1 CS 170 ‐ Computer Applications for Business Fall .docx

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CS 170 ‐ Computer Applications for Business
Fall 2016 ‐ Assignment 6
Introduction to JavaScript
Due Date Before 11:00 PM - Friday, October 21st, 2016
Accept Until Before 11:00 PM - Friday, October 28th, 2016
Evaluation 15 points
Submit to Sakai Assignment6_answers.html file
To get credit for this assignment:
Upload and submit the Assignment6_answers.html file through
Sakai.
Learning Objectives:
This assignment is designed to practice:
1. Basic understanding of JavaScript variables, including;
a The declaration, initialization and assignment processes

2. Obtain user input by via the prompt() function and present
output to the user through
the alert() function
3. Data type conversion in variables (strings to numbers,
convert to upper case)
4. Use of the conditional if and if/else statements
5. Use of arithmetic and logic operators
6. Use of comments
Directions:
You are provided an html program. Your responsibility is to
insert the JavaScript statements
that will solve the problem discussed below, and to comment
the html file with the
requested information per the requirements.
For the JavaScript, you will only complete the section inside of
the <script> tags that are
located within the provided skeleton program:
<script id="COMPLETE_THIS_SECTION_ASSIGNMENT_6">
Insert your JavaScript code here

</script>
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Problem to solve:
The Serendipity Booksellers has a book club that awards points
to its customers based on the
number of books purchased each month. The points are awarded
as follows:
urchases 3 books, they earn 12 points
additional 5 points on top of
the 12 points for each book above 3.
Preferred Customers receive a bonus of double award points.
The Serendipity Booksellers website needs to be updated to ask
the customer to enter the

number of books purchased last month, confirm if they are a
Preferred Customer, and then
calculate and display the number of award points earned.
Requirements:
For this assignment;
1. Your program will calculate the award points as described
above.
2. You will generate HTML comments to add your name,
section and TA name. Each on a
separate line within the <Head> tags. This will (should) NOT be
visible in the document on
the web browser).
3. You will then add JavaScript code to the provided
assignment6.html skeleton file within
the <script> tags:
<script id="COMPLETE_THIS_SECTION_ASSIGNMENT_6">
/* INSERT YOUR JAVASCRIPT HERE */
</script>
4. A typical program flow would declare the variables needed to
solve the problem,
initialize the variables, solicit input, perform the data
manipulation and/or calculations

and display the result.
5. Utilize JavaScript comments to explain the steps you are
preforming within your code. A
JavaScript comment’s form is:
/* Place your comment between the stars */
6. You will utilize prompt() functions to request input from the
customer. Your message
should be descriptive enough to solicit data from someone not
familiar with the
assignment.
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7. You will utilize the alert() function to display your output as
a clear and unstandable
message to the customer.
8. Variable names should be descriptive. For example, if a
program is calculating the total
charge for a bill at a restaurant, it may have a variable named
tipAmount.
9. Utilize at least one if/else statement. Consider using the

if/else in determining the
bonus points.
Additional Information:
Since the contents of a text box, which is what the prompt()
function generates, is going to be
used in mathematical operations, use the function parseInt() to
convert the text to a number.
Otherwise your calculation operations will not perform as
expected.
Example: variableName = parseInt(variableName)
To simplify the comparison of solicited text, it is often easier to
convert this text to upper case.
Example: variableName = variableName.toUpperCase();
References:
Fluency 6 - Chapter 17 - Fundamental Concepts Expressed in
JavaScript
w3schools.com - http://www.w3schools.com/js/default.asp
Firefox Tools - https://developer.mozilla.org/en-
US/docs/Tools/Debugger
Lectures’ slides and examples

Recitation Week 6
https://developer.mozilla.org/en-US/docs/Tools/Debugger
VRIO Analysis
What RESOURCE are you examining?
Is it valuable?
Is it rare?
Is it difficult to imitate?
Which of the four barriers to imitation prevent rivals from
imitating it? Explain.
1
2
3
4

5
6
7
8
What Capability are you examining?
Is it valuable?
Is it rare?
Is it difficult to imitate?
Which of the four barriers to imitation prevent rivals from
imitating it? Explain.

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MAIl N E L /R ·nl, Uo· OAY
fR AN K T. ROTI·I AERMEL
Best Buy's Turn-Around Strategy (2013)
MHE-FTR-023
0077645065
CEO HUBERT JOLY BREATHED A SIGH OF RELIEF as he
reviewed the 2012 end -of-year holiday revenue
fi gures for Best Buy. After perhaps the most tumultuou s year
eve r in the life of the compan y, he knew the numbers
could be much worse. Desp ite being the world 's largest retail
er of consumer electronics with $50 billion in annual

sa les, Best Buy's financial situation wa s precarious. The
company 's stock price had fallen from $45 to $ 15 per
share over the past two years, a drop of roughly 60 percenl. 1
While reve nu es had been increasing at a marginal
rate, both comparable store sales and overall profitability were
showing a co nsistent negative trend. Earlier that
year, Best Buy had been forced to report a 91 percent drop in
profits during the second quarter compared to the
same period in 20 II;" the third quarter showed a co mparabl e
97 percent drop in operating income. '
So, yes, the fact that the company made $12.8 billion in
revenues during the last nine we eks of20 12, compared
to $ 12.9 million the year prior (a drop of ju st 0.4 percent), was
welcome news indeed 4 A s 10 ly had previously
told invcs tors, one of hi s lirs! priorities was to stabilize the
compan y befo re he could implement way s to improve
its overall performance:'
Still, 10ly was optimi stic about Best Buy 's future. H e had a
knack for numbers, and behind all the red ink, he
liked what he saw. After being appointed by the board in Augu
st, he spent his first week on the job in September
working as a " blue shirt" in Best Buy stores in the Minneapoli
s/S !. Paul area. Shortly th ereafter, he held a three-
day retreat with the company' s top man agers, and once again
emerg ed encouraged 6 As he said:
Best Bu y is a co mpany with an ama zi ng hist ory , e normous
assets and great opporlunities . I am eager to s tart wo rkin g
with eve rybody at Best Buy to define and take the act io n s
that will allow us to win in th e marketplace , a nd to be seen
by all of our s take hol de rs a s the best buy7

As .Ioly saw it, Best Buy had a lot of strengths on which to
build , in spite of its disappointing financials. It
sold far more consumer elec troni cs than either of its largest
compe titors ($ 50 billion compared to -$3 0 billion for
Walmart and $14 billion for Amazon), and dominated the PC ,
Cil mera, and tablet categories in terms of market
share. It had state-of-the-art logistics, inventory, and support
systems that enabled it to make same-day deliveries
for onlin e order s. M ea nwhile, Best Buy 's online business
was the 11th-larges t e-commerce site worldwid e, and
was growin g by 15 to 20 percent each quarter8 Whereas c riti
cs saw the company 's phy sical stores as cos tl y over-
head, 10ly firmly believed there was value in Best Buy' s unique
combination of phy sical and digital re so urces.
Statistics showed that customers picked up approximately 40
percent of online orders in th e store, which provided
a perfect opportunity to se ll additional products and servi ces 9
Combine all those features with a well-trained sales
force that converted more site vi sit s into sa les, and Be st Buy
could easi ly triple its operating profits ' 10
In prior jobs, .Ioly had engineered successful turnaround
strategies for Vivendi and Carlson Wagonlit Travel, I I
and he saw no reason why Best Buy would be any different.
Still, based on tho se previous experiences. he knew
that the path to success would be filled with sign ificant
challenges. Competiti on in the consumer-electronics
industry was cut-throat, with ra zor- thin margins. Best Buy was
up against the low-cos t king Walmart on one
side, and was flanked by Ama zo n-the original online empire-
on another. And then there was Apple w ith its
Prnfc s.s()["$ M ;lfII(; L. /rthal(l-Day and Fr..mk T. ROlh acrl
lh: 1 prepared thi s c ase frolll pllhlic sourc e .... T he 3ul hor~
ilrc inuclllcd 10 N icola McCa nh y (GT PhD
Candid :IIC) ror her "ol1lri[1l1 lions 10 :111 earli er vcr~ioll

of [hi" ca.t:. T his CJSC i ~ de veloped for the purpo:-e o f cla
ss di sc llssion. It is nol inlcndetilo he used for any
kind of ~ndorcmc nl. source ()f dillJ . or depiction of crticicnl
o r incfri<; icnl manageme nt. ([) hy Arlh auJ-Day :md
ROlhacfll1cl, 1015.
31
32 Strategy & Policy
Uest Buy's Turn·Around Strategy (2013)
premium gadgets and trendy stores, which dominated the
market's high-end segment. Carving out a unique niche
in this crowded, post-big-box, digital-retail world would not be
easy, but it was the only way for Best Buy to avoid
the same fate as the now-defunct Circuit City. The recent
holiday results were encouraging, but investors were
already clamoring for more details on what Joly 's next steps
would be.
A Brief History of Best Buy
Together with his business pattner, James Wheeler, Richard
Schulze founded Sound of Music, an audio spe-
cialty store, in Minnesota in 1966. The fledgling company
ended its first fiscal year with gross sales of $173,000,
and continued to grow rapidly over the next few years. By the
time of its initial public offering in 1969, the home-
town enterprise had acquired twoof its local competitors l2 and
had opened two new outlets near the University of
Minnesota in downtown Minneapolis.
Schulze bought out Wheeler in 1971,13 shortly after Sound of

Music hit the $1 million mark in annual rev-
enues. 14 Subsequent years saw continued expansion through
additional locations, new product lines, and novel
promotional techniques. For example, in 1979 Sound of Music
became the tlrst supplier of video and laserdisc
equipment from companies such as Panasonic, Magnavox, Sony,
and Sharp. After a tornado hit the Roseville,
Minnesota, store in June 1981 , the company responded with a
"Tornado Sale," which became an annual event,
storm or no storm. This strategy boosted Sound of Music's
average sales per square foot to $350, compared with
an industry average of $150 to $200. 15
ARRIVAL OF THE SUPERSTORE
With ambitions to capture even larger market share , Sound of
Music changed its name to Best Buy Co., Inc.,
in 1983. Shortly thereafter, it adopted its now-familiar
superstore format, with an increaSingly diversified product
range. Boosted by an infusion of cash from a successive series
of public offerings, Best Buy proceeded to grow
from 8 to 24 stores and saw its revenues increase from $29
million to $290 million from 1984 to 1987. 16 On July
20, 1987, Best Buy made its debut on the New York Stock
Exchange (NYSE: BBY) with an initial offering of
8.3 million shares of common stock.
Best Buy changed its logo to the yellow tag in 1987, and in
1989 its stores adopted a new "grab-and-go" store
format, called Concept II. Schulze's revolutionary new approach
to big-box retailing combined Walmart's prices
with Circuit City's assortment, in a shopping warehouse with a
35,OOO-square-foot footprint. 17 The new stores
consisted of well-stocked showrooms with self-help information
so that people could make their product selec-
tions independently and check out in a single stop. Answer

Centers were still available for people who desired
assistance, but salespeople no longer needed to attend to each
individual customer or fetch merchandise from
storage. This change reduced Best Buy's employment costs by
one-third, which compensated for the correspond-
ing de-emphasis on service contracts. One analyst called
Concept II "the most innovative thing to happen in this
industry-ever.,,18
Spurred by the success of its warehouse format, Best Buy hit $1
billion in sales revenues in 1992. The company
landed on the Fortune 500 list (debuting at 1t373) for the first
time in 1995. For/une magazine named Best Buy one
of the top 10 peliorming stocks from 1990 to 2000, and honored
it as "Company of the Year" in 2004. 19
GROWTH THROUGH ACQUISITIONS
The year 2000 marked the launch of a new phase of inorganic
growth through acquisitions. Best Buy grew
its revenues from $12.5 billion in 2000 to nearly $51 billion in
2012 20 The company first purchased Magnolia,
a high-end consumer-electronics chain with 13 locations
throughout Washington, California, and Oregon, for
2
Best Buy's Turn -Around Strategy (2013)
Best Iluy's Turn-Around Strategy (2013)
$88 million in 2000 21 The nex t year, Best Buy purchased Mu
sic land for $425.1 million. The acq uisition of the
mall-based music and entertainment retailer gave Bcst Buy

access to an additional 1,300 stores across the United
States and Puerto Rico, including 650 Sam Goody and 400
Suncoast Motion Picture outlets. [n 2002, the com-
pany acquired Geek Squad, a 24-hour computer-support task
force. By 2004, Best Buy had opened Geek Squad
precincts within all of its stores. 22
In contrast to the rapid expa nsion of Geek Squad, Best Buy
divested Musicland in 2003 due to declining mall
sa les after 9/11, coupled with increased competition from
Walmart and Target in the CD segme nt. Sun Capital
Partners Inc., a private equity firm, purchased the failing finn
for the assumption of Musicland 's debt and lease
obligations. Brad Anderson, who succeeded Schulze as CEO in
2002. desc ribed the Musicland venture as "a very
expensive but powerful learning experience for Best Buy."D
After the Musicland debacle, Best Buy took a two-yea r
acquisition hiatu s before purchasing AudioVisions, a
custom integrator of electronic products such as nat-sc ree n
TVs and security solutions, in 2005. 24 [n December of
that sa me year, Best Buy acquired PacifiC Sales, a Los
Angeles-headquartered company thM spec ialized in selling
premium kitchen appliances, for $410 million 25 In 2007, Best
Buy announced plans to purchase Seattle-based
Speakeasy Inc., a broadband and VolP services provider, for
$97 million 26 This transaction was followed by the
2008 announcement of Best Buy's acqui sition of Napster for $J
21 million in cash, in an effort to compete with
Apple's 70 percent share of the digital-mu sic marketp lace. 27
INTERNATIONAL EXPANSION
In the mea ntime, Best Buy was also engaged on the
international front. Its first cross-border expansion was
the 200 I acquisition of Futureshop Ltd., a Canadian electronics

chain, which added annual sales of $1.32 bil-
lion n Maintaining Futureshop as a wholly owned subsidiary,
Best Buy later strengthened its Canadian presence
by opening 77 branded stores of its own. 29 Best Buy
established an active presen ce in the growing Asian markets
with its 2006 acqui si tion of a majority interest in the reta il
chain Jiangsu Five Star Appliance Co., Ltd., China 's
fourth-largest appliance and consumer-electronics retailer, for
$180 million 30 A year later on January 26, 2007,
the first Best Buy store in China- touted as the largest Bes t Buy
in ex istence-opened in Shanghai." Other
regions quickly followed. By 2008, B est Buy had announced
the opening of its first pilot stores in M ex ico and
Turkey, as well as multiple branded superstores in the United
Kingdom and other European countries.'2
rn respons e to tile 2008-2009 recession and increasing
competitive pressures, Best Buy started to shift its
expansion efforts away from traditional "big box" stores to
focus on its new "Connected Store" format and "Best
Buy Mobile" concept stores at home and abroad. By the end of
20 12, Best Buy had closed all of its branded stores
in China. Turkey, and the United Kingdom (while Illilintaining
its presence in Canada and Mexico). Instead, thc
company invested heavily in its Five Star subsidiary in China
and its Carphone Warehou se and Phone House
stores in Europe, opening 38 and 36 new locations in fiscal
2012, respectively3J
LEADERSHIP CHANGES
After having just two CEOs in ils first 43 years of operations
(Richard Schulze and his successor Brad
Anderson), Best Buy went through three top leaders in a six-
month period in 2012 34 Brian Dunn had assumed
th e helm in June 2009 and had been trying to "right" Best Buy's

"s hip" for the past three years. Dunn likewise
believed that the company's physical stores were an asset: "
There are still things in the physical world that are
going to be important: expert advice and th e ability to see and
touch the latest tablets."J5 But to cut costs, he
announced in 2011 that Best Buy would reduce its "big box"
real estate by 10 percent over five years, by closing
some stores, renegotiating leases, and letting some leases expire
36 Thousands of worker s, including some 600
highly trained Geek Squad staffe rs , were laid orf.37 Moving
forward, Dunn pJanned to open 600 to 800 new Best
Buy Mobile stores, focusing on sma rtphon es and other mobile
devices 38 Tile goal was to in crease the number
of retail points of contact while decreasing square footage,
thereby increasing the company's fle xib ility as a
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33
Oest Ouy's Turn-Around Strategy (2013)
multichannel retailer39 He also increase d Best Buy's online
offerings by more than 20,000 items to broaden its
"virtual" footprint. 4o
Unfortunately, Wall Street was not satisfied, and the company's
stock price continued its precipitous decline .
Analysts felt Dunn had been slow to recognize the company's
problems, and was not being aggressive enough in
shutling down underperforming stores 41 Thus , when Dunn
announced his resignation in April 20 12 after 28 years

as a Best Buy employee, many assumed it was due to the
company's financial woes. In reality, he left in the midst
of a board investigation into allegations of personal misconduct
(a close relationship) with a female employee 42
Ultimately, the independent investigators determined that there
had been no misuse of company resources, but that
Dunn's poor judgment and lack of professionalism had
contributed to a negative work environment. 43
The fallout did not stop there, however. Richard Schulze, who
was then serving as Chairman of the Board,
stepped down from his position at the June 2012 board meeting.
The board "expanded his role" by granting him
the honorary title of " Founder and Chairman Emeritus" and
permitled him to finish out his term as director through
2013. The investigative report indicated that Schulze had
learned about Dunn's actions, confronted him, warned him
that such behavior was contrary to company policy, but then
dropped the issue when Dunn denied the allegations.
To rectify this breach of ethics, the board named Hatim Tyabji,
chair of the audit committee, as the new Chairman 44
and hired an external consultant to run the search process for a
new CEO. In the interim, George Mikan Ill, another
director, agreed to take on the day-to-day respon s ibilities for
running the company45 The board also recommended
that shareholders approve the declassification of the board,
making each director subject to annual re-election 46
Joly wa s hired in August 2012, and assumed active duty
starting in September47 Several investors were still not
happy. Some saw Joly 's lack of retail experience as a
significant limitation, while others wondered if the company
had rushed the search just so it could proceed with its
restructuring plan. 48 (See Exhibit I for Best Buy financial

data for fiscal years 2008- 20 I 2.)
The Consumer-Electronics Retail Industry
A BRIEF HISTORY
The consumer-electronics retail industry grew rapidly in the
second half of the 20th century due to several
converging trends. At the end of World War II , a significant
portion of the U.S. population migrated from cities to
s uburbs, creating a need for suburban retail centers. At the
same time , the cost of technology decreased, generat-
ing an increase in demand for televisions and other consumer
electronics. Many of these new customers were
price-sensitive, first-time homeowners, who were willing to
accept decreased customer service in return for lower
prices, leading to a rapid growth in discount stores 49
As the children of the WWII generation-the baby boomers-
reached adulthood in the 1970s, demand for
consumer electronics soared. Retailers shifted from carrying
just one or two lines of equipment toward stocking a
diverse set of product lines. Strong industry growth continued
through the late I 980s, until the new VCR market
became saturated and a recession slowed consumer sales. By
1991,98 percent of all homes had at least one color
TV and 77 percent of those that owned TVs also owned a VCR.
The United States alone had at least 10,000 radio,
television, and cO)lsumer-electronics stores that had sprung up
to meet the surge in demand. With market satura-
tion , however, growth in the I 990s was limited to the
replacement and upgrading of existing devices 50 As a result,
competition intensified and many companies, such as Highland
Superstores Inc., left the electronics market 51
Technology advancements and improved economic conditions in

the mid- to late-1990s again Jed to·a period
of growth that supported the rise of large superstores such as
Best Buy and Circuit City. In 1998, sales at Be st Buy
and Circuit City increased by 21 percent and 48 percent,
respectively.52 It was ~round this time that the industry
faced yet another great shakeup-the birth of online retailing.
In J998, Amazon.com , a previously unheard of competitor,
entered the consumer-electronics market by ori·er-
ing mus ic CD sales online 53 Not willing to cede this
potentially lucrative market, Circuit City, Tweeter Home
4
Des t fiuy's Turn-Around Strategy (20t3)
Enterta inment Group, and Outpost.com all opened onlin e
consumer-electronics sites of th eir own within the next
year. Bes t' Buy followed suit with Bestbuy.com in 2000,
making it a relatively late mover in e- retailing 54
The ability t' o reac h new consumers online, coupled with in
creased interes t in digital ca meras and DVDs, led
to ye t anoth er period o f rapid ex pan sion throughout the earl
y 2000s. This time, howeve r, grow th occurred primar-
il y through acq ui sitions and industr y consolidation. From
1994 to 2007, the three larges t consumer-electronics
retailers (Circuit City, Bes t Bu y, and Radio Shack) increased
channel share from approx im ately 22 percent to
45 percent. M ea nw hile, the total number of firm s in
electronics retailing with ove r 100 empl oyees dec lined by
4 percent per annum from 1998 to 2004 .. "

From 2005 to 2007, the indu stry compound annual growt h rate
(CAGR) was approximately 6 percent. With
th e onse t of the global recession, growth fell to 3.4 perce nt in
2008 and -0.4 percent in 2009 (Exhibit 2). The
economic co ntrac ti o n proved to be short-lived, however, and
the industry quickly resumed a modest rate of grow th
in subseque nt yea rs. A s of 20 II, approximatel y 50.0 percent
($257 .3 billion) of th e total market value of $5 14.2
billion was attributabl e to the audiovisual equipment segment,
with com puter hardware contributing 34.3 percent
($176.2 billion). Mu sic and video comprised another 10. 5
percent ($53.9 billion), and ga me consoles the rem ain-
in g 5.2 percent ($26.8 billion). The global computer and elec
tron ics industry was projected to reach a value of
$620 billion by 2016, an increase of 20.6 percent over 20 II
figures. 56
CU RRENT TRENDS
The consumer-electronics retail industry is both cyclical and
seasona l. Indu stry sales during the holiday season
in the fourth quarter typically exceed sales from the other three
quarters comb in ed. As most consumer-electronics
items are co nsidered discretionary purchases, sa les are directly
correlated with macroeconomic factors such as
consumer confidence, un employment, the housin g market , and
the abi lit'y to obtain credit 57
Another distinctive trend in the consumer-electronics indu stry
is that of ever-falling prices. These price
decreases place co nsta nt press ure on consumer-electronics
manufac turers to impro ve functionality, portability,
and sty le as a way of dilferentiatin g their products from those
of competi tors. As a re su lt, the product life cycle
has grow n increas ingly shorter as manufac turers cannibali ze

their ow n products in an effort to maintain custo mer
interes t and loya lt y.
Thi s cannibali za tio n has led to the evolution of co nsumer
electroni cs as a meas ure of soc ioeconomic status in
countries such as the United States. Fin ancial wealth buy s
access to the latest and greatest technol ogy. As prices
fall , the tec hn ology becomes affordable to a wider
demographic , but the technological elite ha ve already moved
on to the next genera tion of devices. Cellular phones were once
fantasy gadgets see n only in James Bond movies.
In the 1980s, yuppies proudly di sp layed their ce ll phones on
their belts as a status symbol. These days, ne<l rl y
eve ry one has a cell phone whose desig n an d f un ct ionality
make those early " dinosaurs" laugh able. L aptops,
l <l rge-sc reen TV s, and smart phones hav e enj oyed a simil
ar proliferation among the masses. Tod ay's must-have is
tomorrow's bargain commodity at Walmart, so retail ers l11ust
strike while the product is hot. A product will, in its
bool11 day s, attract a very different clientele than in the later,
less -exc lusive phases of its shelf life. Consequently,
understanding and predicting consumer dem<lnd is an im per
ativ e in the modern consumer-electroni cs indu stly.
Past and Current Competitors
Compa ratively speaking, the consumer-electronics retail indu st
ry remains relatively fragmented. Pri or to the
2008 recess ion , the top three consumer-electronic s reta il ers
(C ircuit City, Best Buy, and Radio Shack) accounted
for 42 percent of thc u.s. market. Tn co mp ar ison, the top three
finn s in home improvement and office supply retail
co nt ro lled 58 percent and 79 percent, respecti vel y. Globally,
the mark et is even more divided, with Best Buy con -
tro lling ju st 3.2 percent of the worldwide market in co nsumer
electroni cs in 20 I 1.08 Its major co mp eti tors in clude

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Uest Uuy's Turn-Around Strategy (2013)
Apple (11.3 percent), Walman (6.2 percent) , and Metro AG
(5.6 percent), with "other" stores accounting for the
remaining 73.7 percent (Exhibit 3).59
With re spec t to online sales, Amazon dominates the U.S.
consumer-electronics market with a60 percent share,
followed by Walmart at 22 percent, and Best Buy at 14 percent.
Amazon's lead in share of sales is somewhat
smaller at 39 percent, compared to 33 percent for Walmart, 23
percent for Best Buy, and 4 percent for Target.
However, Walmart 's value per order ($189) exceeds that of
Amazon ($103)60
CIRCUIT CITY
The story of Best Buy is not complete without an account of the
rise and fall of Circuit City, once the compa-
ny's most formidable competitor. When Samuel Wurtzel ,
Circuit City's founder, learned that the first commercial
television station in the South was soon to hit the airwaves, he
decided that a store selling TVs sounded lucrative.6 1
He opened the first Ward s Company store in Richmond in
1949. Soon thereafter, Wurtzel and his partner diversi-
fied their product offerings to include a range of home

appliances as well as televi sion se ts. As profits grew over
the next decade, they opened three additional stores in the
Richmond area 62 The company went public in 196J ,
selling J 10,000 shares at a price of $5.375 through a Baltimore
stockbroker6J
Ward s expanded across the Southeast and Midwest through a
series of acquisitions from 1965 to 1970, after
which Samuel Wurtzel passed the torch on to his so n, Alan
Wurtzel. 64 In 1974, Wards arguably suffered adverse
effects due to its rapid expansion and diversification, losing $3
million on overall sales of $69 million. In response,
Wurtzel junior withdrew Wards from areas outside its core
competencies, such as tire sales, and refocu sed the
product line on consumer electronics. To showcase its new
strategy, the company opened a 40,000-square-foot
store called "The Wards Loading Dock.,,65 This "big box"
format had ample room to display Wards' extensive
selection of 2,000 products. A s a result of its novel store
design, Wards increased its sales ten-fold to $246 million
by 1983 66
In 1984, Wards changed its name to Circuit City Stores and
listed on the New York Stock Exchange. That sa me
year, Richard Sharp succeeded Alan Wurlzel as CEO. Under
Sharp, the company consolidated its operations in
very large stores located in clusters throughout the Southeast.
These "Circuit City Superstores" encompas sed up
to an acre of floor space 67 Circuit City's approach of opening a
number of large stores at once in the same region,
accompanied by heavy advertiSing, represented a methodical
determination to win the lion's share of sales. By
1987, the company was reaping $1 billion in annual revenues
and dominated the U.S. market 6 8
In 1.992, Circuit City expanded its offerings to include personal

computers and recorded music. In 1993, Circuit
City stretched its boundaries even further and opened the first
Cm'Max used-car lot. About that time, Circuit City
also found itself in an intense price war with Best Buy that
pitted the companies' sales forces against one another.
Circuit City was known for its hard-sell tactics, with
salespeople working for commission. In contrast, Best Buy
employees enjoyed a more relaxed, self-service-Driented sales
environment, in which they were paid a flat hourly
rate 69 Best Buy's "We're here if you need us" approach was so
popular that Circuit City was forced to adapt. Yet,
despite dismissing 3,900 workers and implementing an hourly
pay structure, Circuit City's 600 stores posted an
annual loss of $89.3 million by the end of 2003. The company
continued to restructure in 2004, closing dozens of
stores at less-desirable sites and opening some 70 new stores in
more ideal locations.
Circuit City 's reaction to the flat-screen price war in the early
2000s likely helped to seal its fate . A bubble
in the U.S. housing market had led to a dramatic increase in
demand for consumer electronics, which in turn
created a flood of investment in new factories , re sulting in
excess supply and inventory for retailers. Then, in
the fourth quarter of 2006, the housing market weakened,
leading to a decline in consumer spending. To move
inventory, discount retailers such as Walman began slashing
prices of flat-panel TVs, and Circuit CilY followed
suit. By the end of 2006, flat-panel TV prices had declined
between 40 and 50 percent. Prices fell so quickly
during the holiday season that Circuit City's weekly advertising
circulars were often outdated by the time they
reached customers70
6

Best Buy's Turn -Around Strategy (20 13)
Oest Ouy's Turn-Around Strategy (2013)
Ci rcu it C ity was es pec iall y vulnerable to erodi ng marg ins
caused by th e price war since nea rl y 44 percent of
its revenues came from TV sa les. By November 2006, Circuit
City rea li zed a net loss of $ 1 6 million, down from a
quarterly profit of$IO.1 million in 2005. (See Exhibit4 for
Circuit City financial data.) Its share price plumm eted
80 percent by the end of that year71 In an attempt to mollify
investors, Circui t C ity CEO Schoonover fired some
3,400 of the firm's most experienced employees and replaced
them with less-cost ly personnel. 72 Circuit City had
hoped to sa ve $110 million in fi sca l 2007 and $140 million in
2008, but in rea lity, the mass layoff led to poor
sa lesmans hip and lower sales n Some ana lysts alleged that the
laid-off Ci rcuit Ci ty employees took their experi-
ence and their customers to Best Buy, bo lste ring the com
pany's main co mpet itor.
O n January 5, 2008, Herb Greenberg of The Wall Sf/·eer
lournal named Philip Schoonover as the worst CEO of
the yem·74 A few month s later, Schoonover re signed ,md was
replaced by James Marcum , who ser ved as Circuit
City's CEO and acting pres ident until the tirm 's demise.
Circuit City fil ed for Section II bankruptcy in Nove mber
2008, c los in g 155 stores in an attempt to prese rve a future for
the rest7 , After failing to find a buyer, Circuit City
began liquidation of the remaind er of its assets in Jan uary
2009. The firm c it ed red uced co nsumer spending and
an overa ll econo mic downturn as the rea so ns for it s
downfall. In May 2009, Sys temax purchased the Circuit City
brand and trademark for $6.5 milli on for use in on .line

electronics retail 76
In t·he year after Circuit City closed, Best Buy reponed it 5.5
percent in crease in marke t share, to approximately
22.9 percent o f the $170 billion dom estic m arket.77.78 .79
However, oth er retail ers and e-tai lers rapidly entered th e
fray and estab li shed significant footho ld s in th e increas
ingly competitive consum er-electronics industry.
WALMART
A s the world 's largest retailer, Walmart employs more th an
two milli on associates across more than 10,000
stores in 27 countries 80 Willman was foun ded by Sam Walton,
who ope ned hi s first store in 1962 in Rogers,
Arkansas. Th e youn g company expa nded rapidly, reaching 24
stores and $ I 2.7 million in sa les within its first fi ve
yea rs of operat ions. In 1969, it in co rp orated as Wal -M art
Stores, Inc., go in g public short ly th ereafter in 1970 at a
sha re price of $ 16.50. 8 1
Since then, Walmart has continu ed to grow agg ress ively by
leveraging it s superior capab ilities in logistics and
supp ly cha in management to provide consumers with a wide
breadth of merchandise at low prices 82 Walmart
stores carry products in areas such as family appa rel, hea lth
and beauty aids, toys, home furni shings, hou sewa res,
hardware, lawn and ga rden supplies, and au tomotive products,
in add ition to co nsu mer electro ni cs. In 2000, the
co mp any launched Walmart.com to co mpete wit h onlin e
retailers such as Ama zo n.com, and it now se ll s more
than a million products through it s website. Walm art 's 20 12
tot<ll sales reached $443.9 billion w ith a net income
of $ 15.7 billion (Exhibit 5) 83
Walmart moved aggressively into th e co nsu mer-elec troni cs

market in th e wake of Circui t Ci ty 's collapse.
In May 2010, the compa ny announced th at it was si gnifica
ntly expanding its offerings of Blu-ray players,
H D TV s, home theater systems, DVD s and Blu- ray movies,
and wireless products for home net works. At the
same tim e, Walmart rolled out a dedicated area for pay-as-you-
go mobile broadband products from well-
respected vendors such as Verizon, Virgin, and AT& T, as well
as a new pay -as-you -go program with Sprint
for ce llul ar users. The company also in c reased its smartphone
offerings by c l ose to 60 percent compared
with 2009.
Gary Seve rson, se nio r v ice pres id en t for Home
Entertainment, explained Walmart' s strategy as follows:
"S tartin g thi s month, customers w ill di scove r more high
quality Internet-ready home entertainment products ,
new w ireless technologies and new mobile devices in stores
and online that offer simple, affordable so lution s for
creatin g a more connec ted life .. .. We also co ntinue to des
ign a we ll-defined shopp in g expe ri ence in entertain-
ment that enables cus tomers to find what they need quickly, lea
rn about new technology, compare pri ces amon g
top brands , and every da y find amazing va lu e. Our commitme
nt to the be st price and surprising value is always
a top pri ority.,,84
7
37

Whil e Walmart has proven more recession-proof than many of
its competitors, the an ti cipa ted increase in
consumer-e lectronics sales never materialized . By 2012, the
company announced plans to reduce the amount of
floor space dedicated to electronics in it s stores, a s triking
reversal of its previous expansion efforts. Poor elec-
tronic sa les were considered a primary factor in seven
successive quarterly declines in U.S sa les at stores open for
one year or longer. According to one consultant, " It' s
something Wal-Mart has needed to do for a year. You don't
need as much space in that area with products s hrinking and
purchases going online, and electronics has narrow
protit margins. Floor space is a scarce commodity." Walmart
executive Bill Simon echoed a s imil a r sen timent to
investors in April 201 I, stating that the company "couldn't
possibly sell enough TVs during the holiday season
to justify th e space allotted to electronics."ss
Walmart's st rength is that it trail s only Amazon in online sa
les of consumer e lectronics, with 22 percent mar-
ket s hare and 33 percent of sales H6 As the lead ing discount
retailer, Walmrut is also one of the few companies
that stands to benefit from the co mmoditi za tion of products
such as HDTVs, Blu-ray players, computers, and
sma rtph ones. 87
AMAZON. COM
Founded in 1994 by Jeffrey Bezos as an online book retailer,
Amazon.com's sales grew from $8 billion in 1995
to over $61 billion in 2012 (Exhibit 6).88 Since the company
went public in 1997, it has rapidly diversified into
multiple product areas 89 In 1998, Amazon .com launched its
online music and video store and began to sell toys
as well as consumer electronics; it added clothing in 2002,

health and personal care items in 2003, and beauty
products in 2004 90 Amazon opened its marketplace to third-
party vendors through the launc h of its "Fulfillment
by Amazon" se rvice in 2006. This move enabled sma ll to
mediulll-sized businesses to utilize Amazon's order
fulfillment and customer service infrastructure , while further
broadening Amazon 's own on line presence 91 More
recently, Amazon has extended it s vast array of products and
services beyond traditional retail boundaries by
offering Amazon Web Services. It s foray into c loud computing
includes both infras tructure (e.g., data storage) and
applications such as database services and workflow
software.92
Atthe same time, Amazon has engaged in an aggress ive string
of acquisitions, purchasing or investing in more
than 70 companies since 1998. Some of these deals a re aimed
at increasing the breadth of products offered, such
as Amazon's acquisition of Zappos, the number-one online shoe
retailer, for $890 million in 2009. Others, such
as the 2012 purchase of Kiva Systems, are intended to enhance
Amazon's business operations 93 Importantly,
the company has ample amounts of cash, as well as ready access
to affordable debt, to continue its buying sp ree
well into the future. 94 Through such deals, Amazon has already
grown to more than 56,000 ful- and part-time
employees95 and climbed to number 56 in the Fortune 500 96
Yet another prong of Amazon's expansion st ra tegy has been to
enter the electronic device market directly,
through the manufacture and sale of its Amazon Kindle e-reader
series. As opposed to merel y selling e lectro nic
books for customers to read on competitors' tec hno logy (e.g.,
the iPad), Amazon now can influence the develop-
ment of both the content and the underlying technology,
creating an interlocking ecosystem that e nhances sales

in both categories. In a move that would place it on an even
more direct collision course with Apple, Amazon is
reported ly planning to s tru·t manufacturin g s ma rtphon es.97
Amazon's competitive advantage comes from its breadth of
selection, the convenience of online s hopping
coupled with same-day delivery services, and its abi lity to
undercut competitors on price. 98 Without brick-and-
mortar stores, Amazon avoids the costs of retail real estate,
inventory displays, and an onsite sales force. At least
for the time being, Amazon also benefits from not having to
charge sales tax, unless customers reside in a state
where the company has physical operations (e.g., Washington).
Meanwhile, traditional retailers such as Best Buy
are frustrated to find that their stores are increasingly serving as
showrooms for Amazon buyers. People come in
to Best Buy to tryout the merchandise and speak with the
trained sales associates, but then utili ze their smart-
phones to compare prices and purchase directly from Amazon if
its prices are lower99
8
Best Buy's Turn-Around Strategy (201 3)
n est nll Y's Turn -A round Strategy (2013)
Amazo n's strategy appears to be workin g. Th e e- tail er
increased its electronics and non-media reve nu es by
66 perce nt in 20 I 0, reaching $18 billion . Fro m 2007 to th e
end o f 20 I 0 , Amazon.com in creased its share o f L CD
TV se ts from 1. 3 percent to 3.7 percent, and it s share of po rt
abl e audio-device sales in cre ased from 4.6 perce nt to
II perce nt. 100 According to Kantor Ret ailin g, A mazon's

brand value increased by 37 perce nt in 20 10, surpass in g
Wal ma n to become the most valuable retail brand worl dw id
e. Target maintained its position at #5, w hil e Bes t Buy
fe ll two slots to # 13. 101 A study by Reo·evo whi ch as ked co
nsumers, "When you think about buyin g elec tro ni cs ,
wh o co mes to mind first'I" provided a strikin gly simil ar profi
le. In bri ef, many of Amazon's ga in s appea r to have
co me large ly at Bes t Buy ' s expense (see Exhib its 7 and 8) .1
01
AP P LE
M ea nwhile, A ppl e has roll ed out nearl y 400 of it s ow n
retail stores worldwide sin ce 200 I , cr eati ng direct
com petitio n for Best Bu y and other firms th at carr y Appl e
produ cts. A t a time when mos t trad it ional retail ers
are c los ing stores or dow nsizing, A ppl e opened 33 new
stores in 20 12 , for a total o f 250 retail loca ti ons in the
Unit ed Sta tes and 140 intern ational stores di stri buted across
13 co untries. Net retail sales grew to $ 18.8 billi on, a
33 pe rce nt increase over 20 II fi gures, and accou nted for
approxi matel y 12 percent o f A pple's total sa les ac ti v-
it y.I03 B y th e end of 20 I 0 , Morgan St anl ey es tim ated th
at Appl e had captured 9 percent of the U .S. electronics
mar ket, pl ac ing it second only to Ama zo n anel B es t Bu y.
Sin ce th en, its numbers have co ntinu ed to ri se in sp ite o f
less th an des irable economic conditi ons (Ex hi bit 9).104
In additio n to providing consumers with hand s-on access to th
e latest iPods, iPads, iPho nes, and M acs, Ap ple's
retail stores offer one-to-one tech support , as well as a vari ety
o f training workshops and youth progra ms. Ap ple
places its stores in high-profile, high-traf fic locat ions in qu
ality shopping malls and distri cts, with th e goa l of
att rac ti ng new customers and providin g a custom ized
shoppin g experience. Management beli eves th at direc t cus-

tome r co nt act is useful in demonstratin g the superi or qu alit
y of A pple's products. All of thi s comes at a sign i fica nt
cos t, howeve r. Th e company has spent more th an $2.8 billi
on in capital asset purcha ses sin ce th e in cep ti on of its
retail seg ment, and had outstandin g lease co mmitmen ts of $2
.4 billion at the end 01' 20 11 . 105 Appl e has also hired
approx im ately 42 ,400 full-time empl oyees to staff its re tail
outl ets. lOG
O n the dow n side, A pple 's recent stock pe rformCl nce has
raised concern s th at the co mpany's produ cts may
be los in g their "sex appeal " against increased competiti on,
oft en at lower price points. A ppl e shares dropped
12 percent on a single day ill Janu ary 20 13, eras ing so me $
175 billi o n from its ma rke t ca pitali za ti on, co mpared
to it s all -time hi gh re ached in September 20 12. Inves tors we
re reactin g to the postin g o f the co mpany's slowest
grow th in pro fit s sin ce 2003 and it s we akest sa les grow th
in 14 quarters. Sales boos ts from rece nt new product
la un ches have not been as signifi ca nt in ei th er size or
duratio n, promptin g some analys ts to ques ti on w hether
A pp le's era of rapid grow th may be co mi ng to an end .I07
TARGET
Targe t is the second-largest di sco unt retail er in th e United
States, behind Walm an . Targe t w as founded in
1962, wh en Dayton's, a Minn eapoli s depa rtm ent store,
expanded into a shoppin g mall i n Rosev ill e, Minnesota.
The store was named Target, to di stin gu ish the discount
retailer from Dayton' s hi gher-end stores. From 1970 to
1990, Targe t grew from 24 to 420 stores th ro ug h organi c and
inorganic growth , becom i ng the lea din g brand in the
Dayto n Hud son Corporati on pol1fo l io in 1977. In 1998, D ay
ton Hudson in creased the co mpa ny's Internet pres-
ence through the purchase of Ri vertow n Tradi ng. In 2006,

Target. com form ed a partn ership w ith A mazo n.com's
Ent erpri se
Solution
s to develop be tter e-co mmerce technology that would enab le
it to compete more effec tively
online. The compan y continues to main tai n a strong online
presence as we ll as over 1,700 Targe t and Target
Superstore outl ets across all 50 states. Across all of its opera
tin g units, Target posted reve nu es o f $68.5 billion in
fi scal 20 II , with a net inco me o f $2 .9 bi llion ( Exhibit
10)w8
9
39
Following Circuit City's collapse, Target likewise increased its

consumer-electronics offerings, focusing on TVs,
video games, and digital imaging "as part of its electronics
makeover." 109 Changes included the installation of new
TV-merchandising walls to make side-by-side comparisons
easier for customers, as well as expanding store inventory
to include larger and more technologically advanced TV sets. At
the same time, Target enlarged its video game section
by a third and added demo stations for players to tryout new
releases. Target was also the first physical retailer to carry
Amazon's Kindle e-book reader. I 10 The company added a TV
delivery and installation service in January 2010. I I 1
In August 20 I 0, Mark Schinele, senior vice president of
Target, unveiled three new consumer-electronics
services to further enhance consumers' shopping experience: 1-
877-myTGTtech, Target Mobile, and Target
Electronics Trade-In. In his words, "Our goal is to create the
best and easiest shopping experience for our guests.
As we continue to grow and enhance our consumer electronics
business, we designed 1-877-myTGTtech to
assist guests with any questions and technical support on their
electronics purchases .... Target Electronics
Trade-Jn offers our guests an opportunity to upgrade their
consumer electronics items for less. And Target Mobile
ensures a convenient cell phone shopping experience." I 12 All

three services were rolled out nationwide in 20 II.
In 2013, Target terminated its mobile partnership with
RadioShack and inked new agreements with Brightstar and
MarketSource, to ensure its customers with continued access to
the latest mobile products and services. 1 13
Analysts like Target 's focus on phones because of the I imited
footprint required, 114 and generally believe that
there is room for Target's approach in the intensely competitive
consumer-electronics market. While Walmart
dominates in terms of brand recognition, breadth of selection,
and low-cost priCing, Target caters to more of a
middle- and upper-class clientele that is likely to appreciate its
enhanced service offerings. I I.) As a general mer-
chandiser, Target also sees much higher foot traffic than Best
Buy, and can capitalize on spur-of-the-moment
purchases and customers' desire for a one-stop shopping
experience. 116
Signaling its future competitive intent in this arena, Target
extended its holiday price matching policy year
round starting in January 2013, promising to match prices
offered by both physical and online competitors. It also
announced that it would no longer carry Kindle readers as of
May of that same year, in an apparent effort to limit

Amazon's growth. Jnstead, Target forged a new agreement with
Apple to sell iPods, iPads, iPhones, and related
products in its stores, placing it in even more direct competition
with Walmart and Best Buy. I 17
Best Buy's Comeback Strategy
Compared with its major competitors, Best Buy's stock price
has taken a beating (see Exhibit II). Shortly after
assuming office, CEO Joly shared a broad outline of his
turnaround plan-dubbed "Renew Blue"-with inves-
tors. Beyond some long-awaited improvements in operational
performance and efficiency, his vision included
attracting transformational leaders, reinvigorating the customer
experience, energizing Best Buy's rank-and-file
employees, and investing in private-label brands. 118
ATTRACT TRANSFORMATIONAL LEADERS
One of Joly's first objectives was to create a top management
team with the necessary expertise and passion
for leading Best Buy's transformation. Dunn had started down
this pathway by luring Stephen Gillett away from
Starbucks to serve as Best Buy's President of Digital and Global
Business Services in March 2012. As Starbucks '

CJO and head of Digital Ventures, Gillett was credited with
integrating technology into the coffee shop experi-
ence, by creating smurtphone apps , a mobile payment system
linked to loyalty cards, and providing free Wi-Fi
connectivity in stores. I 19 At Best Buy, Gillett's primary task
was to create an integrated, multichannel retail expe-
rience through the use of innovative technology while
improving the company's operations. 120
Dunn's interim successor, Mike Mikan, was responsible for
.hiring Matlhew Furman as the company's Senior
Vice President of Communications and Public Affairs in June
20 I 2. Furman previously served as the Vice
10
Ilest IlIlY's Turn-Around S tr ategy (2013)
Pres ident of Corporate Affairs at Mars Choco late, and had also
worked in various commu ni ca tion s positions for
Google, Cho icePo int , and even President Bill Clinton. His

main objective was lO tell Best Buy's story- "w here
it's been, where it intends to go and how it 's goi ng to get
there"-w ith "consistency, clarity and passion" to the
tirm's multipl e sta keho lder audiences. 121
Still, Joly felt th at several more key hires were needed. In
October 2012, he recruited Scott Durchslag to Best
Buy's grow ing executi ve team as President of Online and
Global e-Com merce, reportin g to Gillett in the technol-
ogy division. He was given the reigns to BestBuy.com, along w
ith instructions to creat e a world-class e-commerce
experie nce. Durchslag hailed most recently from Expedia
Worldwide, where he was re sponsibl e for managing
strategy, product development, marketing, and operations for
the company's 27 global sites. In prior posts, he
served as th e chief operating officer of Skype and corporate
vice president of Motorola, where he helped launch
the RAZR lin e of mobile phones. Durchslag started hi s
business career at McKinsey & Company, ri si ng quickly
throu gh the ranks and making partner in just four yea rs. In
When his boss, Stephen Gillett, left Best Buy for
Semantec in December 20 /2, Durchslag assullled leade rship
for the entire online di vision. 123
Sharon McCollam joined Best Buy in November as the

company's new Chief Administrative and Chief
Financial Officer, with responsibility for all global financial
activities. Earlier in 2012, she had reti red from a
similar post at Williams-Sonoma, a U.S.-based home
furnishings retailer. Sharon was regard ed hi ghl y for her
skills as a cross-fu ncti ona l leade r and her track record of
producing strong financial result s. She had worked in
the financial field throughout her professional life, starting out
in public accounting at Ernst & Young and th en
moving up through the contro ll er rank s at Dole Food
Company.124
With hi s lead players in place, Joly' s next move was to
restructure the business effective January I , 20 13 . He
created tw o cha nnels , on lin e and retail, and promoted insider
Shawn Score to lead the U.S. retail unit. Shawn had
held a variety of positions ove r hi s 27-year hislOry with Best
Buy, but most recently served as senior vi ce president
ancl ge nera l manager of the Connectivity Business Group. In
turn, Jude Buckley was promoted from chief operat-
ing ofticer to head of the Connectivity Business Group. His
prior experience included several years as managing
director for the Carphone Warehouse and as an investment
banker and tax accountant in Europe and Au st rali a.
There were no leadership changes for the two other business

groups: Mike Mohan remained head of the H ome
scctor, and George Sherman cont inu ed to run the Services unit.
All unit heads reported directly to Joly, at leas t for
the time being. 125 Joly hoped that the simplifi ed
organizational and reporting structure would enable Best Buy to
become more flexible and respo nsive to market demands.
REINVIGORATE THE CUSTOMER EXPERIENCE
Best Buy's strategy had lon g been characterized by a co
mmitment to customer-centrici ty attained through
in-dept h data analysis an d systematic custome r seg mentation
. The company's Purchase Path

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