Read Problem Solving Application Case: Toys R Amazon, Walmart, and Others, but Not Us. Follow the instructions at the end of the case to use the 3-Step Problem-Solving Approach to address the issues faced by Toys R Us.

Page 6115 PROBLEM-SOLVING APPLICATION CASE Toys R Amazon, Walmart, and Others, but Not Us Toys-R-Us has long been known as a marquee toy retailer with giant 40.000-square-foot stores and nearlyIr everyr item desired or imaginable for children [and some adults]. A large percentage of Americans, as well as customers in international markets, can recall visiting a Toys-R-Us store. Ell'lllll ' SUM mm Toys R Us is yet another iconic retaihr to suffer due to changes in technology. customer preferences. and new competitors. Days: Calama-Robeson-'Newsday-'Gelsy Images Sadly however. even icons fail. especially when confronted with hearty $5 billion of debt. fierce online competition from Amazon and Walmart. changing customer preferences [video games instead of conventional toys]. and technology {e- commerce}. Not even 3 billion dollars in annual sales could surmount these challenges. SEALED FATE Some argue the company's fate was sealed back In 2005 when Bain Capital took the company private and buried it in debt to do so. Toys R Us never shed this burdenyt The Toys R Us scenario is a familiar one. In the years prior to the great recession (20062008), private equity firms {PE}, like Sam and KKR. went shopping for retailers. They took the companies private by borrowing money for the purchase and planned to achieve high returns by making them more efficient. selling off parts, or both, and in a period of a few years take them public again. (Note: PE firms generally collect large fees associated with taking the companies public.) To compete online requires massive investments in technology and support, people, all while selling products at lower margins. In summary. competition is up. debt is up, expenses for creating an ontine channel go up. and profits go downa tough scenario for any retailer.\" Many have responded by only investing in safe bets and cutting products and people, which in tum has limited merchandise and degraded service. For its part. Toys R Us tried bankruptcy in September 2017 to salvage the company but doing this before the holiday shopping season (when it collects a large percentage of annual revenue] hurt more than helped. Company leadership and other employees were in survival mode instead of executing and boosting sales when it needed them most. The poor timing was made even worse as it scared customers away, as they were concerned that toys couldn't be returned, and gift cards redeemed.88 COMPETITORS POUNCED Knowing Toys R Us was on the ropes, Walmart, Target, and Amazon cut prices during the holiday season and took an ever greater share of sales. For instance, competitors sold some toys at a toss in order to get the business. This practice isn't sustainable. normally. but each of these large competitors sells many. many other products besides toys. As such. they could compensate with sales from other products while Toys R Us couldn't. It sells only toys.89 Concerns spread and a domino effect ensued. Many toy suppliers delayed shipments fearing they might not be paid if the company went bankrupt, and creditors also tightened terms making things even worse. WHERE NOW? A\" is not lost. Yes. the company did technically go awayover 700 U5. stores ciosed and nearly 33.000 employees lost theirjoos. but a new company. Tru Kids Brands, has emerged in 2019. Investors bought Toys R Us trademarks. private toy and baby brands, its famous mascot [Geoffrey the Giraffe}, Babies R Us, and other assets. The new CEO, Richard Barry, formerly the chief marketing oicer of Toys R Us, hired many ofthe former company's leaders but none of its stores and associated employees.\" Many industry experts note that atthough the major competitors are indeed formidable, the demise of Toys R Us Page 5;; leaves a notable gap in the market. Many people still need or at least desire to shop in an actual toy store, and this is especially true during the holidays. It's nostalgicm NEW TEAM . . . NEW APPROACH Tirne WHI ten. but at the time this case W39 written it is clear it Will involve new employees, new stores. and a new strategy to go along with the new name. Assume you are the new CEO Richard Barry and apply the 3Star) ProblemSolving Approach to chart a path forward for Tru Kids Brands. APPLY THE 3-STEP PROBLEM-SOLVING APPROACH TO OB Step 1: Define the problem. A. Look first at the Outcomes box of the Organizing Framework in Figure 16.12 to help identify the important problemlsl in this case. Remember, a problem is a gap between a desired and a current state. State your problem as a gap and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3. B. Cases have key players, and problems are generally viewed from a player's perspective. You need to determine from whose perspectiveemployee, manager, team, or the organizationyou're defining the problem. As in other cases, whether you choose the individual or organizational level in this case can make a difference. In this case you're asked to assume the role of new CEO Richard Barry. C. Use details in the case to determine the key problem. Don't assume, infer, or create problems that are not explicitly included in the case itself. Only use what ls provided in the case. D. To rene your choice. ask yourself. why is this a problem? Explaining why helps refine your thinking. Focus on topics in the current chapter. because we generally select cases that illustrate concepts in the current chapter. Step 2: identify causes. Using material from this chapter and summarized in the Organizing Framework, identify what are the causes ofthe problem you identified in Step 1. Remember. causes tend to appear in either the Inputs or Processes boxes. A. Start by looking at Figure 16.12 to identify which person factors. if any, are most likely causes of the defined problem. For each cause explain why or now It causes the problem. Asking why multiple times is more likely to lead you to root causes ofthe problem. in this case. for instance. how do competitors factor in to your decisions? What about the value of the brand? Expertise of leadership? B. Follow the same process for the situation factors. For each ask yourself, why is this a cause? By following the process of asking Why multiple times. you are likely to arrive at a more complete and accurate list of causes. Again. look to the Organizing Framework for guidance. C. Now consider the Processes box shown in Figure 16.12. Consider concepts listed at all three levels. For any concept that might be a cause. ask yourself. why is this a cause? Again. do this for several iterations to arrive at root causes. D. To check the accuracy or appropriateness of the causes. be sure to map them onto the defined problem and conrm the link or cause and effect connection. Step 3: Recommend solutions. Make your recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see 2 Section 1.5). Which recommendation is desirable and feasible? A. Given the causes identified in Step 2, what are your best recommendations? Use material in the current chapter that best suits the cause. Remember to consider the OB in Action and Applying OB boxes, because these contain insights into what others have done. B. Be sure to consider the Organizing Framework-both person and situation factors, as well as processes at different levels. C. Create an action plan for implementing your recommendations and be sure your recommendations map onto the causes and resolve the