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 Sticking on old service model and outdated winning strategy.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Finally, the company should remodel outdated stores.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.
In conclusion, we have realized the significance of including just the netted plan assets and the PBO and not including the full amount of the plan assets and the PBO on the balance sheet. This type of accounting flexibility by the FASB helps companies and ultimately hurts investors who are unaware of the consequences. Usually, the estimated PBO and plan assets are very large in relation to the debt and equity capitalization of the company. The financial situation is therefore skewed and is not represented correctly on the company’s balance sheet which then in turn distorts financial ratios. Investors who are unaware of these accounting rules will end up making erroneous conclusions. Also, this accounting flexibility allows managers to manipulate financial statements whether intentionally or unintentionally by influencing their actuarial assumptions.
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).
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
The main contributing factor to the decline in the return on stockholders’ equity (25.37% to 8.73%) was the decline in the profit margin (11.79% vs. 5.08%). The decrease in asset turnover (1.11 to 1.00) made a small contribution to the decline, as did the decline in the debt ratio (48.4% to 41.8%).
Managers in the more profitable regions were achieving/surpassing their sales goals, while managers in the less active regions were unable to achieve their sales goals. These underperforming managers were penalized by a system that they neither fostered nor developed. In all likelihood, the underperforming managers were disincentivized by unrealistic budgetary goals for their region, needing further assurances from corporate that their vision could be achieved. All retail stores suffered from a lack of product, destroying the potential sales that they could have gained. The stores in less popular/populated regions may have garnered a reputation for being unreliable and continually out of stock.
Seitz, P. 2013, Best Buy Set For Price Battle This Holiday That Will Hurt Profit Margins 'In this to win,' says CEO on aggressive competition with Amazon, Wal-Mart, Los Angeles.
On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection becoming the largest retailer ever to do so in U.S. history. Most industry analysts attributed the immediate cause of the company's bankruptcy filing to a dull holiday season and stiff competition from WalMart and Target as the chain's more fundamental problem. But competition wasn't the root cause of Kmart's consistently poor performance. The real reason for Kmart's poor performance is that Kmart never had a marketing strategy. Kmart completely misunderstood its market and was positioning itself in the wrong direction. Also, on the strategic side, there are issues of where stores were located. On the whole, Kmart stores did not seem to be sited as well as the stores of the competition. Then there was the issue of technology. While Wal-Mart was becoming the relentless efficiency engine that we know today by investing in technology and streamlining the supply chain, Kmart held back. As Wal-Mart developed an infrastructure that enabled it to lower prices, Kmart slipped into a price disadvantage. This paper discusses these strategic problems that led to Kmart's poor performance.
The success of circuit city can be attributed to their concept of strong management, customer service focus and a good merchandising formula which capitalized on innovative electronic consumer products. They created world-class competencies in efficient and effective logistics expertise. Their deployment of sophisticated point-of-sale and inventory tracking technology, IT investments which helped them to connect the flow of information among geographically dispersed stores was the best in the industry. These core competencies allowed them to track customer preferences and enabled them to adapt quickly to changing trends. Added to these competencies, their highly trained sales personnel who provided superior service
Therefore, the organization should take a strategic growth-oriented and reverse type combine. On the one hand, the use of outsourcing and vendor competition to reduce costs in order to compensate for management and manufacturing inefficiencies, pay attention to controlling costs; On the other hand, combined with the advantages of their own technology, innovation, branding and marketing and other aspects of the product 's high school three grades are low pile of competitive products, consumer electronics growth to seize the opportunity to obtain efficient growth performance, and further expand market
Strategic wear-out occurs when an organisation no longer meets customer needs and the pursued strategy is surpassed by competitors. (Drummond and Ensor, Strategic Marketing Management, p. 149, Butterworth Heinemann)
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... 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.
-Customers: The company felt the importance of being customer-centric and innovate by adapting to customer