Case Study: Case One: Battle of the Toys – Fao Schwarz Is Back!

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Introduction Large retail chains like Wal-Mart and Target force dozens of smaller competitors out of business each year. The buying power that these two box stores have over their competition makes it almost impossible for any other store to turn a profit. In the toy retailer marketplace this is exactly what happened to the world-famous FAO Schwarz. Losing sight of its core business values and getting caught up in trying to win a losing battle over pricing strategies caused the iconic store to close its doors. Developing competitive advantages in your marketplace is the key to survival and long-term sustainable growth for any organization in any industry. In this assignment, I will summarize the Plug-In B1 closing case one Battle of the Toys – FAO Schwarz is Back! and then I will then answer the questions to the unit closing case published on page 254 of the textbook. At the end of this paper you will be able to view the references I used to support my points-of-view. Summary Started in 1862 by German immigrants, FAO Schwarz is famous for its high-end, one-of-a-kind toys sold from its store front in New York City’s famed Fifth Avenue. Through the years FAO Schwarz enjoyed success after success, expanding beyond its original New York location, and eventually running over 40 stores nationwide. In 2004, however, after battling large chain stores like Wal-Mart and Target, for customers FAO, Inc. closed all of its stores. Several reasons led to the demise of this iconic brand, including selling mass produced toys like Sesame Street figures for 300% more than the likes of Wal-Mart. FAO Schwarz also moved away from its core business model of providing unique, handcrafted, high-end toys catering to the elite customer. D.E. Shaw & Co., a New York investment firm, say the potential in the name and purchased the rights to FAO Schwarz and re-opened the Fifth

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