1. The company's debts were too much to bear.

The main reason why most of the companies, especially toy manufacturing, go to
bankruptcy is inability to repay their outstanding debts. Their assets cannot cover the
obligations of the company anymore. Toys R Us was saddled with massive debt when it was
taken private by Bain Capital and other companies in 2005. By the time the company was on
the verge of bankruptcy in 2017, it already owed about $5 billion. Those debt payments
proved to be a figurative chain around the long neck of mascot Geoffrey the Giraffe. Toys R
Us was "starting at an intrinsic disadvantage due to the debt load," according to Douglas C.
Bernstein, a Plunkett Cooney bankruptcy lawyer who was not involved in the case.

STRATEGIC PLAN:

Filing bankruptcy is a debt restructuring strategy, not an end of the business. A law on
bankruptcy is in force to aid individuals who have borrowed unmanageably – typically
because of significant medical bills or other unexpected expenses that are not their own fault
– to get back on track.

RISKS:
There are detrimental effects of both kinds of individual bankruptcy. "The bankruptcy
declaration is the biggest single influence on credit scores," says Experian, one of three major
national credit units. It can also make you look at businesses that request your report,
including other lenders, insurance companies, and possible employers, as a poor risk. Other
Risks of Filling Bankruptcy is the Immovable and property loss. Sometimes the exemption
does not apply to all personal property and property. This means that your bankruptcy
tribunal can confiscate and sell your property to satisfy your creditors.

Comparing your overall debt releases with the bankruptcy filing costs:
Fees for filing (about $300)
Lawyer's fees (1000-5000 dollars)
Improved rates of insurance (auto, homeowners, health, etc.)
negative effect for two years on your credit value

If you are just trying to wipe out credit card debt worth $2,000, bankruptcy is not
worth the money. Bankruptcy may well not be the greatest way to minimize your creditors by
30 to 60% because you provide them the lump sum payment immediately. It helps you
discover a respected lawyer that would like to help you find out about your alternatives.
Herrn argues the fact that it remains on your credit report for 10 years is a great
misperception about costs for bankruptcy.
"Your credit score is the most important thing for lenders these days. Today, like two
decades ago, people are just not criminalized," adds Herr. "In reality, two years after filing, I
have seen many customers receive the approval for a car loan at a good interest rate, and
others can qualify for home loans, even in shorter time following their second bankruptcy."

BENEFITS:
The greatest method to avoid financial obligations is occasionally to file for
bankruptcy. The following are the benefits or the advantages of filing for bankruptcy.
1. An automatic creditors' stay. The court automatically issues this stay for any debt
collection activities once you are filing. It truly does not cancel your debt, but suspends debt
recovery until your case of bankruptcy is complete. It doesn't mean more:
 Calls or letters from debt collectors
Lawsuits on the debts
Wage garnishments
Home mortgage foreclosures
Property repossession

If a creditor attempts, after the court has granted an automatic stay, to collect a debt from
you, your lawyer can disregard court actions. This allows the court to stop, penalize them
and/or require them to pay you for damages.

2. Debt unloadable. You could have the option of discharging or canceling your debt. An
unloadable debt can be erased through insolvency. These include debt on the credit card,
medical, utility and personal loans.

3. Exemptions from bankruptcy may allow you to retain property ownership following
bankruptcy. If a property can be 'exempt,' this means that you mustn't worry about the
bankruptcy seizure. Specified exemptions protect an asset up to some cash amount; the
exemption occasionally covers the whole asset value. Certain sorts of assets such as a motor
car or wedding ring may be exempt, but others may apply to any property that you have.

4. Your employment also includes the protections provided by bankruptcy law. For you
to declare bankruptcy, future employers cannot discriminate against you. So, in your future
professional aspirations, financial mistakes in the past do not affect you.

POSSIBLE OUTCOME:
A temporary debt payment breather and/or renegotiated contracts could all be a
struggling firm. The suspension of debts and the negotiation of cheaper contracts can enable
companies that would otherwise not be allowed to remain afloat to turn their business around
while pursuing new methods to cut costs, sales or asset sales that could take months to
complete. When the company closes down, employees may be willing to pay or lower their
salaries, instead of being unemployed, depending on how easy it is for them to obtain other
positions.
You can be more efficient than your competitors, who must satisfy all of their
obligations if you can temporarily suspend your debt-service commitments, just pay some of
your existing debt and discard agreements you have made. A 2006 study by CFO magazine
of company owners indicated that most polled found that protection from bankruptcy
provides an unfair competitive advantage for the protected business.
If a company continues to lose money, it ceases the continuing cash flow that the
owner or partners may be personally responsible for. You may still be charging mortgage,
leasing, insurance, property tax, security and maintenance fees, and other expenditures, which
are known as carrying costs, simply closing off your doors does not halt your charges. You
may end up losing your funds and your house if you are personal liability for any or all of the
business' debts. The bankruptcy report officially ends the firm, prevents the settlement of bills
and ends the bond once all assets are utilized for debt payments.
A company having contracts, including labor contracts, might conclude its contracts
so that more advantageous conditions can be renegotiated. Many sellers and affiliations are
prepared to lower their debt or to renegotiate contracts as that ensures that the firm will
continue to operate, purchase supplies and services and offer jobs for years to come. When a
labor union participates, the syndication management takes a vote on its members' new
contract proposal and recommends that members accept the contract. On the basis of the
examination of the financial position and the reorganization plan, the union management
offers its suggestion.
To find a way out, declaring bankruptcy does not put an end to the business but
reaffirms its wish to survive. That being said, there has only been a few times that this move
result in successful business revival.

2. Failure to effectively manage the year long cashflow cycle of the toy business.
In the toy industry, your company is likely to be "out of pocket" for an extended
period of time during the cycle. You must pay for employees, office space, advance cash flow
inventory sales, marketing expenses, and much more. Usually, retailers do not make it easy
for you to get paid quickly. Having the financial processes and facilities in place to fund both
a good year that necessitates further investment and the following revenue cycle after a poor
year is critical for survival in a market where fortunes can shift rapidly.

STRATEGIC PLAN:

Hire an Accountant or other financial professional. During the first ten years, 96 percent
of companies failed because their debts could not be paid. Many companies have difficulties
paying their payments because they don't adequately manage their cash flow. To avoid
getting into this group, appoint a finance or accountant to monitor the cash flow of your firm.
You may be able to use some guidance in this field unless you have studied financial
services. That's nothing to be honored about. As a manufacturer, you deserve to focus on
your talents and give other professionals additional work.

Tightening Credit Requirements or policies. Companies often have to give credit to their
clients, especially if they start or grow. The Dun & Bradtraset study on prospective customers
is recommended by the SBA. Credit cards might be more secure for payments on a timely
basis.

RISKS:
For any work they do, you'll have to pay an accountant and occasionally that
additional cost may be breaking the budget. An accountant's rate depends on the job, but you
can normally pay an accountant at least $60 an hour and frequently more. You can make
smaller payments on the basis of your business or your connection with the accountant, but
you will increase the overhead of your business, even if you have only part of it. Regardless
of whatever accountant you pick, they will be human. They  can make errors still. Usually
this won't be a significant concern if they make a tiny mistake and it can be fixed quickly but
it might also be a catastrophe. An example is if they put expenses of your company in the
program and omit a major item. If you don't catch it, you can pay extra tax time since you
have lost a very worthwhile deduction. Moreover, You will save time by delegating your
accounting to others, but you want to ensure that you are still practical. Although the
accountant you employ does the job, you should also routinely review everything and make
sure things go as smoothly as possible. You need an accounting alliance and each one of you
should have an active role.
A credit policy defines the conditions for the balance to be repaid by the customers
who buy on account. Suppliers often give loan accounts to regular purchasers to promote
business repetition. A severe credit policy means that the amount of time a purchaser can pay
a debt is enforced in severe conditions. Buyers expect to be paid back to an industry within
one week with an average payment cycle of 30 days will not attract much attention by your
credit offer. If you suddenly move from moderate to loose policies to a tight payment
window, you also risk of destroying connections with existing buyers. Damage to buyers may
result in unforeseen costs. It is expensive to handle the stockpiled goods. You might need to
decrease prices to remove the backlog at some point. It can lead to the carriage of objects that
expire or become obsolete. More performance index also focus on the time, effort and work
you invest into controlling excess inventories. Furthermore, Stricter credit regulations also
place pressure on your payment and billing personnel to implement them. More rapid
payment requirements mean bills and invoices have to leave the door sooner. You must also
aggressively follow up with buyers who do not pay by phone or letter. This continual
communication might pressure already busy employees and permanent calls and letter
reminders can further undermine a buyer's view of your company.

BENEFITS:
The financial management of a business involves numerous technical elements and
even tiny errors might generate a big problem. This is quite true when you file taxes, because
the IRS check may result in unintended omissions or discrepancies. An accountant's task is to
guarantee that all records are error free and to verify that your numbers are not in difficulty.
Your accountant needs it to be successful for your business. One way they might achieve this
is by seeking savings. An example would be to check the monthly expenditure to identify
where fat may be cut or to streamline the record keeping to take less time. When you are
about to do your taxes, the accountant will pay all your credit and deductions so that when it
comes to your business, you may focus on other things. If you plan on producing some new
items for longer hours, boosting your marketing or extending your consumer base, this may
be a major benefit. In addition to balancing books, an accountant can also give specialized
advise on pricing structures and funding. If you have taken the decision that the firm should
be sold or closed some point in the future, an accountant will give you some advice on how to
do it. This excellent contribution, especially when it's your first business, is really invaluable.
The operational efficiency of credit departments may be achieved by tightening credit
regulations. This is owing to less ambiguity about how their functions are to be carried out.
The written instructions provide clarity and guidance. According to policy type, credit
policies can also help to boost the cash flow of a company. Tight loan policies may reduce
loan default occurrences and accelerate accounts receivable turnover, hence enhancing cash
flow.

POSSIBLE OUTCOME:
The possible outcomes or effects of hiring an accountant are the following:
1. Saves you time. You don't have to do yourselves all the tasks. An accountant can assist
you handle the most significant requirements of your firm, such as paying taxes and ensuring
that time periods are not missing. Because an accountant knows the current tax laws, rules
and regulations, they can save you time and hours by passing the fiscal requirements and tax
obligations of your government.
2. Reduces the responsibility for taxation. Accountants can work in certain methods to save
your taxes and make use of tax deductions by looking at your financial and monetary
capabilities. You can handle tax calculations and advise you about how to run your business
most tax efficiently.
3. Remains to organize your business. You can help the accountant to organize rentals and
utility charges if you run a huge enterprise with multiple staff and other departments.
Accountants are also good in terms of payroll and budgetary management, and might be the
finest people to advise you on how to structure your loans and investments to avoid a
downward trend.
4. You continue to concentrate on other vital business problems. With your team
accountant, you may comfortably respire knowing how successfully your business is
managed. In this way, you can concentrate on other significant problems which have to be
discussed with the Board of Directors, corporate expansion, marketing, employee relations
and many other companies that have a lead on you.

As to Tightening Credit Requirements/Policies: From a credit collecting position, it is the

capacity to use the components of policy to stimulate payments and to lessen the need for the
internal debt collectors which is the main result of having a defined credit policy adhered to
by all corporate divisions. For example, a debt collector can suspend future orders and
shipments if a consumer does not pay his obligation. This is a very effective instrument, since
when the customer expects future deliveries of products or services and his business would be
badly affected by a pipeline break, the customer will be encouraged to pay. In addition, the
customer will be pressured to pay if the Sales Department enforces the credit stop since not
only will the client be significantly impaired, but also the Salesperson's commissions will be
harmed. Customers must be encouraged to stay current with their facts by credit policy
together with a good internal communications among the sales and the in-house debt
collector.

3. Overlooked Competitors
Disregarding the competition was sensible advice a generation later, but with
innovation pushing progress at a rate unprecedented in human history, businesses can't afford
to ignore their rivals entirely. People  saw previously how rapidly new companies entered the
marketing technology world, and how this could be used to justify ignoring the competition.
However, it is quickly twisted in another direction: if you don't pay attention, you can
unintentionally become a carbon copy.
Toys R Us may be the largest global toy empire, but that does not mean it is without
competitors. Walmart is a formidable and tough rival for them, not just because it sells toys
but also because it employs pricing tactics and provides free delivery. People's shopping
habits have shifted to online shopping, which has resulted in a shift in consumer behavior. E-
commerce has expanded dramatically as a result of factors such as pricing, convenience, and
discount coupons. This meant that Toys R Us had to deal with both large and small online
rivals, including the online behemoth Amazon, resulting in a significant drop in revenue for
the company. When a group of investors purchased Toys R Us in 2005, it could be argued
that they were not foresighted about the future of e-commerce. Even Amazon was not
regarded as a large corporation at the time. Furthermore, today, anybody with a smartphone
will gain access to technology. Toys are similar in this regard, since they no longer have to be
physical. They take new forms, such as sports, and brands now appeal to a wide range of
genders and ages. Toys can take the form of e-sports and are sometimes available for rent in
order to minimize product waste.

STRATEGIC PLAN:

Cost-leadership and Differentiation Strategies

Companies that seek cost leadership initiatives tend to have purchasing, production
and distribution strengths. Companies generally target clients with no-frills, simple products
and penetrating price who want to value. This strategy This is the easiest competitive
approach to copy, which means that other big competitors can set cheaper prices.
 Companies that apply differentiation strategies target clients with premium and strong
brand equities for their quality and value-seeking. They cannot offer what their competitors
provide. You might focus on a smaller proportion of the present range in order to pursue a
differentiation approach. An example of this strategic option is Hasbro and its strategy to
offer a wide range of toy products.
RISKS:
The following are the risks of Cost Leadership and Differentiation Strategy.
1. It can lead to budgetary cuts in key areas which affect the company. A low-cost
position is a good goal. Many leaders in this manner will uncover areas in which the present
budget may save money. Some cost managers in important business sectors such as their
customer service businesses can potentially be at risk for cutting costs. While the price to the
consumer is excellent, customers who add value to their value estimates are not part of this
organization.
2. It reduces innovative products. Research and development is one of the first cuts that
always occur with cost leadership styles. R&D appears like an alien cost to many of these
leaders. The results of the funding loss here are that fewer innovative items or services are
available on the market. Innovation is less likely to occur. Instead the same product is being
marketed at lesser prices in the same style of leadership.
3. It's a technique that other people readily follow. Almost typically, the gains of cost
management approaches are ephemeral. Once a corporation sees the advantages of cost
reduction to increase the profit margin, all else starts copying the strategies employed also to
reduce prices. Even though research and development money is invested to overcome this
problem, new technology are still outdated in a few years. This means that cost management
is mostly active in making it efficient.
4. A huge number of sales is required in order to succeed. When it is able to generate a
great deal of sales, cost management is more successful. This is how the organisation's total
profitability can be maintained. This is why organizations, which can operate on significant
economies of scale are often employing them. In Walmart or Costco you'll discover cost
management at work. In your local Mom and Pop businesses or small chain, you will not find
it at work.
5. The relevance of market research is not taken into account. Cost management
considers only one value transaction: cost. It assumes that the products or services generated
on the local market are necessary. It means that no time is spent creating in-depth market
research on how a community reacts to the offer. Cost management companies are therefore
more subject to changes in the environment caused by cost reduction strategies. Sudden
changes in the market are particularly difficult, since the company will be less manoeuvrable
and less time consuming.
6. The issue of shifting customer perception would be a challenge in
executing differentiation strategy. The product is seen by many users as being equivalent to
other items available on the market at a lesser cost. Take cereal as an example. Large firms
seek to distinguish their cereal brands from cheaper cereals in a higher quality. Nevertheless,
many consumers are buying cereal from the brand since it is equivalent to the products.

BENEFITS:
The following are the benefits of Cost Leadership and Differentiation Strategy:
1. It gives the team and organization better profits. Cost management techniques are
designed to create cost-effective operations within the market and industry. It becomes
feasible to increase profit margins by cutting development and production costs. When
competitive pricing has higher margins than other companies can accomplish, you get more
business because you provide your clients a stronger value proposal.
2. It undermines market competitiveness. Companies that are able to execute successfully
their cost management techniques have a future edge. Because they may offer their
consumers, a higher model of pricing, new market competition is constrained, as competitors
can fight to attain the same price. It becomes nearly hard to survive without competitors
being prepared to undermine the company's cost leadership. Over time, this enables market
control.
3. It creates more resources, which can be utilised for growth. Cost management
strategies also increase access to greater cash. Although the cost for retail items or services is
modest, bigger margins enable capital from each transaction to be retained. This generates a
nest egg of resources that can be used for several purposes throughout time. Many low-cost
firms will either continue with their investment or fund new expansion with the extra capital.
4. Builds on a product's distinctive traits. The company examines and compares the unique
product to similar products from competitors. Following comparisons, the firm produces a list
of features that are not included in the products of the competitor. These traits differ in the
goods, and through individual customer interactions and by incorporating this information in
their promotional material, the corporation communicates these attributes to the customers.
5. Build on their reputation as a strength. As a result of earlier products that had unique
characteristics, consumers expect some companies to add new elements to their products.
These corporations market their brand and businesses to show the company's current and
future performance by conveying their historical success. Customers know the brand and
relate its image to standards other than those of other companies.

POSSIBLE OUTCOME:
The goal is to become the least expensive producer in a cost leadership strategy. This
can be achieved by huge production where corporations can take advantage of economies of
scale. If a corporation can use economies of scale and make products at a cheaper cost than
that of its competitors, it can then establish a sale price that other companies cannot replicate.
Therefore, because of its considerable cost advantage over its competitors, a corporation
implementing the cost management technique may make a profit.
The products or services of an enterprise differ from the rivals under a differentiation
strategy. This might be carried out by supplying clients with high-quality products or services
or innovative products or services. The corporation can then establish a premium price on its
products or services if a firm is able to differentiate successfully.

Supporting Details:
Differentiation may be defined as a strategy centered on developing product and
service differences in the firm (Dess, Lumpkin and Eisner 2010). Toys R Us uses
differentiation technique, as stated in this study. As other competitors in the toys and gaming
business, the company provides distinct service. Each of Toys R Us' shops offers a wide
department in Toys R Us, which includes furniture, car seats, beds, walking scouts, security
items, baby clothes, and baby food for all parents and babies. According to Toys R Us 2013.
In addition, a strong brand image and large range of products allow the company to
achieve differentiation strategy. As mentioned in this study at the induction, Toys R. Us is
one of UK's major playground and game dealers and has a strong brand image in order to
achieve the strategy of differentiation. Toys R Us offers a wide choice of toys and other
things for children, according to MINTEL 2010. Toys R Us use the differentiation technique
for various advantages. This method can firstly enhance loyalty of consumers. The strategy of
differentiation can also enable companies to reduce the threat of alternative products. On the
other side, the consumer may prefer to buy products from the company utilizing the cost
management technique. There are few downsides for difference.
 Disney Company uses the strategy of focusing. The Disney items are linked to the
Disney movie (Disney store 2013). The corporation focuses in particular on the client who
likes the Disney brand pictures. If they prefer to watch Disney movies in particular, most
consumers elect to take it from Disney shop. The focus is on the strategy of cost leadership,
Argos and Amazon. Both firms provide a variety of low-priced toys and games.
4. Personal Disasters
Natural disasters and catastrophic illnesses can bankrupt even the most careful saver.
Separation and divorce are two more forms of personal calamities that could place you in a
difficult situation. More than 10% of Canadians who file for bankruptcy say their divorce or
separation was the primary cause of their financial issues. Despite the fact that Canadians are
insured by the government's healthcare system, getting treatment outside of it can be pricey.