SITUATION AND CENTRAL ISSUES.
This case has a generally positive slant in that there it does not describe many
weaknesses and problems present in many others with which students would be
familiar. Toys R Us (TRU) has followed a path of international expansion from the
US via more than 13 countries, starting from Canada in 1984 and entering Japan in
1991. By any standard this is a rapid expansion of markets. This case illustrates
several elements of developing market strategies that have been central to TRU's
observed success in these markets.
First, TRU has developed a strong competitive advantage in its home market that is
based on fulfilling 95% of consumers' needs relating to children. This has been
based around large retail space and counteracting the cyclical nature of toy retailing
which traditionally peaks around the gift giving period during Christmas. Second,
they have succeeded in transferring their retail concept from the US to its newer
markets by modification of the product mix to suit local tastes.
Third, they captured
international marketing experience by recruiting executives with international
experience such as Mr. Joseph Baczko who has been able to adapt the strategy and
use a non-standard approach to market entry. His approach has adapted their
successful entry strategy to fit the needs of the country environment. The following
analysis will commence with an analysis of the company and its business and
consider each of the issues raised in the foregoing discussion. This will be followed
by recommendations for future activities.
ISSUE AND PROBLEM ANALYSIS.
The Firm, its Industry and market expansion.
TRU is a company whose operational core is purely in retailing. The company has no
manufacturing capabilities and relies on developing its business strategies of fulfilling
consumer needs with a one-stop-retail environment that fulfils the majority of
consumer's needs. Therefore, the company's market activities are purely in the form
of a specific retail concept which is based on sourcing local and international
products for sale in each of the countries in which it operates. Two key
characteristics are critical for TRU to succeed: high-income per capita and high toy
sales. Both of these are self-evident. The case study does not provide the order of
market entry but the early entries into psychically close countries such as Canada,
UK and Germany conforms to the patterns of expansion as firms gather international
experience. It appears that TRU has acquired international experience by recruiting
Mr. Joseph Baczko who has made direct entries into countries whose environments
are more similar but used less direct forms such as franchises in Saudi Arabia, the
Emirates and Joint ventures in Singapore and Hong Kong which are psychically and
geographically more distant.
TRU has developed and relied on the following key success factors (KSF) that is at
the heart of its market analysis and subsequent strategy development: the one stop
shop concept, the ability to source products in sufficiently large quantities such that