Assignment Objective: #2 Evaluate Toys R US internal and external environment and competitive position. #3 Compare and contrast competitive strategies. #4 Evaluate global strategies and strategies for diversified companies. #5 Assess the organizational components that impact strategy implementation. #6 Evaluate the roles of ethics, social responsibility, and environmental sustainability in strategy implementation.
Toys R Us
External Environment Toys R US
Political
The varying market dynamics of Toys R US are evaluated using PEST analysis. The political atmosphere of Toys R Us is quite stable and promising. Nonetheless, any variations in government tax policy may affect the firm’s revenues indirectly.
Economic
The economic environment is varying considerably as the US economy has been hit hard by recession. As such, consumer spending is way too low. There’s need to address the need for low priced products that would meet clientele needs.
Social
The social environment of Toys R Us is going through serious changes, especially with regards consumers age groups below 5 years. However, 5-12 children segment keeps on shrinking. Ironically, their clients are not being replaced by comparable number of children. Moreover, there has been a societal shift towards educational related activities over leisure, an aspect that has impacted the business (Syed, 2014).
Technological
The technological backdrop of Toys R Us is quite impressive as the company has engineered some of the exceptional innovations. Moreover, its online systems have offered the company a competitive edge.
Internal environment
Strengths
The company has more than 1,500 stores across the world. Toys R Us markets its products through the internet in partnership with Amazon, which increases its client base significantly. Moreover, the company a remarkable distribution network that uses modern logistic structures.
Weaknesses
The firm lacks sustainable competitiveness apart from the brand. In the United States, Toy R Us major market has lost its position to Wal-Mart. Size does not matter, especially when clients can access toys from other retail stores and in some cases at fair price.
Opportunities
The firm collaborates with Amazon, which is important for the two organizations. Amazon is good at online business, develops websites, warehouse products and deliver to clients. Moreover, Toy R Us global presence increase its revenue, because people in emerging economies like China have disposable income and likely to grow in future.
Threats
The company faces intense competition from Target, Wal-Mart and KB toys. Toy R Us also faces challenges with differentiation as such it has to compete based on availability, cost and variety. Another threat is traffic as well as quotas set by the government particularly in China to safeguard manufactures. Therefore with such embargoes, the company is likely to be without toys.
Competitive Position
New Entrants
New entrants in this sector can lead to intense competition. However, Toys R Us has put in place a strategy of product identification. With many years in this industry, new entrants are likely to face challenges in meeting the needs of loyal clients aligned towards the giant Toys R Us.
Substitute Products
With substitute products, the company may face the challenge of low profit margin. Therefore, if Toys R Us competitors come up with a substitute product, it has to be trendy to make a sale.
Bargaining Power of Suppliers
This is an important factor about the attractiveness of the sector since have suppliers are powerful, the will demand for high prices, which minimizes overall profitability. As such, this sector has many suppliers have low bargaining power and retail stores can get products from a different supplier (Syed, 2014).
Bargaining Power of Consumers
Owing to the fact that there a few online clients, the have a higher bargaining power. But Toys R Us has a significant leverage as it merges with toysrus.com to increase its buying influence. Moreover, the company buys products in large quantity, it enjoys huge discount.
Rivalry
Intense competition reduces profit margin because it decreases or increases the cots of operation. In general, more firms in this sector will increase competition. With regards to Toys R Us it faces intense competition from KB toys, Target and Wal-Mart.
Evaluate Global Strategies and Strategies for Diversified Companies
Some of Toy R Us global strategies include collaborating with partners to drive not just innovation but also value and differentiation. It leverages its business partners in United States and in other countries to drive appropriate differentiation as well as leadership while creating appealing shops and in-store brand statement. Another strategy is the development of highly engaged and performing talent. In this areas the company concentrates on assessing organizational structure, create structures that foster talent growth accountability and efficiency (Cautela, Pisano & Pironti, 2014). With respect to diversification, the company launched an online site Toyrus.com, offering a wide range of toys and baby products for children all ages such action figures, arts and crafts, bikes scooters, building blocks, video games among others. Additionally, the site provides exclusives, useful services and regular deals. The firm further diversified globally through their baby category under Babies RUs identified with purple and white Babies R Us logo.
Assess the Organizational Components that Impact Strategy Implementation.
There are various components that affect Toy R Us’s strategy implementation. For instance, in-store and online shopping, therefore the firm adopted initiatives including cleaning existing stores, enhancing in-store execution, faster checkout, all these were done to ensure a client-based business. Another aspect is pricing that greatly affected strategy implementation was pricing, therefore the company enhanced promotion and loyalty initiatives; improve cost perception b creating a suitable pricing approach while ensuring simplification of promotions and use of e-commerce by focusing on online buying (Ahmad, Pesch & Gulati, 2015).
Evaluate the roles of ethics, social responsibility, and environmental sustainability in strategy implementation at Toys R US.
Integrity forms the core of Toys R Us strategic implementation. It is demanded from all employees and other stakeholders in the company’s everyday operations. As a firm that has operation in a variety of different markets globally, it has employees and customers from different cultural backdrops, denomination, demographics and lifestyles- and these differences are highly esteemed. The company embraces open communication and learning from one another, an aspect that strengthens its competence to succeed (Cautela, Pisano & Pironti, 2014).
Toys R Us works to accomplish the safety of the clients or families they serve. In doing so, the company upholds the highest moral and legal specifications, and demands the same from business associates. The company works in conjunction with regulators, manufactures and global establishments to the safety standards rather high. The company’s business operations are anchored on social responsibility that has a global reach. Toys R Us utilizes its resources to impact positively not just on global communities but by enhancing the delight to children large and small. Toys R Us runs a Children’s Fund that offers support to children in the event of disaster. Financial aid amounting to more than $5 million has been given towards disaster response such as tornadoes, Hurricane and floods among others.
References
Syed, T. A. (2014). Product recalls and product-harm crises. Competitiveness Review, 24(3), 190-210.
Ahmad, S., Pesch, M. J., & Gulati, R. (2015). COST OF QUALITY: LESSONS FROM TOY RECALLS. Journal of International Business Research, 14(2), 1-14.
Cautela, C., Pisano, P., & Pironti, M. (2014). The emergence of new networked business models from technology innovation: An analysis of 3-D printing design enterprises. International Entrepreneurship and Management Journal, 10(3), 487-501.
