Executive Summary
During the development from 1949 to 2000, Circuit City achieved aggressive expansion and became the leading company in the industry of electronics retailer. However, fiscal 2000 was an important transition year for the company. The more and more intense competition and the decreasing profitability for years made the company face with unprecedented challenges. These problems were caused by the following reasons:
1. Overexpansion. The company expanded its business and took more and more market share in the cost of decreasing profitability.
2. Being distracted from core business. The company paid a high price of $114 million for its investment on Divx without any achievement in this trial of diversification.
3. Sticking on old service model and outdated winning strategy. When the demand of consumers changed, the company still insisted on its old service model which was successful in the past, but couldn’t retain and attract customers any more.
Problem Statement
Till fiscal 2000, Circuit City was still the leading company in consumer electronics industry. However, Best Buy, which was extremely competitive with Circuit City, had surpassed Circuit City in sales and operating profit, and was growing in a much faster speed. The stock price of Best Buy was approaching that of Circuit City. It showed that the competition from Best Buy was more and more fierce.
The sales and profit of Circuit City in appliance market decreased because of the increasing competition from discount retailers, such as Sears, Wal-Mart, and Home Depot.
With development for so many years, the stores had been out of fashion. Its brand image was not attractive and distinctive to customers as before.
Data Analysis
The problems existed in Circuit City...
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...is way, the company could reduce costs from staff, inventory and others.
Third, the company should fully know the taste and preference of consumers and change its full-service model to self-service model or other more effective model. Always satisfying the demand of customers and providing exactly what they want is important.
Next, the company should take the advantage of e-business and build up its online business. The online business is an effective supplement of its downsized physical business and revolutionized service model.
Finally, the company should remodel outdated stores. The remodeling should focus on the differentiating brand image and give customers distinctive shopping experience. After remodeling, the customers should clearly know what’s special Circuit City could provide them and put Circuit City in the first place when making purchase decision.
...ty’s implementation of Superstores. These companies, however, were better able to see the advantages and disadvantages of the superstore, and parlay that knowledge into quick growth rate and a higher return on equity than Circuit City. On November 3, 2008, Circuit City announced that it would close 155 stores and lay off 17 percent of its workforce by year-end as a result of its ongoing struggle for profitability. Days later, 700 corporate employees were laid off from Circuit City’s headquarters and the 1,000 remaining corporate employees were merged into a single building in an effort to further cut costs. On November 10, 2008 Circuit City filed for bankruptcy. Circuit City had lost more than $5 billion in stock market value over the past two years. The company’s goal was to emerge from bankruptcy protection in mid-2009.
The idea that department stores might be losing out to retailers like Amazon is not a new one. However, the extent to which one affects the other is not entirely clear. More specialized, non-department stores may also play a role in pulling department store sales downward. Clothing store sales, for example, grew slightly, by 1.2 percent, from January 2013 to January 2014 while department store sales declined. (Census Bureau, 2014)
First, customer centricity is important to channel customer centricity into their company strategy. It will get the whole workforce on track. Next, the collection should keep their customer data up-to-date. They would benefit from building a stable foundation by bringing all of their current customer contacts. The brand should also save all documents including minutes-of-meetings, emails, offers, contracts, and every payment transaction. Then, the company should establish healthy customer relationships based on their customer profile. It is always important to follow-up on customers and to make sure they stay satisfied with the merchandise. Finally, it is all about the customer. Their response is very important. It is viable to surprise and impress their customers, as well as plan and implement multi-phase marketing campaigns(CAS
With the passion for the latest and greatest technological knowledge, and the charisma and devotion towards the youth, Best Buy is sure to continue on the high road to success. Best Buy will be changing and advancing to accommodate the ever-changing field of technology. They are truly a testament to upholding and exceeding their vision statement of “meeting the customer at the intersection of technology and life” (FAQ).
• CarMax executives were keenly aware of the fate of their one-time parent company, Circuit City, demise to Best Buy after ignoring or underestimating the threat Best Buy had become to their business and vowed that CarMax would not meet the same fate.
In summary, “Internet activities are not most significant in competition, such as informing customers, processing transactions, and procuring inputs”. (Porter, 2001) significant corporate assets--skilled employees, proprietary product, and efficient logistical systems – these factors are the most important to keep competitive advantages. In fact, it is foreseeable that the Internet's evolution will come up in the future involve a shift “in thinking from e-business to business, from e-strategy to strategy”. (Porter, 2001)Only by integrating the Internet into overall strategy will this powerful new technology become an equally powerful force for competitive advantage.
Historically the personal computer (PC) industry has sold its products at reasonably high prices yet garnered only small profit margins. One reason for this is the high competition in the PC industry which led to competitive pricing among producers. Analyzing the competitive environment of the PC industry, it is evident that there is very little barrier to entry in this market. PC's have very low physical uniqueness and are made of standard components that require very little expertise to assemble.
• Too aggressive business expansion. • Stagnant stocks. • Lady Fuller and her people are inexperienced when it comes to the retail business. • The stores have limited sizes available. • The profit margin is horrible.
During the 1990s, each company experienced specific difficulties to their market share. Both companies struggled to reestablish themselves in the global consumer electronics world. As the year 2000 came around, new CEOs at both companies came up with even more complicated initiatives and reorganizations. Outsiders wondered how each company’s internal changes would affect their endless competitive battle in the industry.
-Customers: The company felt the importance of being customer-centric and innovate by adapting to customer
In the following, the strategic and operational plan taken by Best Buy would be indicated to have a clearer picture of current situation. Then the assumption of Best Buy made will be discussed and necessary new assumption would be elaborated. After that, new operating metrics are suggested. At the end, three financial management decisions and recommendation are provided as well.
This decision was based on the fact that the company was trying to pursue a cost leadership strategy in order to compete in the saturated market. The highest paid employees were the more tenured and experienced ones. These experienced, successful, well paid, and loyal employees were trimmed from Circuit City and quickly became a wealth of talent available for their competitors (Mehrmann 2009). This turned out to be “stuck in the middle” scenario for Circuit City. They neglected to upgrade and protect their core competencies which the competitors took advantage of. The company’s decision to pursue noncore activities like creating CarMax, a retail chain for used cars and introduction of a proprietary DivX player, which was a huge flop and the attempted merger with Blockbuster lead to further erosion of the company’s competitive advantage (Rothaermel
This strategy was carried out by selling via phone, fax and direct sales, instead of selling through retail stores. Not only this approach differentiated Dell from other competitors at the time, it also reduced its operating costs as it did not have to rent expensive retail space. In addition, Dell’s strategy of selling customised computers allowed it to hold only a small amount of inventory, which reduce...
... concept is inadequate. The concept according to majority of retailers is just dressing a window, or just an unnecessary expenditure. The competitors’ today have an astonishing retail design stock and will have to compete purely on master merchandising and the technological edge.
Electronic Commerce as popularly as E-commerce has become a big deal in our growing economy due to the increase use of online systems. E-commerce now of the fastest growing business in the world. The technology has change the way of business. Business that have physical location have now made it an effort to focus their online business. It is the new sort of business platform where you can make use of different technologies like electronic data interchange or transfer document electronically. Online business is an effective of sales.