Essay about Case Study 1

706 Words Jun 12th, 2016 3 Pages
Case Study One
Daniel Smith
Southern Wesleyan University
April 2, 2016

1) Think back on our discussion in the chapter section, Caveat Emptor-Be An Informed Consumer, evaluate whether the replacement of highly paid workers with lower-paid workers did or did not cause Circuit City to perform so poorly. How confident are you in your evaluation? Why?
After reviewing the article, one can be confident that the replacement of highly paid workers was what made Circuit City perform poorly, which led to Circuit City closing. One can be confident that high paid skilled workers is what hurt Circuit City due to Best Buy being able to outperform Circuit City with less quality people and lower wages. Highly paid workers hurt Circuit City due to
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82% of Costco employees have health care coverage and retirement plans where Costco contributes 1,300 annually. Less than half of Walmart and Sam’s Club employees are covered by health care coverage and only 64% of employees have retirement plans where Walmart contributes $700 annually("The High Cost of Low Wages", 2006)).

4) Are there larger problems in the competitive landscape for Best Buy that cannot be solved by compensation strategy changes alone? When customers look to buy electronics, what options do they have other than Best Buy and why would they choose these options over Best Buy? Where do customers “test drive” the product and where do they buy it? Can compensation changes address these challenges?
The larger problems for Best Buy to stay competitive go beyond compensation strategies. Best Buy could be more competitive if they did cut back, but how much could they cut back to compete with other big chain discount stores. Due to the internet, consumers have an endless supply of options to buy electronics from. Consumers choose to buy over the internet due to the simplicity. Department stores like Wal-Mart and Target could be used to “test drive” products before a consumer buys online. Since more people are buying items from the internet everyday, compensation changes could keep the big retail chains competitive due to the fact that if the consumer needs the item now, they could go get it.

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