As one of the leading figures of the toys industry since the late 20^th century, the news of Toys ‘R’ Us filing bankruptcy to both the U.S. and Canadian government came as a surprise to many individuals. However, unlike Future Shop’s abrupt closure 2 years ago, Toys ‘R’ Us has announced that the vast majority of their stores will continue to function normally and that this filing is a proactive step to restructure its $5 Billion debt, generating more financial flexibility for investments and to ensure its inventory for the holiday season. Considering from a financial accountant’s perspective, the massive long-term debt on the balance sheet not only may repel potential investors but also bring a notable interest that may limit the company’s cash flow. However, with the newly obtained 200 million USD term loan and 300-million USD revolving credit facility provided by a group of investors led by JPMorgan Chase Bank, Toys ‘R’ Us Canada seems to be in an unfavourable, but maneuverable position. Analysts such as Seung Hwan Lee, a professor from Ryerson University has suggested that Toys ‘R’ Us’ old fashioned way of sales, or the ‘channels’ building block of the canvas model‘, is the main factor of the company’s decline. With the development of online sales, Amazon has taken an increasing significant role in the toys market, providing lower prices and more convenience in both browsing and receiving toys. On the other hand, retail stores such as Walmart has also brought a threat to Toys ‘R’ Us with their lower prices and convenience as parents can grocery shop while their child shop for toys. As suggested, Toys ‘R’ Us may need to improve its ways of communication, distribution, and sales. A possible model Toys ‘R’ Us may wish to consider is creating more interactive shops that provides toys and play areas to increase customer satisfaction and create an advantage over online shopping where one cannot physically experience the toys. Interestingly, despite criticize from analysts Toys ‘R’ Us’ Canadian subsidiary said in court documents that it is “performing well financially, with net earnings doubling and sales revenues increasing at a compounded annual rate of 5 per cent over the last three years”. Personally, I found that Toy ‘R’ Us did a fine job with keeping up with the increase in the demand of digital goods, as their shops provided various video games and game console for test play. Nonetheless, to recover its dominance in the toy industry it will need to use its new loans effectively to restructure its channels of communication, distribution, and sales.

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With the release of the Apple keynote and the announcement of new iPhones today, professor Jonathan Sterne’s article “Your new iPhone will soon be trash, and that’s the point” provide profound insights to Apple’s business models. In the article, Sterne suggests that Apple updates the iPhone line with a fresh look annually to make its customer think that their older iPhones are out of date. The elimination of headphones jacks on the iPhone 7 and Apple no longer supporting older models are both examples of Apple luring its consumers to purchase their new products. Anecdotally, I found that older models of the iPhone runs smoothly on an older iOS, but lags significantly on a newer iOS. This design perhaps aims to take advantage of the more power new chips while promoting the users of old iPhones to buy newer models. Notably, the article claims that Apple stated that “their ideal lifespan for an iPhone is about three years”, and has gone as far as stating that “The company that designed your new gadget already imagines it as future trash.” Considering that the price of the new iPhone X ranges from $1,319 to $1,529 CAD, this marketing strategy that aims reduces the lifespan of these expensive gadgets raises an issue of business ethics. In fact, this business strategy contradicts Edward Freeman’s stakeholder theory, which suggests that managers should aim to benefit all stakeholders, rather than maximize shareholder wealth. Noting Freeman’s comment on how all stakeholders should have a common interest in order to make “capitalism tick”, and I perceive this marketing strategy of Apple as a portion of the stakeholders trying to lure the customers into sharing a common interest. While this strategy does not break the law or cause fraud, it is targeted towards benefiting the company and its shareholders at the cost of its customers. In this sense, the company’s managers has failed to achieve their social responsibility, especially noting that the production and disposal of iPhones are both economically and environmentally costly. Ultimately, while from a financial perspective this strategy may be beneficial, the ethical concerns of unnoticeably influencing consumer decisions is fairly significant.

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