Analysis of Macro Environmental Factors of Toys R Us Company

This report analyzes the macro environmental factors affecting Toys R Us Company, including political and socio-cultural factors, and provides possible solutions and decision-making strategies to reduce negative impacts. The report includes a PESTLE framework analysis, identification of major issues, and business cases for potential growth opportunities. The subject is Business Management, and the course code and college/university are not mentioned.

Running head: BUSINESS MANAGEMENT
Business Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report has helped in the analysis of the different kinds of macro environmental analysis
of Toys R Us Company which is situated in Sweden. Furthermore, the different kinds of
political and socio-cultural factors have been described which have created negative impact
on the company as well. The business cases have been provided with decision-making
strategies which has helped in reducing the issues in a positive manner.

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Table of Contents
a. Introduction and Background Information.............................................................................3
b. PESTLE Framework of Toys R Us........................................................................................3
Influence of External Environment on Toys R Us.....................................................................3
Negative Impacts and Issues in Political Environment of Toys R Us Business....................4
Possible Solutions for Negative Impacts in Political Environment of Toys R Us.................4
Implementation of Relevant Solution................................................................................4
Business Case for Potential Growth Opportunities with Decision Making Strategies......5
Negative Impacts and Issues in Socio-Cultural Environment of Toys R Us Business..........6
Identification of Major Socio-Cultural Issues........................................................................6
Possible Solutions for Negative Impacts in Socio-Cultural Environment of Toys R Us.......6
Implementation of Relevant Solution................................................................................6
Business Case for Potential Growth Opportunities with Decision Making Strategies......7
Conclusion..................................................................................................................................7
References..................................................................................................................................9

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a. Introduction and Background Information
The report helps in the entire analysis of the Toys R Us which is an American Toy
Company based in New Jersey ("Toys"R"Us.com - Toy Store - Shop Toys, Games & More
Online", 2018). The company was founded in the year 1948 by Charles P. Lazarus and the
main focus of the company was on baby furniture. However, there were different issues
which led to the closure of the company as Toys R Us was filed for bankruptcy in the United
States Court. The retailer was saddled with enormous kind of burden of debt of over $5
billion worth and this never recovered by the company as well.
b. PESTLE Framework of Toys R Us
The PESTEL analysis or the framework is used by the marketers in order to monitor
and identify the macro environmental factors which can cause huge impact on the
organization. It is essential in nature to conduct the PESTEL analysis as this helps in
providing strong kind of indication of the external environment on the business as this helps
in providing information of the condition of the global environment in which the business is
operating in nature. The potentiality of the market can be determined with the help of
PESTEL analysis which helps in understanding the different kinds of market conditions
(Brown, 2016).
Influence of External Environment on Toys R Us
The businesses operate in the external environment in which there is huge competition
from the rivals and there are different political, legal, economic, environmental, social and
technological factors which are essential to be considered in nature. In case of the Toys R Us,
this has been noticed that there are different political and socio-cultural environmental effects
which can create huge implications on the entire business (Brown, 2017).

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Negative Impacts and Issues in Political Environment of Toys R Us Business
There are different kinds of issues in relation to the political environment of Toys R
Us in which the company is suffering from huge negative impacts. Firstly, the impact of
Brexit is one such factor in which it has been seen that while UK is exiting from Europe,
there will be reestablishment which will increase the prices of the toys (Carroll & Buchholtz,
2017). However, on the other side, this can be seen that Toys R Us cannot raise prices of the
toys immediately as the prices are printed in catalogues and this will reduce sales of Toys R
Us as the customers will be moving towards the shops which will provide same kinds of
products at a lower price.
Furthermore, the cost of labor is the other major reason which can affect the sales of
the Toys R Us company. Furthermore, the mandated labor markets along with tight
government regulations will increase the cost of the making and production of toys. It was
seen that there was increase in the wages of the laborers and this affected the margin of the
company in a negative manner. Lastly, the increasing tension between the US-China relations
has created huge uncertainties for the US business which has impacted the business of Toys
R Us as well in the entire competitive market and this affected sales margin of the company.
Possible Solutions for Negative Impacts in Political Environment of Toys R Us
Implementation of Relevant Solution
There can be different possible solutions which can reduce the negative impacts in
political environment of Toys R Us Company. The main issues in the political business
environment is the impact of Brexit along with increase in the costs of the laborers. The
correct strategy in order to deal with the respective problems of Toys R Us Company in
respective manner:

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 Firstly, the company Toys R Us Company needs to inform the customers of the
company through online social media platforms regarding the changes in the prices
which have been caused after the impact of Brexit. Furthermore, it can be seen that
Toys R Us Company cannot change the prices of the products which have been
already been printed as immediate actions cannot be taken. Furthermore, the company
needs to inform in an effective manner by managing a strong customer base as there
are different customers in the market who can move to other stores in the market
which will provide the similar kinds of products at a lower rate (Skuza, McDonnell &
Scullion, 2018).
 Furthermore, when there is increase in the costs of labor is affecting the production of
the company. In such case, the company Toys R Us Company needs to hire part time
employees in place of the full-time employees as this will reduce the cost of labor and
this will help the company in providing less salary and this will help in managing the
costs and this will improve condition of the company as well (Nowakowska-Grunt
and Brzozowska, 2016).
Business Case for Potential Growth Opportunities with Decision Making Strategies
These are the two solutions which can be proposed to Toys R Us Company as this
will help in managing the political issues effectively. In case of Toys R Us Company, this can
be seen that the company can create their own cell in which they can hire employees form
high schools or college as this will be cheaper in nature (Charan, 2017). Furthermore, this has
been analyzed that while recruiting employees from outside the country is not possible after
the different legislative implications done by Donald Trump. By recruiting the workers from
the respective country, this will help in gaining huge incentives and commission from the
same as well.

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Negative Impacts and Issues in Socio-Cultural Environment of Toys R Us Business
Identification of Major Socio-Cultural Issues
The major socio-cultural issues are relating to the decline in the target sector in which
this has been noticed that there are number of factors which is affecting the target sector of
the company in a negative manner. It has been seen that there is overall decline in the birth
rate of the children and this directly reduces the potential count of the customers. With the era
of digitization, the teens and children spend most of the time on social media websites such
as Facebook and Instagram and they have stopped playing with their toys as well. This has
created a huge negative impact on the revenues of the company and this has affected the sales
of the company as well. The era of digitization has led the different retail markets to face
huge loss which has affected the sales of the company (Smith, 2016).
On the other hand, this has been seen that there is shifting of the preference of the
customers in the market from materialistic products and they are shifting their entire focus
mainly on dining and travelling (Epifanova et al., 2015). This kind of shifting in the focus of
the customers on the dining is creating huge negative impact on the sales of the company and
this has affected the profitability of the company as well. Furthermore, this has been observed
that the company Toys R Us is facing huge loss in the market as the customers prefer to
purchase the different kinds of toys from the online stores at a reasonable rate.
Possible Solutions for Negative Impacts in Socio-Cultural Environment of Toys R Us
Implementation of Relevant Solution
From the previous section, this has been seen that main socio-cultural issue is relating
to the decline in the sales of the company along with shifting of the preferences of the
customers away from the materialistic preferences (Kolk, 2016). These are the different
issues which can be solved with the proper implementation of promotional campaign which

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has to be strong in nature. Firstly, the promotional campaign is required to be adopted by the
company which will attract more customers in the organization. Furthermore, the other
effective strategy is relating to the changing of the different countries and they require proper
and strong customer base as well.
Due to digitization, the company Toys R Us needs to handle and attract the different
young generations such as kids through mobile applications as well. This has been seen that
in the era of digitization, the company needs to implement the strategies such as providing
and opting for pop-up strategy which will be helpful in attracting them towards the toys and
this will help the company in gaining competitive advantage as well (Feimi, Kume &
Pulaj,2016).
Business Case for Potential Growth Opportunities with Decision Making Strategies
In case of Toys R Us, the licensing of the products can be done by them in order to
increase the overall productivity of the organization in a positive manner (Kew & Stredwick,
2017). The different games and toys have to be licensed as this will be extremely popular in
nature for them and they will be agreed to pay large lump sum amounts as this will help them
in allowing to sell toys based on different super characters form movies, event mascots or
web series as well. Lastly, this will help the retailer of Toys R Us in capitalizing and surging
the demand by licensing he toys along with games of the popular characters.
Conclusion
Therefore, this can be concluded that proper and effective solutions have been
recommended for Toys R Us Company which has helped them in increasing their sales and
reduce the different kinds of political and socio-cultural issues in a positive manner.
Furthermore, the negative impacts of the company have affected the company as the era of
digitization has reduced the profitability of the company. Furthermore, this has been seen that

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the business case has been provided to influence the growth strategies in an effective manner.
Furthermore, the growth strategies along with proper implementation of decision-making
strategies has helped and assisted Toys R Us in gaining stronger customer base in the
organization.

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References
Brown, A. A. (2016). Impact of the macro and micro economic environment on business
strategy: a case study on Lonmin Platinum (Doctoral dissertation).
Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
Charan, R. (2017). HOW HIGH‐POTENTIAL LEADERS CAN MASTER THE MACRO
ENVIRONMENT. Leader to Leader, 2017(85), 31-36.
Charan, R. (2017). HOW HIGH‐POTENTIAL LEADERS CAN MASTER THE MACRO
ENVIRONMENT. Leader to Leader, 2017(85), 31-36.
Epifanova, T., Romanenko, N., Mosienko, T., Skvortsova, T., & Kupchinskiy, A. (2015).
Modernization of institutional environment of entrepreneurship in Russia for
development of innovation initiative in small business structures. European Research
Studies, 18(3), 137.
Feimi, D., Kume, V., & Pulaj, E. (2016). Macro environment and innovation in service
sector. The evidence from Albanian context. European Journal of Sustainable
Development, 5(2), 137-142.
Kew, J., & Stredwick, J. (2017). Business environment: managing in a strategic context.
Kogan Page Publishers.
Kolk, A. (2016). The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
23-34.
Nowakowska-Grunt, J. and Brzozowska, A., 2016, April. Small Business Management In
Relationships Of Micro And Macro Environment. In Proceedings of International

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Academic Conferences (No. 3506026). International Institute of Social and Economic
Sciences.
Skuza, A., McDonnell, A., & Scullion, H. (2018). Macro talent management in Poland: The
role of talent and the challenges ahead. In Macro Talent Management in Emerging
and Emergent Markets (pp. 66-83). Routledge.
Smith, B. (2016). Nature and Geography: Tragic Voids within Marketing Textbooks and the
External Business Environment. In Global Perspectives on Contemporary Marketing
Education(pp. 47-64). IGI Global.
Toys"R"Us.com - Toy Store - Shop Toys, Games & More Online. (2018). Retrieved from
http://www.toysrus.com/