Reorganization Of The Company Web Toys'r Us example essay topic

Toys'R'Us INTRODUCTION In this assignment I have chosen to focus on explaining what kind of company Toys'R'Us is, giving a brief, short summary of the firms history, their corporate responsibilities, what their competitive advantages are and how they implement their strategies through retailing and merchandise. I also found it relevant to explain the market situation in the toy-industry and what the trends are, for understanding what other difficulties that are important to consider in order to survive. SHORT HISTORY In 1948, a company which totally dedicated themselves to children and their needs, was formed by Charles Lazarus in Washington DC. This was a perfect timing in relation to the post-war baby boom period, the demand for accessories for children was high, and the main purpose for the company was to carry furniture for babies. After some time, he heard customers saying phrases like 'I need a toy for my baby', so he began selling toys a swell. Mr. Lazarus tried to give his customers what they wanted he understood early that this was the best way to keep his customers.

In 1957, he opened his first toy supermarket, and with specialized retailing and the off-price positioning, he revolutionized the concepts in the pre-mall and discount days. After this success, he sold his business to Interstate, which later went bankrupt. Mr. Lazarus rejoined the company and made it profitable, and in 1978 it became a public company; Toys'R'Us, Inc. DIVISION OF THE COMPANY Today, Toys'R'Us is a $11 billion dollar company and they have over 1500 stores over the whole world. The company is divided into six different divisions: Toys'R'Us US Strongly focuses on strengthening the shopping experience by providing better service and better merchandise.

There are around 680 locations of Toys R Us in the US. Toys'R'Us International Is licensed, franchised and operated through over 570 locations in 29 countries outside the USKids'R'Us Consists of more than 375 locations where children's clothing and toys are all under one roof, and ought's to offer all of the latest fashions and of course high quality merchandise. ImaginariumToysrus. com Developed in alliance with Amazon. com in order to offer an online shopping service. Babies'R'Us Offers everything parents need for their babies, like furniture, bedding, car seats etc. All products can be purchased under one roof By organizing their organization into these different divisions, it gives them a competitive advantage because it makes it easier to focus in the certain areas.

These divisions are very different from each other, and needs specialization in all the different aspects. It is very important that the divisions work closely together on top level to coordinate all different activities. Also by combining and using the 'all under one roof' idea, they make it easier for parents to shop so that they save time. CEO The company has a very talented Chief Executive Officer which of course gives them a competitive advantage. John Eyler joined the company in January 2000, with top lead positions as CEO in both FAO Schwarz and Hart marx. Mr. Eyler took his MBA in Harvard, and started of his retail career at The May D&F where he was named CEO at only the age of 32.

Toys'R'Us " CEO has a wide experience within different retail and merchandise areas, worked for big companies before and should be perfectly suited for the job. CORPORATE RESPONSIBILITY In 1992 the company established Toys 'R' Us Children's Fund Inc, which main function is to raise money for charity which is dedicated to meet children's needs in the US. They believe that 'our children are our best and most rewarding investments' and they want to continue to 'seek innovative ways to improve their lives'. Apparently, the foundation contributes millions of dollars to organizations that makes a child's life better and easier, examples are funding corporations like Reading is Fundamental (RIF) which is the oldest and largest nonprofit literacy organization in the US. Their aim is distribute free books to more than 100.000 children and to engage them with motivational activities designed by the parents. This way, children will get better educated and strengthen the relationship.

The fund also works with renovating and construct playrooms in hospitals to make the environment better for sick children and their families. They have joined partnership with the Starlight Children's Foundation in order to do this, and have also awarded Gilda's Club Worldwide with a three-year grant to offer the same opportunities in relation to families that are effected by cancer. By showing corporate responsibility, the company most look better in the eyes of society, and that they don't seem as a pure capitalistic firm where profits only go to their shareholders. Especially since they are in the toy industry, their involvement in children reflects back on their brand and image. It is the children that they make profits on, and by funding good causes people will also buy more of their products. web 'R'US COMPETITORS, WHAT THREATS THEY FACE AND HOW THEY IMPLEMENT STRATEGIES Toys 'R' Us maybe think that they have the dominant position in the market, but other resources claim that the position has been eroded by WalMart and Target. These retailers are the companies main competitors but also other emerging such as Home Depot and Kmart / Sears.

In 2003, their profits fell by more than 60 percent, and in the second half of 2004, rumors came clare that the company was considering selling its toy business and just spin of their Babies'R'Us division. web (2) In order to meet competition, particular from WalMart which basically offers anything from food, toys, clothes to electronics, Toys'R'Us have seen it as inevitable to find another way to differentiate themselves from them. The customer (which in this case are most mothers buying toys for their children) want's everything situated in one place to save time. It is very difficult to compete with these growing retailers, they have to much power, and can easily drive the prices down from their suppliers. web (3) 'During the course of our strategic review, we redefined our business model and sharpened our competitive position. This enabled us to strengthen the value we provide to our customers, and we were rewarded with market share gains this past holiday season.

We believe that our new financial partners will help us build on this momentum and we look forward to a successful future as a leading toy and baby products retailer' John Eyler, CEO. Just recently, as a solution to Toys'R'Us financial problems, they sold out in March to Ko hlberg Krav is Roberts & Co., Bain Capital Partners LLC and Vornado Realty Trust. The first two are equity firms, the last one is a real estate developer. They agreed on making Toys'R'Us a privately owned company. The deal was estimated to $6.6 billion.

Unfortunately, it appears that the companies will issue $5 billion in more debt to finance the purchase. Toys'R'Us already has a debt of $2.3 billion, and Fitch Ratings has already warned that they might downgrade the company down to a B rating. This is three notches down from the current BB ratings that they have now. By being downgraded on this list, it will give future investors an idea of the risk iin investing in a company, which is much higher now when all this debt is issued. The sell-out has helped the company to survive in rough times, and now has three equal companies to absorb their financial problems until they get pay-offs for their strategies. Toys'R'Us unfortunately have to see themselves to close, sell or lease out a minimum of a 100 stores, though this will not be taken to action before January 2006. web (4) and web (10) By the end of 2004, the company was found to have prices which was five percent below WalMart's.

The vice president of the store marketing, Greg Ahearn said that 'we wanted to be price competitive and do it throughout the holiday season this year. ' web (5) The reason for this behavior is a response to WalMart's hard and aggressive move into the toy industry with very reduced prices. WalMart says 'it tries to beat competition wherever it operates a store', and they are doing it good. An toy industry analyst, Sean P. McGowan thinks that a company within this industry cannot afford falling behind any competitor because 'the American consumer is so price sensitive right now'. In 2003, KB Toys and Toys'R'Us had to cut 20 percent of their prices in order to survive, so they are trying as hard as they can to meet the treat. KB Toys filed for bankruptcy and had to close more than 600 stores, while Toys'R'Us try hard to fight back by meeting the price war and now with the reorganization of the company. web (6) Toys'R'Us does not only cut their prices or restructure their organization.

In the end of 2004, their manufactures which included Mattel and Hasbro start giving 'aid' to the company by giving exclusive deals like only letting popular toys such as the Hockey-Pocket ELMO-doll be sold through them. Almost 25 percent of the items in their inventory where not found in any other retailer or in WalMart. WalMart's power by mass merchandising drives down the prices among the suppliers, and Mattel and Hasbro are highly concerned of what they future will be like if Toys'R'Us gets forced out of business, mostly because the chain offers a broader range of toys than WalMart does. The manufacturers are even helping with money for advertising, almost 21 commercials with exclusive toys only to be sold at the chain. web (7) and web (8) Another competitive advantage Toys'R'Us have, was the partnership with Amazon. com. Their aim was to make a co-branded toy and video games store, which gives them the opportunity of exploiting the of the two powerful companies. Toys'R'Us has the selection of merchandise, marketing and brand as their competitive advantage, while for Amazon. com's part this involves also their brand, but not to forget about the fulfillment capabilities and their e-commerce expertise.

The alliance started in 1999 and this give them an advantage when it comes to being aware of how their delivery systems work, payment and they both gain good image by working because of the power of their brands. Toys'R'Us have seen the opportunity for e-commerce at an early stage which should pay of now that shopping over the internet is now very popular, and on Amazon. com you can purchase most of the things you need without going out of your house. It is time effective and lower prices since it goes directly to the consumer. web (9) Trends in the toy market these days have been closely identified by Toys'R'Us and put into five categories. The most emerging are items in portable entertainment, devices that play music, dvd's and games are extremely popular. Examples are G amboy Advance, Gameboy Dual Screen and the Jr. Personal Video.

Another trend is update t classics like Crayola and Ms. Pac-Man, and interactive learning includes early learning skills, geography and math. A fourth trend within this market is the interactive game play, where you combine DVD technology with board games like Trivia Pursuit. The last emerging trend in the toy industry are cool vehicles, where car producers such as Hummer, Ferrari, and Corvette have started to make small luxury cars for children. All these toys ought to be found in the broad product-range of the company. web (11) SUMMARYToys'R'Us is a company which was the leading company within the toy industry for many years. The last years they unfortunately had to see themselves defeated by the emerging supermarkets like WalMart which started offering toys in their product ranges.

The advantage of these chains are that they are the biggest retailers in the world, which means that they can compete on price. Also that they offer everything from clothes to food under one roof, attracts costumers that want to save time and money. In order to meet this threat, Toys'R'Us just sold off the company for $6.6 billion, and they are at the moment in a restructuring process by cutting, leasing or selling stores to save money. Toys'R'Us now try to follow the market leader by 'getting everything under one roof', and they have already started strong alliances with Hasbro and Mattel which are their nearest suppliers, to make sure that their popular products are only sold at their shops. The suppliers look at the company as the only way of surviving in this highly competitive market, due to their own prices and product range. Toys'R'Us use many different ways of reaching their customers, they have own locations, they use other de tailers and of course the possibility of purchasing online at Amazon. com.

Resources 1. Site: web Their official web-site where there are links about corporate responsibility, history, managers, vision etc. 2. Site: web Discussion. cf m/10174 Article: Toys " RU'Us Lookin for Some Holiday Magic By: George Anderson Published: 06.10. 20043. Site: web Deal Breathes New Life Into Toy Biz By: George Anderson Published: 18.03.

20054. Site: web No store closings this year at Toys'R'UsBy: Jeffrey Gold Published: 18.03. 20055. Site web Discussion. cf m/10259 Article: Toys'R'Us following good book's advice By: George Anderson Published: 15.11. 20046. Site web The toy war begins By: Michael BarbaroPublished: 13.11.

20047. Site web Discussion. cf m/10252 Article: Toy manufacturers chooses sides By: George Anderson Published: 11.11. 048. Site web Article: Report: Toy makers helping Toys'R'UsBy: Cnn Money Published: 10.11. 20049. Site web toys / l /aa 000809 a. htm Article: Amazon and Toys'R'Us to play togheterBy: RetailindustryPublished: 199910.

Site web Toys'R'Us announces agreement to be acquired By: Retail industry, source; Toys'R'Us press release of 17 March 2005 Published: 17.03. 200511. Site web story/11-18-2004/0002464213&E DATE Article: Toys'R'Us details top toy trends for the 2004 holiday season By: N. J Wayne Published: 18.11. 2004.