Toys R Us Case Study Assignment

Joana Pinheiro Portugal Syalisha Latifah Australia

Due: Wednesday, 18 July 2012

Toys R Us which was first introduced as toy supermarket was first founded in the late 1940 by the US businessman, Charles Lazarus. As the worlds leading toy retailers, Toys R Us now operates 875 stores in the United States and Puerto Rico, and more than 625 international stores and over 140 licensed stores in 35 countries and jurisdictions (Toys R Us, 2012).

Within this case study, the problems in transferring the Toys R Us competitive advantages to a foreign market will be identified. As well as the reason behind why did Toys R Us internalize the firm-specific advantages rather than licence another retailer abroad.

Firstly, in order to maintain the top competitive rankings as the worlds leading toy retailers, many retailers discover their unique competitive advantage that differentiates their brand from any similar organizations. By doing this, it is believed that the company will differentiate their firm and avoids engaging in price wars with any other competitors.

Firm competitive advantages is the fundamental aim of business strategy. A competitive advantage is defined as an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing grater benefits and service that justifies higher prices (Johansson, 2009).

First of all, Toys R Us has done the expansion from the US market and entered Japan market in 1991. As the largest toy retailers in United States, Toys R Us has developed a strong competitive advantage in the US that is based on fulfilling 95% of consumers needs relating to children and the worlds largest dedicated toy store showcases spectacular attractions and a unique toy shopping experience (Toys R Us, 2012). Toys R Us also has a very well known reputation of a large-size retail space.

On the other hand, Japan has a quite smaller scale retailers. This will be a problem for Toys R Us in transferring their competitive advantages to a foreign market, because as a company whose operational core is mainly in retailing, the Toys R Us has no manufacturing capabilities and relies its business to the suppliers/manufacturers. However, the problems with the entrance in Japan market lies on their incapability to get the necessary permission and empty space needed to open huge stores. The major manufacturers also would not willing to enter into direct deals with Toys R Us, instead preferring to work with the local retailers (Johansson, 2009).

Lastly, the reason why Toys R Us choose to internalize the firm specific advantages rather than licence another retailer is because by doing this way, Toys R Us did not have to train any new employees. As well as saving extra time and money in a new market research they also managed to protect their business and following their own managerial style instead of using Japanese style of doing business.

Reference list

Johansson, J. K. (2009). Global Marketing fifth edition. New York: Mc Graw Hill.

Toys R Us. (2012). About Us. Retreived July 17, 2012, from http://www.toysrusinc.com/about-us/