When trying to figure out a strategy of a firm, we have to look at a company’s internal and external environments. There are several things that help us analyze the external environment. Some of the more important are Scanning, Monitoring, and Forecasting the industry. SWOT analysis also plays a big role in figuring out a company’s strategy. Toys R Us is in a very competitive industry where the entry barriers are low and new competition can come from any direction. Toys R Us constantly needs to analyze

the industry in order to try to maintain their competitive advantage. There are several steps that are involved in figuring out your external environment: Environmental Scanning involves surveillance of a firm’s external environment to predict changes and to detect changes already on the way. As an example, Toys R Us saw falling birth rate numbers in the United States and wanted to come up with a way that that can still same sales and profits even though the market significantly shrunk. Toys R Us said they would offer infant supplies (e.g., diapers) near cost to encourage mothers with young children to shop there and to form a favorable opinion of the store (including its pricing). This showed that Toys R Us monitored the new baby market and wanted to adjust its marketing and business strategies to adjust for those changes. Another very important deciding factor in making business decisions is any information collected during competitive intelligence. Competitive intelligence helps the firm understand and define their industry, and their rivals. There are many ways Competitive

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