Management Event Analysis

Management Event Analysis

Introduction

The business environment has changed drastically over the years, challenging the management models applied by companies. Toys R Us, Radio Shack, and Kodak are leading global firms that have faced bankruptcy due to their failure to adopt innovation. The digital economy has continued to transform all industries; managers have been faced with the challenge of establishing new business models in 2019. Some of the changes that managers should make include the expansion of the market opportunity by developing physical products through the provision of complementary services. Managers must acknowledge the changing customer landscape. The discussion focusses on the case of Toy R Us by concentrating on its attempt to make a comeback in the US market in 2019 following its bankruptcy in 2017. The analysis is based on three scientific management theories that include Porter’s theory, Deming’s theory, and Drucker’s theory.

Discussion

The Toys R Us management should ponder on how it can maintain a competitive advantage over other players in the industry. The solution lies in getting and understanding of the forces that influence competition and the generic strategies that businesses can apply to cushion themselves against these forces. An industry is regarded as a group of companies that offer similar goods and services. The five forces are competing for a position in the market, the possibility of new entrants in the market, the threat of substitutes, the supplier economic power as well as the consumers’ bargaining power. Bearing this mind, Toys R Us can use three generic strategies to address the impact of these forces in the market, including focus, differentiation, and low costs.

An evaluation of the five forces offers suggestions that should be used by the management while coming up with a new business model. The companies that are fighting for a position in the market are numerous, and the management should adopt a differentiation approach through pricing and innovation to keep up with the pace in the industry. The toy firms competing for a spot in the sector include Amazon, Walmart, Fisher-Price, Boti, and Carters. The possibility of new entrants in the market is high, considering that it has become relatively easy for companies, particularly the new entrants, to operate in the online market. Consequently, Toys R Us should consider doing business in the online market to keep up with changes in the market. The threat of substitutes is high as the toy industry is dominating by top retailers and competition toy companies. Consumer bargaining power is high due to the high level of competition that exists in the market. As a result, Toys R Us should set competitive prices to appeal to prospective buyers and regain past customer loyalty.

The situation facing Toys R Us can also be examined using Drucker’s theory of management. The model is based on the argument that management is the primary source of differentiation between companies. Toys R Us should take into consideration while re-launching its operations in the US. Management is the process that influences entrepreneurship and innovation in business. According to the approach, Toys R Us suffered bankruptcy owing to the management’s failure to adopt innovation. The management failed to foster innovation in its products which, coupled with the high level of competition from toy companies and retailers such as Walmart, led to decreased sales and profitability. The business should acknowledge that management is defined as a practice that calls for effective judgment. The role played by management entails the organization of resources available in a business and establishment of a customer base to achieve the business goals and objectives. Managers in the company will be required to create a balance between the present and the future to address the issues facing the business. They will need to establish and maintain the link between strategy, objective, and incentives.

Toy R Us re-introduction in the US market should meet the definition of a firm as stipulated by the Drucker theory. The management should adopt an outward-looking approach meaning that it is influenced by the external environment. It should also be driven towards contributing to society. The most integral consideration that the management should build on is creativity that will contribute to innovation that is necessary to help the business attain success and profitability.

Deming’s theory can also be used to understand the situation facing the Toys R Us company as well as the direction that the business can take following its re-launch. The management should consider making changes in its structure to achieve improved results. The model suggests that internal reforms should be made within the company to attain the desired outcomes. In this case, the management should foster creativity within the business and ensure that the employees are on board when introducing changes in management,

Conclusion

Current management news reveals that enterprises have been facing immense challenges as observed from bankruptcy cases faced by companies such as Toys R Us. The situation can be explained using specific management theories such as the Porter Five forces, Deming’s approach, and Drucker’s model. These models result in the conclusion that Toys R Us should transform the management approach through differentiation, pricing, and focus on ensuring stability and profitability.