Global Analysis-Toys “R” Us

Introduction

Toys "R" Us has been identified as the worst and most unsuccessful company. The firm filed for bankruptcy in 2017, which led to excessive store closure at the domestic and global levels. Increasing competition, debt burden, lack of adaptation, unfavorable economic conditions, and many operational inefficiencies became the reasons for the failure. In this context, assessing the domestic and global business climate is imperative to derive insights and suggest viable strategies.

Identifying and Describing Political-Legal Environments

Domestic (US)

The United States has been a good country for toy retailers due to its political stability. The political system has been supportive. Regardless, the influence of laws and regulations on their product safety and labeling is in the spotlight. Interestingly, these regulations did not negatively influence this toy retailer before their decline (Kolhatkar, 2017). There have been some legal paradoxes, especially in the context of the company's bankruptcy proceedings and debt reformation. Nevertheless, it turned into an agonizing situation for other players in the toy industry (Hirsch, 2017).

Global (China & United Kingdom)

China's political climate has been stringent compared to that of the home country. The government has regulated the toy industry, as far as restrictions on content, safety standards, and foreign investments (Medium, 2023). For example, foreign toy operators must shape alliances with local entities to sustain the business. It shows the support for the domestic players, which becomes a dilemma for global companies like Toy "R" Us. The Legal climate is also complicated. Intellectual property protection laws have become a significant challenge. Potential imitation and counterfeiting became challenging (Smart Protection, 2022).

The UK, one of the potential markets, has faced uncertainties after Brexit. Disruption in the supply chain has been devastating. However, new agreements didn't contribute to further complications for the toy industry (Payne, 2020). supportive for the toy retailers, including both domestic and global players, remained. IP protection has been a concern in the United Kingdom. The overall legal framework is vigorous and supportive, making the FDI and expansion probable (Sutherland, 2023).

Identifying the Socio-Cultural Environment

• Socio-Cultural Parts

(Hofstede-insights.com, 2023)

• Differences

Power Distance: China has a high power distance compared to the US and the UK. The influence on the decision-making process is evident. Customers have expectations from authoritative leaders (Hofstede-insights.com, 2023).

Individualism: The UK and the US show a strong focus on individual attainments instead of being a collectivistic society. Thus, the firm must be aware of the influence on product design, marketing, and relationships (brand).

Long-Term Orientation: The US focuses on the current situation compared to the UK and Chinese societies. People in China strive for long-term planning to secure the future.

Indulgence: China is different because the society is more restrained and controlled compared to the US and the UK (Hofstede-insights.com, 2023).

• Similarities

Masculinity: All three countries show almost the same score, indicating the need for competition and achievement (Hofstede-insights.com, 2023).

Uncertainty Avoidance: The score nearly matches the minimum difference, as openness to change with time is essential.

Economic Environment

Comparing and Contrasting with the Global Economic Environment

The United States is the home (domestic) country of Toys "R" Us. According to Rostow, the country is at stage 4, as it drives to maturity. For example, the economic situation is vital due to high per capita income, industry diversification, and modern technologies (Ajami & Goddard, 2014). This financial situation shows that there is a potential market for toys. However, cost, quality, and price war are in the spotlight in this context. There are also some concerns regarding increasing income inequality, high healthcare costs, and automation, and it influences the buying patterns in the toy industry. Galbraithian's viewpoint shows that the US economy depends on individual consumption, making the organization vulnerable due to possible changes in the preferences. The increasing gap between personal and public wealth is influencing priorities as far as spending on toys is concerned (Gov. uk, 2020).

China is at 3 rd stage, according to Rostow, as it is at the take-off position. In this massive transition phase, the country is heavily dependent on industries and urbanization. It is making the middle class grow along with the high disposable income (Biswas, 2009). The high disposable income of the middle class will lead to high preferences for toys. Probability related to uncertainty and volatility is also in the loop. Galbraithian's perspective shows state-driven growth. Of course, the role of the Chinese government in economic development is apparent. This role influences the toy market opportunities and regulations. Issues, such as counterfeiting, remained in this stage-driven economy (Goldberg, 2023).

United Kingdom at stage 5, according to Rostow, as it depicts mass consumption. The UK is a mature economy with a stable consumer base along with a well-established retail infrastructure. Hence, the constant demand for high-quality toys is visible. However, market saturation and limited growth can be some potential issues for the company. Galbraithian's perspective shows the influence of uncertainties, especially in the form of Brexit. Of course, the negative impact on exports and imports has been an issue. The social welfare system in this country is protecting people from possible economic declines. It is also contributing to the stabilized demand for toys even in challenging situations (Cash Float, 2023).

References

Ajami, R., & Goddard, J. G. (2014). International Business: Theory and Practice. Routledge.

Biswas, S. (2009). Changing perspectives about development economics: Indications from literature on the history of economic thought. ASBM Journal of Management, 2(1), 62-79. https://www.proquest.com/scholarly-journals/changing-perspectives-about-development-economics/docview/205056391/se-2?accountid=30552

Cash Float. (2023, October 15). Guide to the UK Welfare State. https://www.cashfloat.co.uk/blog/guides/welfare-state/

Goldberg, I. (2023, November 18). China’s Heavy Economic Legacy of State Ownership and Central Planning. https://thediplomat.com/2023/11/chinas-heavy-economic-legacy-of-state-ownership-and-central-planning/

Gov.uk. (2020, April 10). Actual individual consumption per head in the UK: 2020. https://www.gov.uk/government/statistics/actual-individual-consumption-per-head-in-the-uk-2020

Hirsch, L. (2017, September 19). Toys R Us files for Chapter 11 bankruptcy protection. https://www.cnbc.com/2017/09/18/toys-r-us-files-for-chapter-11-bankruptcy.html

Hofstede-insights.com. (2023, March 1). Country Comparison Tool. https://www.hofstede-insights.com/country-comparison-tool?countries=china%2Cunited+kingdom%2Cunited+states

Kolhatkar, S. (2017, October 2). Toys R Us and the Trump Voter. https://www.newyorker.com/magazine/2017/10/09/toys-r-us-and-the-trump-voter

Medium. (2023, November 27). China’s plush toys have strict safety standards and guaranteed quality. https://medium.com/@yhthtyt76/chinas-plush-toys-have-strict-safety-standards-and-guaranteed-quality-72a8f66c5859

Payne, A. (2020, December 12). Brexit chaos is causing UK toy shops to run out of Lego and other popular kids' presents long before Christmas. https://www.businessinsider.com/popular-christmas-toys-presents-lego-baby-yoday-brexit-shortages-ports-2020-12

Smart Protection. (2022, July 5). Toy industry fights counterfeits increase with brand protection. https://www.smartprotection.com/articles/toy-industry-fights-counterfeits-increase-with-brand-protection

Sutherland, T. (2023, November 24). Key Legal Considerations When Setting Up a Toy Store. https://legalvision.co.uk/startups/toy-store/

Requirements

Students will become familiar with business theories and approaches relating to various business environments (Domestic, Global, Technological, Political-Legal, Socio-Cultural, and Economic).

Students will evaluate the business environments and practices of selected companies.

Students will evaluate the business environments of a company identified as a "worst" company to learn why it is not successful.

Students will apply successful company strategies and business theory to recommend a successful strategy for the "worst" company.

The Political-Legal Environment includes all laws, government agencies, and lobbying groups that influence or restrict individuals or organizations in their society. The political environment also is about how changes in government policy might affect the business. The legal environment is about how legislation and related regulations in society affect the business, i.e. changes in employment laws on working hours. Lesson 5 covers the Political-Legal Environment.

The Socio-Cultural Environment consists of how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population. The Socio-Cultural Environment includes language, aesthetics, education, religion, attitudes, values, social groups & organizations, and business custom practices. You will now begin to compare the social and cultural environments of the domestic and global cultures of your chosen "worst" company. Lesson 6 covers the Socio-Cultural Environment.

The Economic Environment consists of economic factors such as employment, income, inflation, interest rates, productivity, and wealth, which influence the buying behavior of consumers and firms. You will analyze the economic environment of both your domestic and global countries for your "worst" company. Lesson 7 covers the Economic Environment.

LO – 5 – Given a chosen company, the student will detect and evaluate the political and legal limitations and barriers for the company using both the Domestic and Global environments.

LO – 6 – Given a chosen company, the student will examine the effect of socio-cultural environmental factors that affect the company within its Domestic and Global environments.

LO – 7 – Given two economic theories, the student will compare and contrast each theory using a chosen company’s Domestic and Global environments.

PROMPT:

For the global analysis choose at least 2 foreign countries (NOT Mexico or Canada):

1. Identify and describe the Political-Legal Environments of your company domestically and globally.

2. Identify the Socio-Cultural Environment of your company domestically and globally, including analysis of opposing cultures domestic vs foreign using Hofstede’s clusters(s). Include:

a. Identify the socio-cultural parts of each country (you will need to examine these with the aid of Geert Hofstede’s 6 dimensions);

b. How do these socio-cultural aspects of each country differ?

c. What are the similarities?

3. Using your worst company’s domestic environment identify its Economic Environment. Compare and contrast the Domestic Economic Environment with the company’s Global Economic Environment, using the 2 foreign countries you selected, applying Rostow and Galbraith.