Educating for Excellence

Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 1 of 6
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
Appendix 1 – A. C. Gilbert
History 1909–1961
Alfred Carlton Gilbert was an inventor and a toy manufacturer who invented the Erector engineering
set. His original company, The Mysto Manufacturing Company, was founded in 1909 to manufacture
the Erector set. In 1916, Mysto became the A. C. Gilbert Company and gained a reputation for
producing quality toys.
By the 1950s, A. C. Gilbert was one of the leading toymakers in the United States with annual sales
regularly topping $17 million. This was an outstanding achievement for a relatively small company.
In 1961, A. C. Gilbert senior died, leaving the company in the hands of his son, A. C. Junior. At the
time A. C. Junior took over the firm, the company was established as a traditional, reliable and
profitable manufacturer of educational toys.
Product lines and rationale
A. C. Gilbert produced train sets but their most popular lines were chemistry sets, microscopes and
their best seller, the Meccano-like Erector engineering sets that had been popular with children for
more than 50 years.
A. C. Gilbert toys were not cheap. They were high quality, solidly crafted and made to endure. Parts
and packaging were designed to last for many years, with the Erector set packaged in long-lasting
metal boxes. The focus was on educational toys, primarily aimed at boys rather than girls. The
company had a limited range but what they did manufacture was top quality and highly regarded.
Systems and processes
A. C. Gilbert was a small company. The following model demonstrates the systems and processes in
place.
Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 2 of 6
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 3 of 6
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
Note: These flowcharts have been included for assessment purposes only, and may not accurately reflect the
actual processes in place at A. C. Gilbert.
History 1961–1967
As the 1950s moved into the 1960s, there were huge cultural changes across the world. The fifties
were a very traditional era of family values and morals, conservative and staid. Then came the
‘swinging sixties’. The sixties were a time of rapid change both technologically and culturally. Old
fashioned values gave way to new moral freedoms.
Where the fifties represented solidarity and familiarity, the sixties embraced change. Everything was
bolder, brighter and more daring. A new young president and rising social activism by youth saw
changes in clothing, music and interests. Young people rebelled against the values of their parents
and embraced a more fast paced, exciting and riskier lifestyle.
Changes to the toy industry
Cultural changes had a huge impact in western toy markets. Barbie and Action Man became ‘must
have’ toys. Girls moved away from baby dolls and cots and wanted dolls that were more grown up,
modern and trendy. They wanted dolls they could dress in the latest fashions and who had exciting
‘careers’, boyfriends and cars of their own. Boys were moving away from the traditional train sets
towards exciting new slot-car racing sets and action figures from popular movies and television
shows.
Traditionally, toy advertising had been done via magazine promotions but the sixties brought in a new
phenomenon: television advertising. A hugely powerful medium, TV advertising became increasingly
‘hard sell’, with toys heavily promoted, especially in the lead up to Christmas. Children wanted the
latest and greatest toys that they saw in these advertisements and put pressure on their parents to
buy, which they did.
Retailing of toys during this period reflected a shift in retailing in general. Small, specialty retailers with
experienced and knowledgeable staff were going out of business, replaced by large discount stores
catering for the mass market. The goal of this type of retailer was to turnover stock. Heavily
advertised lines were in demand and that is what they would stock. Cheap was in and giant retailers
were after a quick profit from easily saleable, inexpensive products. They weren’t interested in
catering to a niche market by stocking more expensive, harder to shift lines.
Packaging was bright and colourful in order to attract children growing up in a world of colour TV,
hypercolor clothing and visual stimulation provided by the swinging sixties.
Affects on A. C. Gilbert
As a small, traditional company, A. C. Gilbert was slow to react to these changes. It may have been
that they were not aware of the changes or were overly confident that their good name and reputation
was sufficient to continue trading as before. The consequences of this short sightedness soon
became apparent.
Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 4 of 6
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
1961 (figures approximate)

This drop in sales was also reflected in a fall in the share price of the company.
Outcomes
As a result of the falling profits and share price, the company became attractive to an opportunistic
businessman, Jack Wrather. Jack Wrather was an independent television producer who had made his
money producing the popular programs ‘Lassie’ and ‘The Lone Ranger’. Jack Wrather wanted to
purchase a successful business and felt that in A. C. Gilbert, he had the opportunity to use his
knowledge of popular entertainment and apply it to the production of toys. He purchased 52% of A. C.
Gilbert for $4 million and immediately set about making his mark on the company. A. C. Junior stayed
on as Chairman but his influence was minimal.
Actions taken by Jack Wrather
● Set a goal to achieve sales of $20 million in 1963.
● Replaced the top A. C. Gilbert executives with his own people.
● Initiated a massive advertising campaign.
● Increased sales staff by 50%.
● Instructed sales staff to adopt an aggressive sales approach.
● Introduced 50 new toy lines, raising the line to 307.
● Changed the focus from traditional boys toys to ranges for pre-school children, dolls and other
toys aimed at girls between the ages of 6 and 14.
● Spent $1 million on changing the packaging for all lines to brighter, more colourful boxes.
Performance report

Key milestones
1962:
● Jack Wrather purchased 52% of A. C. Gilbert.
● Replaced existing executives with his own people.
● Increased sales staff by 50%.
Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 5 of 6
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
● Implemented extensive television advertising.
● Set an organisational goal to achieve sales of $20 million for 1963.
● Company recorded a loss of $281,000.00.
● Introduced 50 new lines in less than 12 months, using existing engineers and production
departments who lacked training and experience in the new product range.
● Repackaged existing lines at a cost of $1 million.
1963:
● Sales and profits down on previous year.
● Anticipated drop in profits due to expansion and cost of establishing new lines.
● Sales fell short of expectations.
● Decline in quality of toys – feedback indicated products poorly made and designed (dolls did not
even come with a change of clothing).
● New range perceived by customers as poor quality and over-priced – not value for money nor
attractive to the target market.
1964:
● Jack Wrather fired most of the top management team he hired two years previously.
● Crisis management lead to multiple changes and dramatic measures being taken and then
changed – often one measure contradicting the previous.
● Jack Wrather hires new CEO – Isaacson.
● Isaacson fires the entire sales team.
● Isaacson makes huge cutbacks in spending.
● Sales are channelled through independent manufacturer’s reps, which was cheaper than
maintaining an in-house sales force.
● Long-standing relationships soured as the independent reps worked on commission and
pushed sales, with no interest in maintaining or building relationships with customers.
● A. C. Gilbert had built its success on personal service and building relationships – that was
destroyed within 12 months.
● A. C. Gilbert Junior dies and is replaced as Chairman by Jack Wrather. Isaacson assumes the
role of President.
● Prior to Christmas, many of the previous year’s failed products were deleted and 20 new items
introduced.
● Reduced the price of core lines such as the Erector set from $75 to $20 but quality also
impacted – cardboard box instead of metal boxes, and brittle parts instead of sturdy long-lasting
parts.
● Sales increased and there was some degree of optimism.
1965:
Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 6 of 6
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
● Sought to capitalise on popular crazes such as James Bond and The Man from Uncle by
introducing action figures for Christmas.
● Due to internal strife and staff cutbacks, the new lines were not delivered to the stores until after
Christmas.
● Operating on a skeleton workforce.
● Due to lack of staff, A. C. Gilbert is unable to implement changes or introduce new lines quickly
enough to capitalise on trends.
1966
● Increased advertising spending to $3 million.
● Introduced point of purchase display products supplied to dealers free of charge.
● Borrowed $6.25 million, granted on the event that the company made a profit in 1996.
● Company made a loss of $12,872,000.00.
1967
● February – A. C. Gilbert closed its doors after 58 years.
Note: This case study is a true story. You may wish to read more about this organisation or to
conduct additional research online.
Reference material
● Tibballs, G., 1999, Business blunders, ‘A. C. Gilbert: Toy Story’, Robinson Publishing Ltd, pp.
43.