Documente Academic
Documente Profesional
Documente Cultură
BUSINESS ISSUES
Presented by:
Ain Nadia Zailan (2017884868)
Hazwani Hashim (2017420346)
COMPANY BACKGROUND
Toys “R” Us
was opened in
1957
#22 on Forbe’s
Washington D.
America’s
C. United
Largest Private
States
Companies List
Founded by
Charles Lazarus
Domestic &
International
1974 - Interstate files for 1978 - Toys R Us becomes 2016 - The company 2018 - Toys R Us files
bankruptcy and the court a public company, trading continues to struggle under documents with Bankruptcy
puts Lazarus in charge of on the New York Stock the debt incurred as part of Court indicating plans to
the restructuring. Exchange the leveraged buyout close 182 stores
Debt
• The children’s toy retailer was burdened with a hefty $5
billion of debt, which became difficult to pay down as
online competitors drew in more customers. Same-store
sales in its latest quarter fell 4.1% year-over-year (YoY),
and resulted in $164 million in losses (Pandolph, 2017)
Shutting Down
• Closing 735 stores in US, leaving 33,000 people without
jobs and wrap up a 70-year business (Verdon & Jones,
2018)
• Closing 100 stores in UK, leaving 3,000 people without
jobs (Goldman, 2018)
Reorganization
• Asia and Central Europe stores will undergo
reorganization and sale process (The Star, 2018)
BUSINESS ISSUE
Online
Pricing & Toys R us couldn’t compete
with its rivals’ online pricing
Shipping and shipping offers
Offers
ECONOMIC FACTORS
Price Leadership
In this form of coordinated behaviour of oligopolists one firm sets the price and the others follow it
because it is advantageous to them or because they prefer to avoid uncertainty about their
competitors’ reactions even if this implies departure of the followers from their profit-maximizing
position.
• If a firm increases
price, others won’t go
along, so demand is
very elastic for price
increases.
• If a firm lowers price,
other firms match the
decrease, so demand
is inelastic for price
decreases
• When there is a kink in
the demand curve,
there has to be a gap in
the marginal revenue
curve.
MEASURES TO SOLVE THE PROBLEMS
MEASURES TO SOLVE THE PROBLEMS
The Kinked Demand Curve
Economies of Scale
Technology Transportation
• A larger firm may be able to adopt • Better transportation and communication may
technologies of production that a smaller firm develop because of the presence of larger
cannot. firms.
• A large firm can purchase its factor inputs in • Concentrated areas of skilled labor force may
bulk at discounted prices if it has greater appear as they get better trained and
buying power. They can buy more from educated to serve these firms.
suppliers at a lower price.
R&D
Financial
• Able to afford large R&D because of the ability
• Larger firms tend to be more creditworthy and to reduce average costs per unit by creating
have access to credit with favorable rates of effective and efficient tactics of productions,
borrowing. which will result in overall revenue rise.
2017 Target
2. North American Free Trade Agreement (NAFTA) 2. Change in consumer preferences in the digital era
3. Currency volatility – low currency exchange rate 3. Technology advancement – electronic device &
4. Holiday season gadgets
4. Low cost toys from Chinese manufacturers
RECOMMENDATIONS
Concept reinvention