A SWOT analysis framework is used to gauge the competitive environment of the industry. SWOT stands for Strengths, Weaknesses, Opportunities and Threats respectively. An organization needs to set the right mix of resource to capability matching to combat environmental changes. Therefore, strengths of Toys R Us lay the potential for opportunities and its weaknesses would pave the way for threats.
The strengths of Toys R Us include its established brand name, a well established distribution network with advanced logistical system, market coverage with over 1500 stores, a diversified product range and a superior product assortment. Its weaknesses include an unfocused marketing strategy that keeps shifting its message from cost to experience and the other way around. Its over-dependence on the last quarter of the year (Christmas and holiday season) also qualifies as a weakness. The sales in the last quarter make or break its financial year round performance. Opportunities in the market environment exist if the firm can cash its internationally renowned brand name to lucrative markets that promise good returns. Develop special product lines offering toy range that is not available elsewhere and base this range through customer analysis and market trends. Cash in on the changes in customer preferences towards games and consoles. This is a high growth market towards which Toys R Us should focus. Toys R Us biggest threat to its toys line comes from its retailing competitors Wal-Mart and Target. Whereas GameStop gives its gaming line a stiff competition because it specializes in offering games and consoles. Its traditional product line of toys is a low growth market and has reached saturation levels. The child population is decreasing as discussed earlier in the report.
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