Senkerik 1
Jan Senkerik
MGT.2021.01
Professor Scimeca
May 7, 2021
Chapter 1 – Homework
Your Turn Case – The Role of Labor Coasts in Retail Electronics
1. Thinking back to our discussion in the 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?
The replacement could be a partial reason why Circuit City performed poorly, but Best
Buy followed a similar path and performed better. It seems that there must have been more to
why Circuit City performed poorly and have to liquidate. I am confident with my evaluation
because there is not enough in the article to tell the reader that this specific step was the
reason why Circuit City was not able to survive compared to Best Buy. Best Buy’s cuts
indeed focused on having the best customer service while cutting the middle management
and giving more responsibility to store managers and other employees. However, the
Customer Satisfaction (ASCI index) shows that Circuit City was not that far behind Best
Buy, so it means that the cuts they both made managed to keep their customers’ service on a
high level.
2. How is Best Buy doing? Did its cuts to labor costs work?
Best Buy is doing well. The planned cuts helped to lower its labor costs and still be
competitive with its rivals like Amazon and Walmart. Best Buy has gone through some rough
times, but with good management decisions, it was able to stay in business and compete with
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its rivals. Best Buy’s customer satisfaction is ahead of Walmart and close to Amazon which
shows that its cuts focused on keeping good customer service worked well for them.
3. Why are Walmart and Amazon doing better than Best Buy (and Circuit City)? Do
they have higher pay?
Both Walmart and Amazon are selling other things like groceries. This allows them to
become some of the biggest rivals to any company. Walmart and Amazon are known for their
low-cost strategies, and they attract many customers from many classes. Walmart’s stores
have anything that shopper needs and are a great one-stop shopping place. If you need to buy
groceries, gardening tools, and movies or video games, you can just stop at Walmart and buy
it all in one store while Best Buy only has movies and video games out of that shopping list.
