GE and Toy R Us Company Histories

Last year, Toy R Us became bankrupt after 70 years of operation leading to various
losses including job losses and vendor’s money losses. Several things are attributed to Toy R Us
failure and the main ones include intense competition combined with lack of digital presence. A
timeline of the company’s existence and operations reveals that its major competitor before the
digital era was Walmart, which forced the company to adopt some strategies like going private
after declined sale (Albanese, 2017). Just when the company was strategizing on how to beat
Walmart, Amazon came into the picture, which had been its leading competitor before the
bankruptcy.
Apart from the intense competition from its rivals, lack of a digital presence also
contributed to the company’s failure. Amazon Prime came into being when the company was
going private and instead of anticipating the digital revolution, the company’s management
decided to continue with an offline business. It was slow to anticipate the changes in e-commerce
in 2005 or later, but only realized its mistakes in 2017 when it was a little bit late (Morgenson &
Rizzo, 2018). During the same time, the company could have provided for extra experience than
Target, Amazon and Walmart as these were its largest competitors. For example, since these
competitors, especially Amazon were known for their low prices, Toy R Us could have provided
unique experiences to its customers with its premium prices.
The Toy R Us management can also be blamed for the company’s failure. In 2017, the
company’s CEO accepted that they were late to enter e-ecommerce. They streamlined their
online platform when it was too late. Every company’s management is tasked with the role of
ensuring that their customers have the best experience and this include moving to where the

GE AND TOY R US COMPANY HISTORIES 3

customers are. Therefore, Toy R Us’ management failed its customers by not streamlining their
experience and this led to the company’s failure too. Speaking about this letdown, one expert
cannot understand how the company missed the Pokemon Go craze when it was the most perfect
time for the company to partner with the appropriate company (Albanese, 2017). Because of this,
customers have been running to Amazon, Walmart and Target to get the best prices and the best
experiences. The company’s management did not seek to understand how it could provide
personalized and special services to its customers. The management also failed to use mobile
capabilities to guide its customers and recommend its stores based on their shopping behaviors.
It failed to act like Amazon and Walmart, which provides discount and coupons to enhance
customer experience.
Lastly, Toy R Us went bankrupt because of heavy debts. When the company went private
back in 2005, it entered into debts and just before its bankruptcy, its debt holders became
impatient (Morgenson & Rizzo, 2018). Otherwise, the company had the right strategy and the
right human resource at its time of bankruptcy to bring it back on its feet, according to experts in
this area. Morgenson and Rizzo explains that the creditors influence on Toy R Us shows that
creditors these days have more influence than expected (Morgenson & Rizzo, 2018). The fund
investors also lacked the necessary patience, which would have seen Toy R Us rising from its
problems. This was worsened by the layering of the company with multiple debts, which added
to the bankruptcy filing complexity.
Like mentioned earlier, different people suffered from Toy R Us’ downfall. Many
employees lost their jobs while their vendors lost millions that had not been paid by the
company. Private shareholders too have suffered from the downfall since they had invested
heavily in the company.

GE AND TOY R US COMPANY HISTORIES 4

GE: How was it Making Money Before the Financial Crisis: What is its Financial
Condition Now? Why is it Struggling
Just like Toy R Us, General Electric is also struggling after 125 years of existence and
it’s currently selling some of business its units (The Economist, 2017). Before the financial
crisis, GE was making money through a number of ways with the oldest being asset and heavy
engineering and later through the financial market. When the company started, it had the light
bulb as its main product. Later, it extended to other goods such as locomotives, aviation,
industrial plastics and power generation equipment. The company also engaged in health care
technology, but in the early 2000s, the company plunged into financial services in an effort to
diversify its profits (The Economist, 2017).
Currently, GE is struggling financially and its stocks has declined and this has led to a
tremendous decline in shareholders’ value. The company’s has also increased in terms of debt
and has been selling some of its businesses in order to pay off some of its debts. The problem is
expected to continue to 2020 with cash flow problems being the main issue (The Economist,
2017). However, it is expected that within a year or so, GE will be back on track after several
strategies that have been put in place by its current management.
The problem began with GE’s diversification discussed earlier as this is believed to be
one of the company’s major mistakes because it went far from its core strength of dealing with
heavy engineering products. Initially, the financial sector was valuable to the company and its
investors and led to increased shareholders’ value (Lovelace, 2019). However, the same sector
was a risky venture for the business. Also, the financial business focus led to GE management’s
continued ignorance of its core strengths, which lies on the engineering side.

GE AND TOY R US COMPANY HISTORIES 5

The global financial crisis also contributed to the current problems at GE. The
organization’s management failed take note and prepare for the intense competition that have
been affecting many other companies in this age of globalization. The company could have
avoided the problem by restructuring the business and focusing on the right business area
(Lovelace, 2019). Lack of focus led to decreased profits and declined stock prices, and this was
also caused by bad investments that also contributed heavily to the company’s declining profits.
When GE was still struggling, the management went ahead to use a lot of money to acquire a
French company that deals with power generation kit.
At the moment, GE is still struggling, but the company’s shares are rising steadily.
Shareholders still believe that with proper management, GE will get back on its feet and the
shareholders’ value will rise. For that reason, new management has been appointed to head the
company through tough times towards its success. Larry Culp, who is the sitting CEO is
currently engaging in strategies that will boost GE’s performance. For example, he has decided
to cut down some investments such as those in the healthcare unit in order to generate cash and
pay off its huge debt (Lovelace, 2019). The decision to drop its healthcare unit is also viewed by
experts as a way of making sure that the company focus on its core competencies. Therefore, an
IPO of the healthcare unit is expected this year together with other value generating strategies.
However, the company is only intending to give up half of its healthcare unit meaning that it will
continue with its diversified business units.

GE AND TOY R US COMPANY HISTORIES 6

References

Albanese, J. (2017). The death of a toy retailer: How a lack of digital transformation helped
destroy Toy R Us. Retrieved from: https://www.inc.com/jason-albanese/the-death-of-a-
toy-retailer-how-a-lack-of-digital-transformation-helped-destroy-toys-r-us.html
Lovelace, B. (2019). GE expects to sell off almost half of its health unit, upping original plans,
CEO Culp says. CNBC. Retrieved from: https://www.cnbc.com/2019/01/31/ge-expects-
to-sell-off-almost-half-of-its-health-unit-ceo-culp-says.html
Morgenson, G & Rizzo, L. (2018). Who killed Toys R Us? Hint: It wasn’t only Amazon. The
Wall Street Journal. Retrieved from: https://www.wsj.com/articles/who-killed-toys-r-us-
hint-it-wasnt-only-amazon-1535034401
The Economist (2017). Why General Electric is struggling. The Economist. Retrieved from:
https://www.economist.com/the-economist-explains/2017/11/30/why-general-electric-is-
struggling