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Toys “R” Us: What Went Wrong?

Arpita Agnihotri; Saurabh Bhattacharya

Product #:9B18M118
Supplier:Ivey
Discipline:General Management
Setting:United States, 2018
Details:Case (PDF) • 13 pages • 2018-08-13

Subjects:

BankruptcyLiquidationCorporate financeLeadership and managing peopleManagement

Industries:

Goods, trade, and consumer services

Geography:

United StatesNorth America
Your Price:$9.71

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In early 2018, Toys “R” Us, an iconic toy retailer, filed for liquidation due to intense competition, heavy debt, poor store merchandise, and a non-user-friendly website. Some experts believed that if Toys “R” Us had filed for bankruptcy after the holiday season, its turnaround efforts would have been more successful. However, a toy maker and founder of MGA Entertainment made a bid to purchase Toys “R” Us, but his offer was denied on the grounds of the value being less than the threshold liquidation value. In April 2018, as he continued in his efforts to buy Toys “R” Us and turn it around, industry experts worried about the future of the toy industry. Was the toy industry likely to suffer due to the exit of such an iconic brand? How would the changing consumer preferences for online games affect the future of toy makers and retailers? Could the current chief executive officer of Toys “R” Us have saved the company and if so, where should he have focused his turnaround efforts?

Learning Objectives

This case is intended for undergraduate- or graduate-level courses in business strategy or marketing. The case deals with organizational failure and the significance of structural holes and value network in the toy industry. It also discusses an organization’s future strategy in the context of marketing myopia and the 4Ps of the marketing mix (product, price, place, and promotion). After completion of this case, students will be able to
  • understand the reasons for organizational failure using the Integrative Process Model;
  • critically analyze alliance termination;
  • discuss the importance of a focal firm in its relevant industry using the concept of the structural hole;
  • critically analyze consumers’ response to bankruptcy and liquidation of an iconic brand; and
  • discuss measures to revive a brand using the concepts of marketing myopia and the 4Ps of marketing mix.
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Case Study: Toys “R” Us: What Went Wrong? (English version) | Ivey Publishing