Toys R Us: Financial Struggles & The Biggest Mistake

Toys "R" Us was one of the largest toy store chains in the world. Its fall in the year 2017 was basically as a result of financial struggles which saw it having a US debt of US$1bn (Goh, 2017). The biggest mistake that the company did is the failure to establish its financial strategies in time to establish itself as a stable e-commerce company. Since its introduction in 1948, The company only signed an exclusive toy vendor deal with Amazon company in 2000 (Goh, 2017). Sadly enough, Amazon went against the agreement terms and hence allowed some other toy vendors, this lowering the market profitability. Failure to self-develop an e-commerce presence in advance without relying on other companies for marketing was the biggest mistake by Toys "R" US (Burt et al., 2003). The scenario proves the content obtained during the lessons that, a company may have business goals and objectives but fail to implement those strategies profitably. Chevan (2009) reiterated that business strategies should comply with the metrics and plans of achieving them, to create a balanced scoreboard.

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The flaw in the Company's Primary Financial Strategy

Nevertheless, much would not be strictly put on the company, because their primary strategy to gain more revenue and attract international figure was flawed. The flaw was contributed by the key Toy chain competing vendors who similarly collaborated with Amazon to improve their financial growth. Toys "R" Us tried to revamp its website back to operations with a plan of $100 million (Bolton et al., 2019). Unfortunately, they were overwhelmed by the presence of significant debts that led to its bankruptcy in September 2017 (Goh, 2017). Furthermore, the response was too late to rectify the initial flawed strategy (Vermeulen & Sivanathan, 2017). As a recommendation, it is always preferable for such large organizations to have clear metrics for implementing their business or financial strategies in specif. Overreliance on external control may not seem to be non-effective due to the arise of uncertainties like open competition with other firms dealing in the same industry. Besides, I would suggest that the company would not have failed if it adopted an independent strategy as a firm for enhancing its financial growth without using Amazon (De Figueiredo, 2000).

References

Bolton, J., Farmer, J., & Pennington, H. (2019). An Unwrapping of the Toys "R" Us Chapter 11 Bankruptcy.

Burt, S., Dawson, J., & Sparks, L. (2003). Failure in general retailing: research propositions. The International Review of Retail, Distribution and Consumer Research, 13(4), 355-373.

Chavan, M. (2009). The balanced scorecard: a new challenge. Journal of management development.

De Figueiredo, J. (2000). Using strategic tools to generate profits in e-commerce. Sloan Management Review.

Goh, F. (2017). 10 Companies that Failed to Innovate Resulting In Business Failure. Book 10.

Vermeulen, F., & Sivanathan, N. (2017). Stop doubling down on your failing strategy: how to spot (and escape one before it's too late). Harvard Business Review, 95(6), 110-117.