The company has been trying to leverage its capabilities to effectively counter the challenges in its environment. The history of the company reveals that it has been acquiring businesses to add to its portfolio or has been venturing into newer segments where it saw potential to increase profitability. Its venture of opening up Kids R Us stores, then growth into international markets tapping Japan, Singapore, Canada and United Kingdom. It also ventured into Babies R Us chain of stores. Signed a deal with Amazon to manage its virtual storefront i.e. toysrus.com. Acquired Imaginarium and has recently acquired etoys.com and related websites in February 2009. This shows that the company has been conscious of changing market trends. However, it has not been very effective in cashing in on opportunities or combating the threats the external environment proposed to it.
For instance, its Kids R Us stores closed down after dismal financial results. It faced considerable losses in Japan and failed to achieve market or mind share there. Its deal with Amazon collapsed in wake of disgruntled stakeholders and lost revenue against online competition virtual toy stores. Nonetheless, its Babies R Us venture has been very successful since its inception and Imaginarium has added to its revenue lines too. It remains to be seen how its acquisition of etoys.com affects its business. On the surface level it seems to be a good way of adding an already developed online store to its portfolio and combine it with toysrus.com for better competitive advantage. Although it is too early to comment if this would bring prosperity or dismay to the organization. Toys R Us should focus on the high growth market of games and consoles. It should devise plans to establish a competitive advantage in this product line.
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