Circuit City from Good to Great to Gone

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Transcript of Circuit City from Good to Great to Gone

FROM GOOD TO GREAT TO GONEThe Rise and Fall of Circuit CityJoshua Neil V. BanzonBA 190 - Strategic ManagementUniversity of the PhilippinesProf. Mita Angela M. Dimalanta

Sige mag-introduce ka ng sarili mo.

Then sabihin mo na kung ano ang Circuit City.

CIRCUIT CITY American multinational consumer electronics company that existed in a big-box store (like a superstore, physically large retail establishment

CElectronics retail store in the U.S.Founded by Samuel Wurtzel in 1949Formerly known as Wards Company until 1984First store was in Richmond, VirginiaIRCUITCITY

GOODGREATGONEWithin 10 years, Wards became a four-store chainTotal sales: $1M per yearLower prices than smaller competitorsStores offered service incentivesBy 1979, sales reached $120MIn 1987, annual sales reached $1B In the 1990s, was largest consumer-electronics retailer in the U.S.Best performing company on Jim Collins Good to Great listHighly motivated and well-trained personnelDeployment of sophisticated point-of-sale and inventory-tracking technologyAbility to connect the flow of information among geographically dispersed storesDetailed tracking of customer preferencesQuick response to changing trendsImplementation of 4S/5S business modelCompetitors were unable to replicate their core competenciesNeglected to upgrade and protect core competenciesTop management team was distracted by pursuing noncore activitiesLaid off 3,400 of firms highest-paid sales personnelBest Buy recruited Circuit Citys top personnelBest Buy upgraded its core competenciesFiled for bankruptcy protection in November 2008

QuestionsWhy was Circuit City so successful as to be featured in Good to Great? What was its strategic position during its successful period? How did it contribute to competitive advantage?Why did Circuit City lose its competitive advantage? What was Circuit Citys strategic position during the time of its competitive disadvantage?What could Circuit Citys management have done differently?What is the future of Best Buy as the leader in big-box electronics retailing as it faces tough competition with Amazon and other online retailers? What core competencies in big-box retailing are critical not only to survive but also to gain and sustain a competitive advantage?

Found in GREAT part (explanation written on paper)

Answers:1. Because they exceeded Collins criterion, instead of outperforming the stock market 6.9 times, they did 18.5 times.High value for their products and low cost large gap between value and cost, resulting to competitive advantage2. Overconfidence: ignored their closest competitor (Best Buy)Poor decision making process: ventured out to other product lines to regain leadLaid off 3,400 of its most tenured employeesCore competencies lost their value they lost their competitive advantage

Found in GREAT part (explanation written on paper)

Answers:3.They could have stayed in appliances while venturing out to gaming and imaging department. They shouldnt have laid off their top employees.4. They must hold onto their innovative customer-centricity model. *This allows employees to identify and more effectively and serve specific customer segmentsUse of 4S/5S model to improve their customer serviceCost-leadership

Found in GREAT part (explanation written on paper)

REFERENCESHart, A., Matulich, E., Rubinsak, K., Sheffer, K., Vann, N., & Vidalon, Myriam. (October 2012). The Rise and Fall of Circuit City. Journal of Business Cases and Applications. Volume 6. Retrieved from

Rothaermel, Frank T., Strategic Management, 2nd Edition, McGraw-Hill Education, New York, USA.

Wulf, T. (2011). Good to great to gone.Training,48(3), 20-20,22. Retrieved from

Found in GREAT part (explanation written on paper)