Case Study

Instructions: Read the following case study and prepare a typewritten double-spaced response to the case questions. Be certain to answer all questions completely and thoroughly.

Be certain to use multiple paragraphs to differentiate the various components of this assignment.

Include in text citations and a work cited page if using information from the textbook.

Please note: This assignment is worth 100 Points.

Toy Magic Case

Toy Magic is a toy boutique located in the main shopping strip of a resort town near a lake. People who own cabins near the lake or come to visit the local state park enjoy browsing through the town's stores, where they pick up pottery, landscape paintings, and Toy Magic's beautifully crafted wooden toys. Foe these shoppers, Toy Magic is more than a store.

It is a destination they associate with family and fun.

The store's owners, Jim and Pam Smith, personally select the toys from craftspeople and toymakers around the world. They enjoy their regular customers but believe selling mostly vacationers has limited the company's growth. They decided the lowest-cost way to expand would be to sell toys online. However, after several years, they had to admit that traffic to the store's website was unimpressive. Thanks to e-mail and Facebook reminders, they were luring some of their loyal in-store customers to the site to make off-season purchases, but few other people looking for toys ever found Toy magic.

Jim and Pam concluded that the next-best way to sell online would be to partner with Amazon.com. Amazon's Marketplace service lets other retailers sell products on Amazon. The Smith's signed an agreement to list the store's most popular items with Amazon. For example, if a shopper is searching for wooden dollhouses, Toy Magic's dollhouses will be included in the search results. A customer who chooses to buy from Toy Magic places the order right on Amazon's website. Under Amazon's participation agreement, the listings must be honest and may not link to Toy Magic's own website or invite phone calls from customers. In exchange for giving the products exposure on the site, Amazon charges a monthly fee plus a commission on each sale.

Initially, Jim and Pam were thrilled about their decision to partner with Amazon. They tracked each month's sales and compared them with in-store sales. In the first five months, sales jumped 45%, mainly because of sales on Amazon. Then, suddenly, sales of popular toy train sets dropped, which were particularly profitable, stopped altogether. Puzzled, Jim visited Amazon to make sure the train sets were still listed. To his surprise, he found that the train set was there, at the usual price of $149, listed right after the same set available directly from Amazon, at $129. He and Pam concluded that shoppers were now buying the product directly from Amazon. It appeared that their store had helped Amazon identify a product consumers value.

The Smith's worried that they need a new strategy. If they matched Amazon's price, they would lose most of the profit on their most popular items. Toy Magic was too small of a business to negotiate better prices from its suppliers. If the store didn't match Amazon's price, it would continue to lose sales at the Amazon site. Jim and Pam wondered whether they should pull out of Amazon altogether or find a way to continue working with the partner that had become a competitor. They also considered rethinking which toys to offer on Amazon.

Questions

1.

Prepare a SWOT Analysis for Toy Magic, based on the information given. The SWOT categories can be in bullet format but you must use sentences to explain your choices for categorizing the items.

(50 Points)

2.

Using the SWOT Analysis, create three strategic goals combining Strengths and Opportunities and explain in detail the relationship between the two (strength and opportunity). (40 Points)

3.

What general business strategy would you recommend for Toy Magic and why? (10 Points)

Instructions: Read the following case study and prepare a typewritten double-spaced response to the case questions. Be certain to answer all questions completely and thoroughly. Be certain to use multiple paragraphs to differentiate the various components of this assignment. Include in text citations and a work cited page if using information from the textbook. Please note: This assignment is worth 100 Points. Toy Magic Case Toy Magic is a toy boutique located in the main shopping strip of a resort town near a lake. People who own cabins near the lake or come to visit the local state park enjoy browsing through the town's stores, where they pick up pottery, landscape paintings, and Toy Magic's beautifully crafted wooden toys. Foe these shoppers, Toy Magic is more than a store. It is a destination they associate with family and fun. The store's owners, Jim and Pam Smith, personally select the toys from craftspeople and toymakers around the world. They enjoy their regular customers but believe selling mostly vacationers has limited the company's growth. They decided the lowest-cost way to expand would be to sell toys online. However, after several years, they had to admit that traffic to the store's website was unimpressive. Thanks to e-mall and Facebook reminders, they were luring some of their loyal in-store customers to the site to make off-season purchases, but few other people looking for toys ever found Toy magic. Jim and Pam concluded that the next-best way to sell online would be to partner with Amazon.com. Amazon's Marketplace service lets other retailers sell products on Amazon. The Smith's signed an agreement to list the store's most popular items with Amazon. For example, if a shopper is searching for wooden dollhouses, Toy Magic's dollhouses will be included in the search results, A customer who chooses to buy from Toy Magic places the order right on Amazon's website. Under Amazon's participation agreement, the listings must be honest and may not link to Toy Magic's own website or invite phone calls from customers. In exchange for giving the products exposure on the site, Amazon charges a monthly fee plus a commission on each sale. Initially, Jim and Pam were thrilled about their decision to partner with Amazon. They tracked each month's sales and compared them with in-store sales. In the first five months, sales jumped 45%, mainly because of sales on Amazon. Then, suddenly, sales of popular toy train sets dropped, which were particularly profitable, stopped altogether. Puzzled, Jim visited Amazon to make sure the train sets were still listed. To his surprise, he found that the train set was there, at the usual price of $149, listed right after the same set available directly from Amazon, at $129. He and Pam concluded that shoppers were now buying the product directly from Amazon. It appeared that their store had helped Amazon identify a product consumers value. The Smith's worried that they need a new strategy. If they matched Amazon's price, they would lose most of the profit on their most popular items. Toy Magic was too small of a business to negotiate better prices from its suppliers. If the store didn't match Amazon's price, it would continue to lose sales at the Amazon site. Jim and Pam wondered whether they should pull out of Amazon altogether or find a way to continue working with the partner that had become a competitor. They also considered rethinking which toys to offer on Amazon. Questions 1. Prepare a SWOT Analysis for Toy Magic, based on the information given. The SWOT categories can be in bullet format but you must use sentences to explain your choices for categorizing the items. (50 Points) 2. Using the SWOT Analysis, create three strategic goals combining Strengths and Opportunities and explain in detail the relationship between the two (strength and opportunity). (40 Points) 3. What general business strategy would you recommend for Toy Magic and why? (10 Points)