Circuit City case study

Circuit City grew up during a time of rapid growth in the specialty retailer, the company found a
niche, selling a broad line of consumer electronics at lower cost and expanded within it. The
strengths that circuit city have are well known brand and the company has already invested in a
store base and the associated insfrastructure making it difficult for a competitor to replicate the
concept. Circuit city has an established relationships with key suppliers and this is evidenced by the
trade credit extended to circuit city despite the hard ship the company is facing.

In 2007 Circuit City management decided to layoff 3,400 employees that the retailer determined
were paid too much to save money. Among the laid off were the most tenured knowledgeable and
highly compensated employees with less experienced people that could be hired at the lowest wage
possible

What Circuit city HR has neglected are

The HR Planning Process

Meeting an organization staffing required strategic human resources planning. An activity with a
strategic purpose derived from the organization plans. Circuit city HR managers has neglected the
planning process in planning, programming and evaluating. The HR has fail to know the organization
business plans to ensure that the right number and types of people they have, where the company is
headed, in what business it plans to be, what future growth is expected and so forth. Few actions are
more damaging to morale than having to lay off circuit city employees because of inadequate
planning for future.

Second Circuit City HR did not conducts programming of specific human resources activities such as
recruitment, training and layoffs. Third the HR did not do any evaluation to determined whether
their people are producing the results needed to contribute to the organisations business plan.

The HR Manager has oversight the demand forecasts which is to determine how many and what
type of people are needed. Demand forecasts for people needs are derived from organization plans.
For example to develop Iphone, Apple need to determine how many engineers and designers it
needed to ensure such a complex products was ready to launch. The the HR needed to estimate how
many iphone the company would want to sell. Based on the forecast of selling 10 millions units the
first full years, then they needed to determine how many production employees would be required
along with staff who would market the phone, handle publicity for the products launch and answer
phone and online inquiries from customers learning how to use the new products. Similarly,
companies selling an existing products consider current sales and projected future sales and growth
as they estimate the plant capacity needed to meet future demand, the sales force required, the
supports staff needed and so forth. The estimated are used to determine the demand for different
types of workers.

Circuit City HR has also neglected employee morale across all levels of senior management as well as
in-store employees, did not focus on attracting talent, maintaining a well trained, highly motivated
and loyal workforce. Circuit City has neglected in training and development for their employees. The
HR fail to realize that employees are a source of competitive advantage when their skills, knowledge
and abilities are not equally available to all competitor. Top companies invest a great deal to hire
and train the best and the brightest employees to gain advantage over their competitor. The HR has
also neglected in empowerment programs, total quality initiatives and continuous improvement
efforts. The HR failed to create VRIO in their organization to be sustainable in the market.

Managing human capital to sustain a competitive advantage is perhaps the most important part of
an organisations in HR function.


PART B

As a consultant, I would like to advice Circuit City to

1. PESTLE Analysis
Prepare PESTLE Analysis tool used in situation analysis to identity the key external forces
that might affect an organization. These forces can create both opportunity and threat for
an organization. The outcome of PEST is an understanding of the overall picture surrounding
the company. By using PEST analysis Circuit City can access the potential of new market.

2. SWOT Analysis
Circuit City should focus on their weakness and threat in order to rise again. Not to copy and
paste what their competitor doing. Circuit City weaknesses are tarnish brands, their not the
No. 1, retailer for key supplier and low employee morale.

3. Maintain Strategy implementation Consistency
Amazon, Wal-Mart, Best Buy has very little to compete over beside price, and focusing on
cost saving strategies. Best buy moves into products variation, focusing on customer loyalty
and good relationships with supplier.

Circuit City should eyed a strategic position of specialization in products and sales staff. In
general, Return on Sales and Asset Turnover could indicate the degree of companys
differentiation and cost savings, respectively. Circuit City should maintain and consistency on
their strategy instead of following their competitor.


4. Recognise their customer base
Circuit city should adapt to the changing market space. As we are aware, through internet,
customers now have instant access to information. The masses are now empowered with
real-time price comparison tools which rank dozens of stores at a time irrespective of
geography. This knowledge of price discrepancies bestows tremendous power upon
customers and drains profits out of the industry as people exercise their arbitrage options.
Also online retailer have eliminated the awkwardness of dealing with overly, eager or
aggressive salespeople. Relieving added value purchase pressure unnecessarily placed on
consumers.

5. Appreciate your competitor
Just like Wal-Mart and Target retailers, they broaden their electronics offerings in a short
amount of time, adding further pressure on the specialized industry. With a diminishing
consumer desire to be served by an expert sales staff, electronics was natural expansionary.

Circuit City should expand electronic products in their website aligned with consumers trend
and often included online inventory not available in store instead of trying to further
specialize in a diminishing market share.