Circuit City Failure Essay

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Today, no one seems to doubt that the consumer electronics market in U.S is dominated by BestBuy which controls approximately 49% market shares (Palmer, 2016). However, 20 years ago, there was the other giant company, the Circuit City, in this market occupying a large market share. By 2000, Circuit City was comparatively successful with more than 60,000 employees at 616 locations across the United States (Romero, 2013). But Circuit City gradually lost its competitive advantage and finally went bankruptcy in 2012. In this writing, I will discuss what makes the Circuit City successful in the past and why it failed in the competition finally.

The core competence plays a key role in a business performance, and it also drives a business’s competitive …show more content…

The main reason why Circuit City failed is the management of this company neglect its core competence. Circuit City focused on the differentiation initially, and lots of experienced sale-persons provided extraordinary customer service. But management of Circuit City decide to dismiss these sale-persons to lower the cost and compete with BestBuy and Amazon who put their core competences on the cost leadership. in the resource-based view, these sale-persons were supposed to be the valuable resources of Circuit City, but Circuit City abandoned them. This decision lead Circuit City lost its competitive advantages rapidly, and ironically, some of these sales-persons was reemployed by BestBuy. Furthermore, inappropriate strategies made by the management also promote the decline of Circuit City. According to Romero, Circuit City has established the “Car Max” to expand its business to automobile market, and invested in a new DVD technology, DIVX, which launched in 1998 (2013). Unfortunately, these both of these two projects went into a large success and brought abounding

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