Business Failure Examination

Business Failure Examination

University of Phoenix

LDR531

Susan Hall

February 8th, 2010

In 2009 a very large and successful electronics and entertainment retailer by the name of Circuit City failed after sixty year of business. The electronics superstore experienced rapid expansion, growth, and diversification through its lifetime. It is commonplace for giant retailers like Circuit City to experience this type of growth, and then go out of business rather quickly. There are several factors that led to the demise of Circuit City, including a recession, competition, and most significantly the organizational structure and leadership.

Circuit City experienced its most successful years in the 1980’s and 1990’s, but failed to make any changes after that. The lack of adaption from Circuit City can be attributed to its leadership (Hamilton). The company employed teenagers and young twenty year olds to staff its store, who could be described as rather miserable. It seemed as if the attitude of the staff could have foreshadowed the end. Circuit City started a replica of itself for the used car industry called CarMax. The irony enters when Circuit City sold off CarMax in 2002, and is still America’s largest used car supercenter. Several other failures littered the Circuit City brand coming from selling off the used car division, to their computer repair department, a bank that was eventually sold to Bank One, and a complete disregard for store updates and prime location (Circuit City).

With the sharp decline in retail spending by customers in 2006, it left Circuit City owing hundreds of millions of dollars to HP, Samsung, and Sony. Circuit City was stuck with old products and it was unable to purchase current models to offer appropriate choices to its consumers. This drove many customers to the now larger retailers like Wal-Mart and Best Buy, and the customers stayed at these places. Consumers simply are not satisfied when they walk into a store...