CIRCUIT CITY

Circuit City

Circuit City

Introduction

Circuit City became the largest retailer to fall victim to the expanding financial crisis Is Circuit City going out of business? Over the last week or so, there have been lots of questions regarding gift card redemption from Circuit City. The questions are based on rumors of the company being on the verge of bankruptcy. (Rourke, Woodward, Salamie 2004)

Even though the company was on a recent list of retailers at risk of going under during the recession, i do not believe the company is going to file for bankruptcy soon unless the current offer from Blockbuster to buy Circuit City falls through. If the deal falls through, Circuit City will be under a lot of pressure to do something dramatic to turn itself around. In the absence of a plan, (Heller 2000) and if the company continues to burn cash, they will have no choice but to file for bankruptcy protection.

Discussion

A well-formed problem statement has four main characteristics:

Unity - the problem statement articulates a single controlling idea. The idea may be complex and have several parts, but it shold be one idea nevertheless.

Focus - the problem should be restricted and specific enough for the reader to gain a clear idea of the OB topical area and the direction of your study and research.

Structure - if the problem statement is sufficiently focused, it will provide a basis for decisions about which information to include and which to exclude from the paper.

Interest - the problem statement should sharpen the reader's interest in the OB topical area of interest.

In 2007, the starting wage for new employees was dropped from $8.75 an hour down to $7.40 an hour ($6.55 being the federal minimum wage at the time) and approximately 3,400 employees were discharged from their positions with salaries higher than the cap for their position within the company being cited as the reason. (Kady 2002)These employees were replaced with new employees brought in at the new starting wage. The market analysis is that the deal would be less than stellar for Blockbuster, but would be a needed shot in the arm for Circuit City. At least, that's what the change in share price seems to suggest.

But it's actually a darn interesting idea, one that is a clear and logical partnership if you have walked into an outlet of the more successful Best Buy (NYSE:BBY) chain: Best Buy devotes a good 50% of its floor space to DVDs and music CDs. It's an interesting mix because it shows the company focusing on both players and content, whereas Circuit City has barely any space devoted to movies and therefore is missing out on the "blade" part of the old adage that you give away the razor and sell the blades (or, the modern equivalent, lose money on the printer but make a killing on the cartridges) (Heller 2000)

Further, Blockbuster stores now stock limited hardware too and it would make so much sense for Blockbuster to expand to having a store-within-a-store where ...