Apple Inc. and Circuit City Failure Analysis

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Table of Contents

Introduction
The fall of Circuit City
Apple Inc.’s Success
Conclusion
Reference List

Introduction

Leadership, organizational structure, and culture play a central role in the success of any organization. Huge companies have crumbled while others have maintained a consistent and steady growth. Considering the case of Circuit City and Apple Inc., Circuit City dictated the big-box electronics sector for over six decades.

Its shareholders enjoyed impressive returns from their innovative business strategy. Nonetheless, Circuit City became a victim of its own accomplishments that forced it to substitute its long-term goals with interim goals in response to the capriciously adjusting and competitive market. Its efforts failed.

Conversely, Apple Inc. has been a success story. Formed by two college dropouts, it has grown to become one of the world wealthiest and most innovative technology companies in the current generation. The analysis in this paper focuses on the two companies, Apple Inc. and Circuit City. It addresses the success of one and the failure of the other comparatively.

The fall of Circuit City

Established in 1949 by Samuel Wurtzel, Circuit City became the first electronic retail in the US. It dominated the industry for many years up to 2004. Before its liquidation, the company stated that the mission of the employees was to work in unity in accordance with its values to achieve the goals of the firm.

Contritely, one of the main reasons that caused its liquidation was poor management. In the first decade after the company was established, the store recorded annual sales of $ 1 million. It witnessed a quick expansion rate. The profit gained from its lucrative sales helped to open other chain stores across the US and hence the witnessed increased profits (Campbell, 2014).

Furthermore, the high gains enabled it to offer lower price for quality products as a plan to outwit its competitors. Customers were the epicenter of all its goals and strategies. This situation attracted more and more clients. The company had made over $ 120 million sales by the end of 1979. It quickly rose to the extent of surpassing the $1 billion point by the end of 1987 (Perry, 2009).

According to Campbell (2014), the growth was impressive until the company began feeling the heat of other competitors such as Best Buy Inc. Circuit City was compelled to introduce new business strategies in the effort to hold its market share.

Although Circuit City sold products that were similar to other superstores such as Best Buy, its mode of operation was different. Circuit City had a high environment that was supervised by salespeople who would be paid on commission (Romero, 2013).

On the hand, Best Buy Inc. had informed staff members who would only assist their clients where necessary because it operated like a self-service store. Despite the then ongoing competition, the company was stuck to its goal. It intended to obtain a principal market share in every area that it operated. This determination would help in increasing sales and gains.

In essence, this move meant that Circuit City would establish a chain of stores in other regions. Similarly, Best Buy Inc. expanded its stores but with a contemporary technology and appearance that attracted customers. Wal-Mart stores were creating a new level of competition in the form of extended warranties.

Imitating Circuit City business model meant that competitors were having a damaging effect on the gains that superstores were making (Perry, 2009). With the hefty competition, Circuit City was forced to invest in new technology and ideas, it intended to keep in pace with its rivals.

It began retailing Divx as a new product in the market. Nonetheless, it suffered the burden of producing and advertising the product to potential consumers. The company strained its budget in an attempt to maintain this product in the market. The impact was exacerbated when a core investor, Rick Sharp, terminated his funding (Campbell, 2014).

Circuit City was struggling in the market but the strategies that its leaders adopted even had more exacerbating results. For instance, after being appointed as the new CEO, Allan McCullough decided to terminate the supply of appliances to focus on electronics.

This plan reduced the number of its clients and eventually the profit margin. The management made hasty decisions such as closing other several distribution stores and retrenchment of workers. Furthermore, the commissioning sales team was terminated with the intention of minimizing the cost operation and making clients the core of the business.

Apple Inc.’s Success

Considered as the world’s richest company, Apple Inc. began as a simple idea by two college dropouts, namely Steve Wozniak and Steve Jobs. These simple ideas quickly transformed the company to the world’s most innovative firm in the telecommunication sector.

The company lacks a clear vision statement. However, its philosophy has helped it to gain a multitude of loyal customers. It seeks to encourage its employers to think differently. It strives to ensure that employees use their skills to develop unique application software, hardware, and operating systems (Mallin & Finkle, 2011).

Apple Inc. encourages a spirit of liberal and ultramodern thinking. Hence, its staff members utilize the skills to provide products of high standards. Moreover, the management department does not only focus on the appearance and quality of the company’s products but also on employee appearance.

It encourages simplicity. Steve Jobs, the former CEO, has been noted stating that employees should leave their neckties and bring their ideas to the organization. The company maintains a good rapport with its human resources. It motivates them to ensure that they feel as part of the organization as noted by Mallin and Finkle (2011).

The company is committed to innovation that is evident in its products, business procedures, and techniques. Through product innovation, the company ensures that it improves the quality and performance of the existing products. Business techniques and procedures involve developing new markets to serve the demands of customers that have not been considered by other competitors.

Innovation helps a company to have control of its market share and/or even outdo its competitors (Mallin & Finkle, 2011). While most companies often focus on retrenchment and/or raising their profit margins, Apple Inc. strives to adjust every sector in the organization so that it performs more proficiently.

It also strives to conserve the business atmosphere by producing environment-friendly products. Indeed, by maintaining a good relationship with employees and considering the interest of its clients, the company will always flourish (Mallin & Finkle, 2011). The management department at Apple Inc. is a good representation of transformational leadership.

Conclusion

Good leadership is of great essence for any organization that seeks to prosper. Circuit City failed to notice the transformation that was happening in the industry. It made irrational decisions that encouraged its failure.

The management of any organization should always maintain a good connection with its employees while at the same time paying good attention to the interest of its customers. Moreover, innovation helps a company helps a company to outdo its competitors.

Apple Inc. is an epitome of companies that have embraced innovation. These two companies provide a good contrast that other companies should consider when preparing their business strategies.

Reference List

Campbell, A. (2014). What Could Have Been Done? Circuit City: A Case Study of Management and Employee Performance Failure. Performance Improvement, 53(4), 16-23.

Mallin, L., & Finkle, A. (2011). Apple Inc.: Product Portfolio Analysis. Journal of the International Academy for Case Studies, 17(8), 49-56.

Perry, D. (2009). Circuit City’s failure of service a lesson for mattress retailers. Furniture, 33(43), 19.

Romero, J. (2013). The Rise and Fall of Circuit City. Econ Focus, 17(3), 31-33.

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