The Rise of Circuit City Stores, Inc. SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of The Rise of Circuit City Stores, Inc.
In fiscal 2000, Circuit City was at the top of its game. The world's leading consumer electronics retailer had delivered record sales and profits for the first year of the new millennium. It was a fitting moment for Richard Sharpe, the CEO of the last 14 years, to step down. Over his tenure, revenues had increased 18 times and operating profits 13 times. In June 2000, Alan McCollough succeeded him as CEO. A 12 year veteran of Circuit City, McCollough expressed confidence in the future, citing trends such as the digitization of televisions, music players, and cameras. But challenges loomed from the increasingly aggressive discount sector. Was Circuit City as strategically strong as its financial results suggested? Would it be able to maintain momentum and retain its leadership?
Swot Analysis of "The Rise of Circuit City Stores, Inc." written by John R. Wells, Galen Danskin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Circuit Mccollough facing as an external strategic factors. Some of the topics covered in The Rise of Circuit City Stores, Inc. case study are - Strategic Management Strategies, Competition, Product development, Strategic planning, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Rise of Circuit City Stores, Inc. casestudy better are - – supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs,
central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of The Rise of Circuit City Stores, Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Rise of Circuit City Stores, Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Circuit Mccollough, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Circuit Mccollough operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The Rise of Circuit City Stores, Inc. can be done for the following purposes –
1. Strategic planning using facts provided in The Rise of Circuit City Stores, Inc. case study
2. Improving business portfolio management of Circuit Mccollough
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Circuit Mccollough
Strengths The Rise of Circuit City Stores, Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Circuit Mccollough in The Rise of Circuit City Stores, Inc. Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Circuit Mccollough in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Circuit Mccollough has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study The Rise of Circuit City Stores, Inc. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Circuit Mccollough is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Circuit Mccollough in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Circuit Mccollough has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Circuit Mccollough has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Learning organization
- Circuit Mccollough is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Circuit Mccollough is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Rise of Circuit City Stores, Inc. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– The Rise of Circuit City Stores, Inc. firm has clearly differentiated products in the market place. This has enabled Circuit Mccollough to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Circuit Mccollough to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Circuit Mccollough in the sector have low bargaining power. The Rise of Circuit City Stores, Inc. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Circuit Mccollough to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Circuit Mccollough is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Circuit Mccollough is one of the leading recruiters in the industry. Managers in the The Rise of Circuit City Stores, Inc. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Circuit Mccollough are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Circuit Mccollough is one of the most innovative firm in sector. Manager in The Rise of Circuit City Stores, Inc. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Circuit Mccollough has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses The Rise of Circuit City Stores, Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Rise of Circuit City Stores, Inc. are -
Slow decision making process
– As mentioned earlier in the report, Circuit Mccollough has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Circuit Mccollough even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Circuit Mccollough has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Circuit Mccollough products
– To increase the profitability and margins on the products, Circuit Mccollough needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Circuit Mccollough has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Rise of Circuit City Stores, Inc. HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Circuit Mccollough has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Circuit Mccollough has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Circuit Mccollough is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Rise of Circuit City Stores, Inc. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Circuit Mccollough has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study The Rise of Circuit City Stores, Inc. that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The Rise of Circuit City Stores, Inc. can leverage the sales team experience to cultivate customer relationships as Circuit Mccollough is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Circuit Mccollough needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Rise of Circuit City Stores, Inc., is just above the industry average. Circuit Mccollough needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities The Rise of Circuit City Stores, Inc. | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The Rise of Circuit City Stores, Inc. are -
Developing new processes and practices
– Circuit Mccollough can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Circuit Mccollough to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Circuit Mccollough in the consumer business. Now Circuit Mccollough can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Circuit Mccollough has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Circuit Mccollough has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study The Rise of Circuit City Stores, Inc. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Circuit Mccollough to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Circuit Mccollough in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Circuit Mccollough is facing challenges because of the dominance of functional experts in the organization. The Rise of Circuit City Stores, Inc. case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Circuit Mccollough can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Circuit Mccollough has opened avenues for new revenue streams for the organization in the industry. This can help Circuit Mccollough to build a more holistic ecosystem as suggested in the The Rise of Circuit City Stores, Inc. case study. Circuit Mccollough can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Circuit Mccollough can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Circuit Mccollough can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, The Rise of Circuit City Stores, Inc., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Circuit Mccollough can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Rise of Circuit City Stores, Inc. suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Learning at scale
– Online learning technologies has now opened space for Circuit Mccollough to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats The Rise of Circuit City Stores, Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Rise of Circuit City Stores, Inc. are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Circuit Mccollough can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The Rise of Circuit City Stores, Inc. .
Stagnating economy with rate increase
– Circuit Mccollough can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Circuit Mccollough in the Strategy & Execution sector and impact the bottomline of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Circuit Mccollough business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Circuit Mccollough in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Circuit Mccollough has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Circuit Mccollough needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Rise of Circuit City Stores, Inc., Circuit Mccollough may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High dependence on third party suppliers
– Circuit Mccollough high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Circuit Mccollough with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Circuit Mccollough is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Circuit Mccollough needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Weighted SWOT Analysis of The Rise of Circuit City Stores, Inc. Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The Rise of Circuit City Stores, Inc. needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The Rise of Circuit City Stores, Inc. is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The Rise of Circuit City Stores, Inc. is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The Rise of Circuit City Stores, Inc. is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Circuit Mccollough needs to make to build a sustainable competitive advantage.
