International Marketing Analysis For Toys R Us

Global macro factors impacting the toy industry

It is very relevant to understand the culture of the country or region in which a company is dealing. It helps in the critical analysis and to develop international knowledge of the markets. Without the knowledge of the international markets, it is not possible to achieve success as the culture acts as a quality of a society and it is related to the intelligence, art, manners, ethics, etc. the internationalization and globalization of the business results in the positive as well as in negative manner (Chang, Witteloostuijn, and Eden, 2010).

The purpose of this study is to analyze and evaluate the international environment of the company named as Toys”R”Us Company. I am hired as an international marketing consultant in Toys”R”Us company and now I have been asked to identify and analyze the international marketing condition for the company. The present study consists of analysis of the global markets, recommendations to the company related to the international business, decision making for countries where the company has to start their international business, appropriate strategy for the company related to the international market, etc. (Doz, 2011) there are lots of factors that impact the international business like competition, macro and micro factors, internal and external business environment, identification of potential markets for the company, suggesting appropriate marketing strategies and entry policies for the company, identification of target country’s socio-cultural factors, marketing mix o the company , etc. In this way, at last a conclusions will be mentioned to provide a summarize version of the entre report.

Toys R Us is a specialized chain store of toys which was created in the year 1948 in the United States of America by the Charles Lazarus. Now the company has more than 1566 store all around the world. The strong art of this company is he staff and their passion. The multifunctional workforces of this company perform with commitment and dedication. They are employees are very dedicated to their work (Birkinshaw, Brannen, and Tung, 2011). The company also provides them daily training so that the skills of the employees remain updated. The team spirit of the company’s employees is very strong; they are user-friendly, simple and hard working.

Global macro-Toys industry

The global growth of the companies in the toy industry was difficult in the year 201 and it was also challenging. From the last five years, the global sales have been decline and lower growth of the GDP that is 3.5 %. The productivity growth rate was very week and also the contribution from the export sector was very low (Czinkota, Knight, Liesch, and Steen, 2010). The growth was observed in the countries of Asia. There are lots of factors that determine the global macro factors for any industry.

Global competitive factors affecting the toy industry

The global macro economic factors are related to the situations and the events that are directly or indirectly related to the economy on a broad level. They influence the economic outcome of the country may be at a national or international level. There are various types of macro factors like inflation, investment, savings unemployment Demographic factors, Age which is one of the major factor that affects the toy industry, Economic factors, Technological factors, Political factors, etc.( Tung, and Verbeke, 2010) these all factors influence the price of the goods and services. It is affected by the production costs, public policies, taxation policies, etc.

Global Competitive factors -Toys industry

The industry of toys is one of the most competitive industry as there are competitors who are financially and strategic strong. They have great volume of finance and investments. They also have big markets to sell their products. The marketing strategies used by them are very effective and they have separate product development departments. The toy industry has big payers in the market who have strong name in the industry so they have a longer operating history. They have competitive advantages and greater economies of scale (Castaldo, Premazzi, and Zerbini, 2010).

The competitive advantage for this company is that the prices of the toys are very competitive. The company is very confident on their prices. The customer service provided by the company is also very effective which attracts a large group of customers. The items of this brand are identical to the same items that are advertised. There is no difference on the basis of shape, size, colour, styles, etc. the items are identical, there prices remained same whether they are available at stores, malls, shops, etc.

Internal business environment of Toys”R”Us

Socio-cultural factors

• Gift giving custom
• Satisfy the toy lovers
• They love pinoy games that are traditional

Technological factors

• Online sopping
• The advent for the new and updates gadgets and phones
• Environmental /economic
• There is a growth in the safety  control over the products and contents
• Plastic issues  and say no to plastic
• There is an increase in the rate of poverty

Political/legal factors

• Taxation policies
• tariffs

Strengths

The company has more than 100 super stores in the markets of all over the world and United States. There are lots of brands of this company like baby brands, babies R Us, etc. that has 200 plus stores. Toys”R”Us markets used effective marketing policies to successful management of the company. The distribution network of the company benefitted by the advance logistical systems which is one of the strong points with the company (Kourula, A. and Laasonen, S., 2010). The bargaining position of the company is very strong as they have shelf space. The companies have to maintain creativity, innovation and technology up gradation in the company. The product differentiation plays a vital role in the toy industry. The target customers have buying power and they can also bargain (Papadopoulos, and Martín 2011).

Using Porter’s value chain to analyze Toys R Us internal business environment

Threats

The toy industry has a strong competitive rivalry like Wal mart, Kb toys, target, Toys”R”Us, etc. the negative part is that f a particular kid has imagined about any toy and his or her parents has the purchasing power, they can easily switch to any other company. The china market for the toys is the biggest threat for the toy companies of all over the world. The low prices of the china’s toys provide tough competition to the other companies  whose manufacturing cost for the toys is very huge then china’s products. The biggest weakness is the taxation policies, tariffs quotas, etc. due to which the prices tend to rise (Carraher, and Paridon, 2015).

Weaknesses-

The biggest weakness of this company is that they do not have any sustainable and competitive advantage as compared to any other toy manufacturing brand. The company has already lost its number one position due to the entry of Wal-mart in the markets. To be a larger retailer does not worth. The actual worth is to remain in the markets, sell the products and have better deal. The company is also dependant on the sales takes place in the final quarter of the year. This is the only time when company make maximum profits (Wales, Gupta, and Mousa, 2013). At the time of Christmas, the sale of the company goes very high. In other words, seasonal sales are a weakness for the toys industries (Jones, Coviello, and Tang, 2011).

Opportunities

It is the biggest opportunities for the joint ventures and strategic alliances as the company is working with Amazon.com which is one of the biggest online shopping websites. They also sell the baby products using amazon.com. It is an opportunity for both the companies and also strength. The Toys”R”Us company use the power of amazon.com as an online website. The company is a good neighbour as in the year 2005 (Saunders, 2012).  It helped the Louisiana victims of hurricane Katrina. They have donated a large part of their stocks that is approximately 6 trucks full of toys, diapers, wipes, batteries, water, etc.

The infrastructure of the firm is very huge and they have more than 1500 stores la over the world. The company is also trying to tap into the new markets where they can expand their business activities and functions (Jain, and Griffith, 2011). There are two types of activities that are primary and supportive activities. The combination of these two activities helps in creating a perfect value chain for the company like Toys”R”Us. As it is one of the big companies, the activities takes pace are inter related but still different. In this way, the value chain helps the company to differentiate between each and every activity takes place in the business organisation. The primary activities of Toys”R”Us are comprises of inbound logistics, operations, outbound logistics, marketing sales, services, etc. (Moussa, and Touzani, 2010)

Identifying and selecting the target market using 12 Cs framework

The support activities are related to the procurement and purchasing, human resource management, technologies development, infrastructure, etc.

The summary of the above findings states that the company has a strong marketing strategies with effective policies. The requirement is to bring little innovation and creativity so that they can again become the leading company on United States of America. The company has an advantage as they can explore to the new markets of United States as well as other countries. The products and toys are liked by kids and they have a place in the mind and hearts of the people. In this way, the company can get back its position in the toy industry in international market (Samiee, and Chabowski, 2012).

The evaluation of the potential market is done through the identification of the attractiveness of the countries.

The appropriate country for the Toys”R”Us company is India is estimated to be a big market for the toy company like Toys”R”Us. The estimated market was US $ 2.3 billion. The import was approximately US $ 450 million which is equivalent to the sales of US$ 1000 million. It is mostly from the china (Ezema, 2011). The best part of Indian markets is the buying power of the people of India is good. They spend equivalent to the developed country’s population on the entertainment.

The growth and developmental potential in India is very good as the market is untouched and they have potential to grow on a fast scale.

Drivers

• Growing disposable income
• Growth and development prospectus
• Cheap labor
• Changes in the perception of people

Competition/ challenges

• No high level competition
• Local manufacturers
• China is the biggest competitor
• Old technology used in the India markets
• The parents prefer educational toys and games
• Entry of foreign traders

The country in which is most appropriate for Toys”R”Us is India. As studied before, one thing is proved that India is a country in which the government supports the multinational organization and also gives them opportunity to establish their business over in India. The mode of entry into an international market is the channels so that a company enters into the new market. There are lots of alternatives to enter into the new markets of India (Cavusgil, and Knight, 2015). It can be trough internet, licensing, international distribution, international agents, overseas, international sales subsidiaries, strategic alliance, joint ventures, etc. these al are the ways of internationalization for Toys”R”Us. The company can choose any way to enter into the Indian markets.

According to the research and surveys, it is fund that licensing and joints ventures are the best way to internationalize the business of Toys”R”Us in India (Hyman, Kopf, and Lee, 2010). This is due to the fact that the company can set up their business with an old party who is familiar with the Indian culture and market trends. It helps in assessment of the technology, core competencies, management skills, etc. it also helps in gaining entry in the foreign market and easy access to the distribution channels, manufacturing research and development etc.

Recommended mode of entry for Toys R Us to enter the chosen country

Licensing is good for Toys”R”Us because it helps in contract manufacturing (Ezema, 2011). The company can only change royalty and fees to use the technology, brand name or may be expertise. It provides help to the companies as it makes business easier in an international market.

There are dynamics of the socio-cultural factors on India or any other country. These factors are related to the demography, stratification, family, economy, politics, religion, architecture and literature. The socio-cultural factors are also related to the basic values of the people of a country and the belief on which they believe (Ulaga, 2011). The socio-cultural factors work in continuity and used to change gradually with the time. India is a country that is very much sensitive for their culture, customs, rituals, values, etc. the company Toys”R”Us have to keep such things in mind before expand their business in Indian markets.

The SWOT analysis of the company states that the company has a good position but the only requirement is to bring innovation and creativity in the international market so that they can have competitive advantage in the business organisation (Papastathopoulou, and Hultink, 2012). The marketing mix of the company that is product, price, place and promotion in mentioned below-

The marketing mix of Toys”R”Us s a composite of product, price, place and promotion in which each element plays a vital role. Product of the company are already liked by the children and they have lots of variety the place of the company is US markets but  now the company has spread its operation in the international markets. The promotional techniques used by Toys”R”Us are up to date and latest. The company is investing huge amount in the marketing and promotion of the company’s products (Chabowski, Samiee, and Hult, 2013). The price of the toys and other items are reasonable and affordable but they are more than the price of china’s product due o the reduction cost of the goods.

Conclusion

At last, a conclusion of the study says that internationalization of business is not impossible. With effective and prominent policies any company can globalised its company. The purpose of the report is to analyze the effect of international business on the marketing strategies of Toys”R”Us company. It will also help in taking necessary steps and making decisions so that the company can expand themselves in the international and potential markets. It also helps in profit maximization and expansion. In order to accomplish all the stated objectives, the company has to do in-depth research to analyze and understand the international marketing for the Toys”R”Us company.

Analyzing the socio-cultural factors of the targeted country

References

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