for a number of significant items might have such an effect.
Government Regulation
Our toy and game products sold in the United States are subject to the provisions of The Consumer Product
Safety Act, as amended by the Consumer Product Safety Improvement Act of 2008, (as amended, the “CPSA”),
The Federal Hazardous Substances Act (the “FHSA”), The Flammable Fabrics Act (the “FFA”), and the
regulations promulgated thereunder. In addition, a few of our products, such as the food mixes for our EASY-
BAKE ovens, are also subject to regulation by the Food and Drug Administration.
The CPSA empowers the Consumer Product Safety Commission (the “CPSC”) to take action against
hazards presented by consumer products, including the formulation and implementation of regulations and
uniform safety standards. The CPSC has the authority to seek to declare a product “a banned hazardous
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