CIRCUIT CITYBy: Nicholas Holt, Silvana Karam, Ashish Patel

Mission Statement

Previous Mission Statement: Throughout our 50+ year history, Circuit City has differentiated itself by creating a shopping experience focused on customer needs and expectations. With over $10 billion in sales, we have grown into a Fortune 500 company of over 35,000 people, with more than 600 stores in more than 100 markets. With our current branding efforts, new store designs, and implementation of process improvement practices, today is one of the most exciting times in the history of Circuit City! It is a time of strategic change and revitalization!

Products and Services of Circuit City

TV & Home Entertainment MP3 & Audio (iPod’s, speakers) Computers & Office Supplies Cameras & Camcorders Car Electronics Video Gaming (PS3, Wii, PSP, Xbox) Movies & Music Phones Repair & Installation (Firedog)

Industry Sector

Sector: Services Industry: Electronic Stores

Position in the Marketplace

Market Leader: Best Buy Circuit City is the #3 Consumer

Electronics Retailer in the industry after Wal-Mart

2008: Circuit City is #215 in the Fortune 500 company list.

Competitors

Direct Competitors Best Buy RadioShack Wal-Mart Dell

Indirect Competitors CompUSA Home Depot

Present Circuit City Stock

52 Week High: $18.87 52 Week Low: $3.44 Current Stock Price: $4.66 Current Stock Value has dropped 88%

Income Statement

2007 2006 2005

Gross Profit 2,928,316 2,830,932 2,568,723

Operating Income or

Loss

-5,303 220,399 97,855

Net Income -8,281 139,746 61,658

The Operating Income or loss declines dramatically in 2007 due to the major turnover rate

As you can see, the Net Income of Circuit City dropped substantially in the past year.

Profit/Loss Analysis

Balance Sheet

2007 2006 2005

Total Assets 4,007,283 4,069,044 3,789,382

Total Liabilities

2,216,039 2,114,411 1,701,948

Total Shareholder

Equity

1,791,244 1,954,633 2,087,434

The Total Assets from 2005-2007 are gradually dropped while the Total liabilities from these years have gradually grown.

The Shareholder Equity has dramatically fallen in the past 3 years

Circuit City Timeline

1949: Samuel Wurtzel starts Wards Company in Virginia 1961: The company goes public 1979: The Superstore format is introduced (32,000sq ft) 1984: Changed its name to Circuit City and became listed

in the NYSE 1999: CircuitCity.com is launched 2004: Acquired InterTAN, Inc. 2006: Firedog was operational 2007: Fired 3400 of the highest paid employees.

Announces plan to explore alternatives for InterTAN, Inc.

Management

CEO: Philip Schoonover Former Vice President of Customer

Segments for Best Buy COO: John Harlow CFO: Bruce Besanko CMO: Peter Weedfald Headquarters: Richmond, Virginia

Marketing

Community Involvement: Boys & Girls Club, Habitat for Humanity, United Way, and the American Red Cross

Wide array of offers from our partners Napster

E-Commerce Site: circuitcity.com “Just what I needed”, “Simplicity

guaranteed” Attracts more customers over age 45

Main Competitors Marketing

Best Buy “Thousands of possibilities, get yours” Targets younger consumers

Wal-Mart “Save money, live better”

RadioShack “Do stuff”

Circuit City spends more money on marketing compared to their leading competitors, yet the competitors still have an edge

Our competitors promote merchandise more aggressively and offer better discount prices for extended periods of time

Customer Service

Circuit City was rated the worst customer service in the electronic retail industry

Under-trained staff leads to a high turnover rate

Many of our associates are part-time, which affects our sales performance and competition

Numerous defective items and restocking fees

Positive Aspects of Circuit City Offers a wide variety of products Teamed up multiple partners…(Napster,

InterTAN, Direct TV, SnapFish, Get Digital, SkinIt)

Firedog prices are much cheaper than Geek Squad

Development

650 stores in the United States In 2003 Circuit City remodeled 222 stores In 2005 Circuit City closed 19 of our

underperforming Superstores Openings in smaller trade areas and urban

locations

If no changes are made…

Possible Bankruptcy Hostile takeover by a possible buyer

(Blockbuster, Inc.) 1.3 Billion Dollar Offer ($6-8 a share)

Merger with Blockbuster Circuit City gains 4800 additional stores

and differentiates itself from Best Buy by offering movie and video-game rentals

Porter’s 5 Forces

Threat of Entry of New Competitors Small computer electronic companies

Threat of Substitutes Non-brand name computers (Acer, Compaq)

Bargaining Power of Buyers (Elastic) Bargaining Power of Suppliers (Inelastic) Degree of Rivalry Between Existing

Competitors Pricing war between small companies

How to Start Over

Need a more experienced management team for Circuit City In the past, hiring executive officials from

other successful companies have worked out well

Better list of priorities and goals for the company to achieve

Objectives/Goals

Relocation & Closing of Circuit City Stores Inside Malls Beside large shopping plazas Smaller and more specialized stores. Moving away

from “superstores” Getting rid of underperforming locations

Be more aggressive in buying new real estate Be more aggressive in marketing and sales to

raise market share Hire more trained and skilled associates to

improve customer service

Firedog Make Firedog more available to small

businesses Clean sweep of the Circuit City Exec.

Board Discontinue international business “The City”

A more desirable shopping experience

Objectives/Goals

Intended Results

The newly appointed executives will turn the company around with better long term decisions.

The opening of domestic segments Prepared for future technology Increased consumer traffic in sales due

to better marketing Will stay the #3 Consumer Electronics

Retailer for now, long road ahead.

Conclusion

By making these changes, we truly believe that Circuit City can be turned around.

New Mission Statement: Circuit City is dedicated to the highest quality of customer service which is done with the highest respect. With a highly praised customer service and satisfaction, it will improve our sales performance. For Circuit City to effectively sell products to customers, sales representatives will try to understand and fulfill the customers needs. With a highly trained team of associates, Circuit City will be successful in the long run.