Toys R Us E Commerce - Literature review Example

Toys "R" Us The Toys “R” Us company was started by Lazarus Charles in 1948, Washington, DC. The company started as an undersized baby fixtures store, which grew to infant toys and products to meet clients’ demands. The firm undertook a supermarket tactic, which allowed clients to search for and choose out their individual product. Through offering specialty products and through pricing most obtained products at incredibly low costs, the company’s brand eventually grew into a toy establishment. The Toys “R” Us firm went public during 1978 and started to branch out its products (Brohan, par 3). In the 1980’s Toys “R” Us stretched out into global markets as well as expanded its brand line to encompass children’s clothing. In the 1990’s, Toys “R” Us further grew into the baby product marketplace with Babies “R” Us (Lombardi, par 4). Additionally, Toys “R” Us assimilated the renowned New York toy store FAO Schwarz together with its online websites during 2009. Items from this New York high-end shop are now in Toys “R” Us stores too (Brohan, par 4). Toys “R” Us Inc. runs more than eight hundred and seventy five Babies “R” Us and Toys “R” Us shops within the U.S., more than six hundred and twenty five worldwide stores as well as over one hundred and forty licensed shops within 35 nations as well as its jurisdictions. Toys “R” Us board of directors is comprised of nine members with Gerald Storch as the Chairman as well as the Chief Executive officer (Brohan, par 6). In an ever developing online retailing marketplace, Toys “R” Us has also developed itself as a virtual retailer. Toys “R” Us operates many online retail websites. Babiesrus.com and toysrus.com have various international websites and are among the highly visited websites for clients looking for kids’ products (Lombardi, par 5). The firm also attained the electronic toy seller ‘eToys.com’ together with FAO Schwarz‘s electronic retail website, FAO.com. The Toys “R” Us enterprise was a public corporation up until 2005, when Kohlberg Kravis Roberts & CO, Bain Capital Partners LLC, and Vorando Reality Trust acquired it. The takeover encompassed all shops worldwide (Brohan, par 7). During 2012 Toys “R” Us sales of toys went down by a percentage of 3.5 to 20.47 billion dollars within the U.S, the global major toy market, rendering to a research company NPD Group. Previously, Toys “R” Us articulated that its same-stores sales within the US had gone down by 4.5% within the 9 weeks from 28th October to 29th December, a crucial time for toys’ sales (Brohan, par 8). Toys “R” Us total sales of toys went down by 4.7% in that period. Toys “R” Us Inc. has not stated toys’ sales results for its current fiscal year. During the year that concluded during 2012, January, same-store sales went down at home as well as within the global business, whereas total sales rocketed from 45 million dollars to 13.9 billion dollars (Lombardi, par). From this analysis, the Toys “R” Us Inc. is feasible to venture into emerging markets such as India. Despite the toy sales drop, Toys “R” Us total sales increment shows that the company can afford to venture new markets or emerging markets, which can boost its toy sales and generate more returns for the company (Brohan, par 5). India’s economic development was grounded upon socialist-inspired policies following the independence. It encompassed state-ownership of numerous sectors, regulations as well as red tape that was referred to as ‘License Raj’ in addition to safeguarding from the global markets. India’s political economy has rapidly transmuted with the economy’s liberalization during the 1990s (Maps of India, par 1). India has currently moved into a market-based structure and it is the global second speediest growing quintessential economy following China. India documented the highest gross domestic product rate of 9 percent in 2007. India’s growth has currently reached 7.5 percent (Maps of India, par 4). India is the global twelfth-hugest economy by purchasing power parity (PPP) regulated exchange rates. India is ranked 118th by purchasing power parity and 128th upon ‘per capital basis’ globally. The most crucial primacies for India rendering to the World Bank are the public sector restructuring, agriculture, eradication of labor protocols, infrastructure, rural development as well as reforms within backward states (Maps of India, par 5). Around 54 percent of India’s GDP encompasses the service industry whereas 29 percent of it encompasses the engineering sector. Because of the economic reforms and the public-sector industries privatization, consumer commodity production has augmented. Among the fastest growing industries are business services that encompass information technology, supported services, corporate process outsourcing and information technology. India dough souk is distributed into unorganized and organized sectors. The organized sector encompasses public, private as well as foreign owned cooperative and commercial banks. It is required that banks offer 40 percent of their ‘net credit’ to crucial sectors. India’s economy system includes India’s payments balance (Maps of India, par 6). Owing to the liberalization of its economy in the 90’s, exports in India have been increasing. Since India economic structure is the 4th largest economy globally rendering to PPP, it is, therefore, the best favored destinations for FDI (foreign direct investments). During a liberalized FDI protocol, up to 100 percent of foreign direct investments could be invested (Maps of India, par 8). This means that a company like Toys “R” Us can enter an emerging market like India through foreign direct investments. Indian labor-force accounts for more than 523.5 million. India has attracted FDI worth of more 2.58 billion dollars rendering to the DIPP (Department of Industrial Policy and Promotion). Lastly, the Indian political economy has encompassed other reforms like formation of SEZ (Special Economic Zones), introducing the GQP (Golden Quadrilateral Project) for building a system of highways, passing the Information Right Act (2005), the Right to Edification Bill (2008) as well as Indo-US citizen nuclear contract (2008). The bearing of each of these restructurings is mirrored in the increased growth percentage for foreign direct investments in India (Maps of India, par 9). Strengths The Toys "R" Us company has in extra fifteen hundred superstores within the United States as well as the Globe. Toys "R" Us also owns the infant brand, Babies “R” Us, that contributes another two hundred stores. The Toys "R" Us enterprise also promotes effectively on the Internet (in conjunction with Amazon.com) (Lombardi, par 6). Toys "R" Us has a vast distribution network, which is aided by the cutting-edge logistical structures. Owning too much ledge space denotes that the firm has a sturdy negotiating standpoint with respect to purchasing prices from producers. By 2005 Toys "R" Us had acquired a turnover of more than eleven billion dollars (Anderson, par 3). The firm sells numerous diverse product varieties (Brohan, par 5). There are disadvantages and benefits to this. Nevertheless, a major strength is that the firm has a differentiated portfolio of items, which denotes that whereas some varieties are underachieving, others varieties are out-performing. Provided that the technology permits them to detect successes in addition to focusing on them, Toys "R" Us has a competitive strength. The net sales obtained from these superstores can be used to venture into an emerging market like India (Brohan, par 7). The Indian economic system renders it possible for an international company like Toys "R" Us to begin business operations in India. The economic system is favorable to foreign investors as well as not forgetting the ready market available in India. India is advanced when it comes to information technology, meaning that if Toys "R" Us ventures into India, most of its sales will come from online sales (Anderson, par 7). Weaknesses Nowadays, the Toys "R" Us Inc. has no lone as well as sustainable competitive lead other than the brand. Within the United States, its customary stronghold, the firm has already lost its position as the number one toy seller to Wal-Mart (Lombardi, par 8). The fact that Toys "R" Us Inc. is large might not be adequate, when clients can visit another large seller and purchase the same as well as similar products, and at times obtaining a finer deal (Brohan, par 3). As it is with all merchants within Western society, the Toys "R" Us Inc. is profoundly dependent on fruitful sales in the concluding quarter in the year (Lombardi, par 9). Toys "R" Us needs to make earnings from Christmas. Merchandizing is disreputably seasonal, besides Toys "R" Us Inc. does not differ to other vendors. In effect, it can be contended that the toys are a major Christmas present commodity, and therefore, are much more probably to be reliant on seasonal sales (Brohan, par 7). Indian economic growth has already been recognized, meaning most companies are looking to invest in India and that includes Toys "R" Us competitors (Brohan, par 8). The fact that it has already lost its position as the leading toy retailer, this means that Wal-Mart may be at it as well in emerging markets (Lombardi, par 5). Toys "R" Us needs to come up with strategic ways of having a competitive advantage over its competitors. Opportunities There are prospects for strategic alliances and joint ventures. The Toys "R" Us Inc. works diligently with Amazon.com as well as its baby items group. This prospect not only adds to the benefits of both firms, but also offers prospects (Brohan, par 6). Amazon is resilient on the online fragment of the corporate, fashioning the online sites, warehousing goods as well as conveying them to clients. The Toys "R" Us Inc. will employ its purchasing power, but eventually undergo the risk of inventory (for instance, if the Toys "R" Us Inc. does not sell, its funds will be tied up within physical stock) (Anderson, par 4). The Toys "R" Us Inc. is a noble neighbor, in 2005, for instance, the company decided to offer aid to the Louisiana sufferers of tornado Katrina (Lombardi, par 4). The Toys "R" Us firm offered six wagons filled with toys as well as baby supplies encompassing diapers, wipes, as well as formula and batteries in addition to water to manifold locations, which were accommodating evacuees (Brohan, par 2). The Babies "R" Us firm has also donated over seventeen pallets of infant as well as children's apparel to the state charity KIDS (Kids In Distressed Situations). Such relations will assist to sustain Toys "R" Us brand with major consumers (Anderson, par 6). As with numerous brands taken into account by the Marketing Teacher.com SWOT analysis, the global market is extremely crucial to the Toys "R" Us Inc. (Brohan, par 6). The residents of emerging countries such as India and China are becoming wealthier as well as better educated (Lombardi, par 7). Customers have more throwaway income in addition to vacation time, plus both of these may surge over the upcoming years. The kinds of services and goods vended by the firm could be promoted more aggressively in overseas nations. The Toys "R" Us Inc. may look for strategic associates, or undeniably go it solo (Anderson, par 4). To venture a market that is fuelled by information technology, Toys "R" Us has a competitive advantage of employing strategic alliances and joint ventures to aid it in venturing emerging markets (Lombardi, par 9). Its affiliation with Amazon is a good opportunity for Toys "R" Us to venture a market that is highly influenced by on-line purchasing (Anderson, par 5). Threats There exists resilient competitive rivalry within the toy marketplace, not from Wal-Mart solely, but as well from Target and KB Toys. The toy product is habitually not allied with the seller (Brohan, par 4). Therefore, if a certain child's toy has seized the imagination as well as the spending influence of its recipient consumer, any selling channel is as suitable as another selling channel. Diversity is problematic, and toy sellers regularly have to rival on price, variety or availability (Anderson, par 5). Let us face it, currently China as well as the same low cost engineering nations are where toy products are prepared (Lombardi, par 5). Low manufacturing outlays are crucial if precincts are to be held. The problem, as well as potential drawback, is that nations as well as trading communities have a habit of imposing tariffs and quotas to safeguard local engineering. All nations do it. Nonetheless, the Toy “R” Us Inc. could possibly be left with no toys that the people prefer to acquire if restrictions are employed on nations like China (Anderson, par 6). China has already ventured into India and it may be hard to beat, as it is known to manufacture cheap products. Toys "R" Us biggest threat is venturing into a market that is already run by cheap commodities from China. To overcome this threat, Toys "R" Us must devise products of high quality that will appeal to the target consumers (Anderson, par 7). Conclusively, Toys "R" Us needs to strategically manage its operations. Toys "R" Us has already articulated its 21st era projects, which will see it improve its overall performance (Brohan, par 6). This is crucial especially now that the company has plans of venturing into emerging markets such as India. Examples of initiatives that Toys "R" Us intends to undertake include rooftop solar initiative that is intended to cover most of the roof of Toys "R" Us distribution center. This will cut on power expenses, which can be directed into other investments (Brohan, par 5). Another initiative is the integrated store approach that will offer shopper convenience, and lastly the product safety initiative. The Toys "R" Us has already employed high safety protocols that take a forceful methodology to hold vendors responsible for adhering to the standards (Anderson, par 6). Such initiatives can aid Toys "R" Us in effective venturing and running of business operations in emerging markets like India. India provides a better market base since the Indian political economic systems are favorable to foreign investors (Maps of India, par 4). Indian has undergone numerous reforms since the 90’s. Such reforms include public sector restructuring, agriculture, eradication of labor protocols, infrastructure, rural development as well as reforms within backward states (Maps of India, par 5). On the account of Indian economy liberalization in the 90’s, the exports in India have increased rapidly. As the Indian system of economy is the fourth hugest economy internationally, rendering India is the most favored destinations for FDI (foreign direct investments). Currently, up to 100 percent of foreign direct investments could be invested (Maps of India, par 8). This denoted that a firm like Toys “R” Us could enter an emerging market like India via foreign direct investments. India has enticed Foreign Direct Investments worth of more 2.58 billion dollars rendering to the DIPP. The Indian political economy has as well encompassed other modifications like introducing the GQP (Golden Quadrilateral Project) for building a system of highways, formation of SEZ (Special Economic Zones), and passing of the Information Right Act (2005), the Right to Edification Bill (2008) as well as Indo-US citizen nuclear contract (2008). The effect of each of these reformations is mirrored within the growth percentage increment seen in foreign direct investments within India (Maps of India, par 9). Works Cited Anderson, Mae. "Toys ‘R’ Us Acquires High-End FAO Schwarz". Christian Broadcasting Network. Web. 10 Apr. 2013. Brohan, Mark. "Toys 'R' Us Opens a Dedicated E-Commerce Fulfillment Hub". Internetretailer.com. Web. 10 Apr. 2013. Lombardi, Candace. "Toys 'R' Us Building Massive Rooftop Solar Project". CNET. Web. 10 Apr. 2013. Maps of India. Political Economy of India. n.p., n.d. Web. 10 Apr. 2013. Read More