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To ensure the category increases Walmart’s overall gross margin, Michael tries to think through all the criteria Walmart would need to apply when selecting toys.
Michael recalculates Walmart’s income statement based on the strategy he has developed for Walmart to enter the category and beat Toys-R-Us.
Kevin explains why Walmart’s strategy is mistakenly assumed to be its significant purchasing power. Kevin explains the advantage that leads to the purchasing power.
The case is projected into the future to determine what is likely to happen to Toys-R-Us, their options for responding and the probable outcome.