Toy Manufacturing Company’s Recovery Plan

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Table of Contents

Introduction
Company Model
Production Cuts
Conclusion
Works Cited

Introduction

The recent bankruptcy of Toys’R’Us has affected its suppliers significantly. To address the critical situation in which the manufacturing organization for Toys’R’Us has found itself, a recovery plan has to include the change in the company’s model and the redesign in its production strategies. As a result, significant expenses linked to procurement and supply chain management (SCM), in general, will be avoided.

Company Model

The company model will have to undergo significant alterations in order to adjust to the results of Toys’R’Us bankruptcy. By downsizing it, one will reduce the number of expenses and, thus the threat of incurring significant financial losses. The risks associated with the company’s debts will be lowered, which will help the firm to adjust to a new setting and economic factors.

Production Cuts

Concerning the SCM enhancement, the organization will have to reconsider the current manufacturing process. Particularly, the firm will need to transfer manufacturing to Malaysia due to the opportunity to use its trade-free zones and the absence of political hindrances (“Malaysia Free Zones” par. 1; Bernama par. 3). The latter is observed in the current “trade wars” between the U.S. and China (O’Grady par. 3). At the same time, production tariffs will have to be cut in China by at least 10% since the recent changes in the state’s regulations allow it (Koty par. 2-3). As a result, the quality of products will rise, which will help attract a new segment of customers and increase retail options. Moreover, the specified shift will help reduce expenses.

Manufacturing Capacity

Additionally, increasing the manufacturing capacity in India should be seen as a necessity since a rise in production levels will help the firm manage the current crisis. For instance, once the company attracts new customers, it will need to boost its production levels, which will require a shift in the current approach toward costs management. Furthermore, the Indian economic environment will allow renting a larger facility and hiring more workers.

Therefore, the search for alternative sources of manufacturing services is warranted. The manufacturing capacities of the U.S. branch of the company, in turn, will have to be cut, while the headquarters will remain in the specified location. The decision to reduce manufacturing processes in the U.S. is justified by the high expenses that they entail for the organization. Similarly, reducing production levels in Canada should be seen as another important step in adjusting to the challenges caused by the bankruptcy of Toys’R’Us.

Doing Research and Opening Markets

Malaysia and Mexico will be targeted as the primary areas of research. An in-depth analysis concerning the opportunities that the specified environments provide for this firm is necessary since the difference in trade regulations may slow down the SCM process.

Moreover, by expanding into the Malaysian and Indian economic environment, one will find new opportunities for managing costs. The firm will need to set shops in Malaysia to attract new types of customers and increase the range of buyers to the needs of which the firm will cater in the future. In Malaysia, shopping areas in large free zones such as Pasir Gudang and Port Klang (“Malaysia Free Zones” par. 1). As a result, opportunities for diversifying products and rebranding the company will emerge with the following rise in partnerships and investors’ proposals.

Conclusion

Although this organization sustained significant damage after Toys’R’Us had gone bankrupt, numerous opportunities remained open. For example, by targeting other areas for setting its manufacturing and rearranging the current approach toward SCM, the firm could increase its chances for success. By adjusting to the change in the circumstances and using the available resources, the company will handle the risks emerging as a result of the bankruptcy of Toys’R’Us.