From Good to Great to Gone: The Rise and Fall of Circuit City

Case Summary: From Good to Great to Gone: The Rise and Fall of Circuit City

Circuit City was the most successful electronic retailer in the 1990s, and it was included in the bestseller Good to Great. The reason why this company became so successful was that they have ability to build and refine their core competences, which create higher economic value than other competitors. Their successful strategic position was customer based services, which contributed a lot to their competitive advantage. First, Circuit City had efficient and effective logistics expertise: “It deployed sophisticated point-of-sale and inventory-tracking technology, supported by IT investments that enabled the firm to connect the flow of information among geographically dispersed stores” (Frank, 2016). Then, they can track customers’ preferences quickly and easily so that they can respond to changing trends. Moreover, Circuit City had the significant assets, which were their highly motivated, well-trained sales personnel. Because of these persons, they can provide superior service to customers and maintain their loyalty.

Circuit City lost value because they neglected to upgrade and protect them. Moreover, the company was outflanked by its competitors, such as Amazon and Best Buy. In addition, they went off road, which the firm’s top-management team was distracted pursuing other activities such as the creation of CarMax. CarMax is retail chain for used cars, which is totally not their core activities. But, the biggest problem was that Circuit City fired 3,000 of the firm’s highest-paid sales personnel and most of these sales personnel were hired by its competitors Best Buy. So, Circuit City lost its competitive advantages. The strategic position during the time of competitive disadvantage was maintained original value and not to update.

The reason why Circuit City failed because they were not able to analyze their internal analysis and external analysis, threats and opportunities. The firm didn’t analyze the broad external environment clearly. They didn’t realize the technological environment, which internet would become more and more important and popular, and the digital market will be the major market. Moreover, they couldn’t compete with their growing competitors, Best Buy and Amazon. Meantime, they didn’t recognize their strengths and weaknesses. The strengths include resources, capabilities, core competencies and activities. They were losing their core competencies when they decided to lay off sales personnel and pursued other noncore activities. So, their previous strengths became weaknesses. Moreover, the resource of Circuit City can be imitated easily by their competitors. So, they barley had strengths to compete with Amazon and Best Buy.