Running head: 1
Toys R Amazon, Walmart, and Others, but Not Us
School of Business, Liberty University
Author Note
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Step 1: Define the problem
After reviewing the case study regarding the once very successful company, Toys "R" Us,
it was very clear to identify the cause of the downfall of one of the most historical toy stores in
the United States. There was not a doubt that came to mind when considering purchasing a toy
and not thinking about Toys "R" Us. The early 2000s was the year of early adaptation where in-
store retail shopping companies started noticing the impact where they had to start competing
against online retail stores (Melis et al., 2015). According to the case, Toys "R" Us suffered a
considerable lapse that inevitably became the organization's collapse back in 2005 when Bain
Capital buried the company's assets in debt (Kinicki, 2021). Additionally, incapable of competing
with other stores offering online purchasing such as Amazon, Walmart, and Target, the
convenience of online purchasing and the opportunity to search for lower prices provided by its
competitors, in 2017, Toy "R" Us, unfortunately, had to file for bankruptcy. The primary
explanation for the organization's collapse came from the division's stores' incapability to adjust
to modern society's adaptations to consumer selections, aggressive fulfillment, and inadequate
administration conclusions. As a result, Toys "R" Us could never financially recover from the
effects against their competitors and had to shut down over 700 stores and leave approximately
33,000 employees out of employment (Kinicki, 2021). Nevertheless, in 2019, under the new
name of Tru Kids Brands, investors purchased all of Toys "R" Us, Baby "R" Us trademarks,
private toys, baby brands, and all additional assets that contain the famous mascot "Geoffrey the
Giraffe" (Kinicki, 2021).
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Step 2: Identify the causes of the problem.
There are several causes that could be the leading cause of the closure of the company.
As previously mentioned, the company's determination in 2005 to let Bain Capital take the
company private is definitely the foremost issue that transpired. The thought of going private was
not a unique or prudent decision. After the company's decision, private equity corporations, like
Bain and KKR, decided to start searching for retailers (Kinicki, 2021). After experiencing what
had occurred, the company reacted by investing cautiously and executing allocation costs which
eventually damaged the production and quality of the products that were being sold, which
negatively affected consumer attraction furthermore. Additionally, another cause that might have
had an influence on the company's bankruptcy was the developing era of online retailing
proceeding the great recession. With the scarcity of the technology required and shortage of the
margins needed to be competitive against other retailers offering online services, the company
was struggling. Other companies provided various advantages that Toys "R" Us did not, such as
a more comprehensive demographic, stable online media, and more significantly, more products
other than toys. As a result of these poor decisions that the company was making, multiple
suppliers and creditors were postponing shipments, which eventually decided to be the end of the
line.
Step 3 - Make Recommendations for Solving the Problem
After defining and identifying the problem that caused the downfall of the company, there
are several internal and external recommendations that could have helped the company. I believe
that the company panicked after proceeding with the era of the great recession and made very
inadequate financial decisions. One recommendation that could have helped the company
internally was investing in improving the company's consumer capability to shop. Just like other
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companies that approached the modern era of online retailing, Toys "R" Us could have offered
online retailing at contesting prices against other competitors. Previous studies that evaluated
bankruptcy prediction using econometrical techniques and their inherent drawbacks of statistical
hypotheses such as linearity, normality, and independent variables have positive results towards
companies that were able to adapt to the technological era (Lee & Choi, 2016). "Do not be
conformed to this world, but be transformed by the renewal of your mind, that by testing you
may discern what is the will of God, what is good and acceptable and perfect" (English Standard
Version, 2001/2016, Romans 12:2). Another recommendation is to improve their demographic
outreach towards consumers by offering a delivery system for consumers. Being limited to just
an in-store retail company that limits the consumer to receive their products at the physical store
would be an improvement. I believe that investing in these possibilities could have provided
positive results for the organization.
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References
Kinicki, A. (2021). Organizational behavior: A practical, problem-solving approach plus 3rd ed.
Connect. McGraw-Hill Education.
Lee, S., & Choi, W. S. (2013). A multi-industry bankruptcy prediction model using back-
propagation neural network and multivariate discriminant analysis. Expert Systems with
Applications, 40(8), 2941-2946. https://doi.org/10.1016/j.eswa.2012.12.009
Melis, K., Campo, K., Breugelmans, E., & Lamey, L. (2015). The impact of the multi-channel
retail mix on online store choice: Does online experience matter? Journal of Retailing,
91(2), 272-288. https://doi.org/10.1016/j.jretai.2014.12.004
The Holy Bible, English Standard Version, ESV®. (2016).
https://www.biblegateway.com/passage/?search=romans+12%3A2&version=ESV
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