RadioShack Franchise, Research Paper Example

Findings

RadioShack is one of the longest serving retail chain stores in the American Market. The company currently focuses on consumer electronics and services with over 4,600 spread across the United States, Mexico and Puerto Rico. The company has a considerably strong presence amongst the consumers owing to it long spanning history.

RadioShack has one of the most intricate networks of retail stores, offering a wide variety of technology products. These usually include home appliances, personal accessories and devices and services. The company has developed a number of brands such as AUVIO (audio and video technology), Gigaware (computing hardware) and PointMobi (enhanced mobility experience) (RadiShack Corporation, 2015).

The company has lost considerable ground in the retail industry, estimated at 70% of its initial market capitalization, within the last half decade. Over this period the company’s brand has come under considerable criticism over its “old-fashioned” model and design. The company has always targeted the older generation in society and failed to connect with the young tech savvy consumers. As a result, the company reported over $110 million in losses in the third quarter of FY2013.

The company officially filed for bankruptcy protection in January 2015 (Krantz, 2015). The company had found it increasingly difficult to maintain is large physical chain store network amid growing pressure from only retailers. The company has lost considerable market share in the specialty electronics retail business. This is depicted in the table below

Table 1:U.S. Specialty Electronics Retail Market Share

However, the company has received a lifeline through the form of a buyout of a huge portion of its physical retail business. This was executed by Standard General, a hedge fund based in New York. The deal would have Standard General takeover 1,700 of the 4,000 retail stores owned by radio shack (Tabuchi, 2015). This move sought to improve RadioShack’s financial position by eliminating the cost drivers within the company, the physical retail chain stores. The company now seeks to become an electronics convenience store, while concentrating on building their position in the online market.

Electronics Retail Industry

RadioShack has been in the retail industry since its inception. It had considerable dominance in the retail industry but had started to realize considerable losses after FY2010. This is largely owing to the fact that many retail chain stores could no longer compete in the new the transforming market. This is because technology has influenced the retail market considerably with the advent of online e-commerce stores such as Amazon.com. Online retailers have dominated the retail industry with a biggest variety of goods. A salient example is Amazon which has millions of good catalogued in their database.

The industry has realized considerable shifts caused and influenced by increasing consumer involvement in the production, packaging and distribution of goods and services. The retail industry has been characterized by a number of successful partnerships that have ensured the profitability and relevance of most companies. These partnerships mainly involve niche brands as companies seek to differentiate their goods and services from other competitors. RadioShack achieved this by partnering with Beats Electronics, promoting their products while targeting a unique market niche. Best Buy’s partnership with Samsung to give their customers the Samsung Experience, has contributed to the 1.7% growth in domestic comparable sales.

Market Position

Table 2: Electronic Retail Industry

(Google Finance, 2015)

The electronics retail industry has been characterized by a generally negative return in average assets. This is largely owing to the poor performance of physical retail stores. Physical chain stores are considerable cost drivers and online retail websites have since taken over a considerable portion of this market.

Best Buy is the best performing company in this industry, largely owing to its pricing business and pricing strategies. The company has maintained its position as the cheapest retail chain store, always providing the best possible prices in the market. This has enabled the company to realize increased sales and minimized costs and expenses. RadioShack’s position cannot be currently ascertained as the company’s financial position is yet to improve since its application for bankruptcy protection.

Synopsis and Global Position

RadioShack looks to revamp itself as an online electronics retail store. Markets realized a considerable shift in business models as the shift in technology was essential for survival in the age of information. However, as businesses grow, there arises the need for efficiency, speed and cost-reduction. This is the cradle of e-commerce. Ecommerce was developed to provide platforms where services and/or business transactions can be conducted in faster, cheaper and safer manner. However, this trend keeps on changing as constant technological innovation because of constant shifts in technology. As such it is important for RadioShack to consider the future of e-commerce so as to ensure efficiency and relevance to the market needs and wants.

In order for the company to realize its movement to profitability, there are a number of strategies the company should consider. One of the most important aspects of a successful online electronics retail store is the unique partnerships they build to set them apart from competition. The company currently has a significant unique partner in Beats Electronics. This provides the company with an avenue to target a specific niche in the market and consolidate its position as a product/market specialist.

The company can develop a number of new partnerships with unique niche brands and take advantage of its vast network of physical retail stores. This can be achieved by leveraging some of the space to niche brands to generate revenue from these business units that are generally cost drivers. The company’s intricate network of stores can be used to generate income through market segmentation achieved in partnerships with niche market brands.

The company would be placed in direct competition with some of the strongest and most dominant e-commerce websites in the United States as well as globally. The company would find it increasingly difficult to penetrate markets that are already dominated by the global online retail players in the industry. The company has a rich history with a strong customer following. Should the company take advantage of partnerships with niche brands, it would realize considerable growth in the long-term.

Some of the strongest competitors within this industry would be Amazon.com and Alibaba. Amazon has currently built its operations on a best-cost strategy. This ensures that the company has a broad consumer by offering the lowest possible prices and unique features, allowing the company to sustain its increasing scope of operations while maintaining its competitiveness within the market (Stroh, 2014). This has considerably aided Amazon.com build its name around its pricing. Amazon usually offers a competitive price compared to competitors eBay. This business-level strategy necessitates the use of a considerable amount of resources on advertisement and marketing.

Alibaba is currently the fastest growing online retail store in the world. With the most recent global IPO, the company has propelled itself to the top of the online retail store in Asian markets. The company has since seen expansion into the western markets, particularly Europe. The company has built its reputation around the variety of good and services available in its database.

In conclusion, RadioShack has a very rich history as an electronic chain retail store. However, the changing technological environment has rendered the company’s old fashioned business model irrelevant in the 21^st Century. The company is great need to adapt to new technologies and models of conducting and organizing business. There is need for the development of a number of partnerships with niche brands to allow the company develop a decent share of the market. The company also need to venture into e-commerce to allow it to maintain and/or expand its market share over time in a shrinking market.

References

Google Finance. (2015, April 6). RadioShack Corporation. Retrieved April 7, 2015, from Google Finance: http://www.google.com/finance?q=Radioshack&ei=DWgjVaCTBIqowwPErYHYCA

Krantz, M. (2015, February 5). RadioShack files for bankruptcy protection. Retrieved from USA Today: http://americasmarkets.usatoday.com/2015/02/05/radioshack-files-for-bankruptcy-protection/

RadiShack Corporation. (2015, January 10). RadioShack Has Deep Roots. Retrieved from RadioShackCorporation.com: radioshackcorporation

Stroh, P. J. (2014). Business Strategy Plan, Execute, Win! Hoboken: John Wiley & Sons.

Tabuchi, H. (2015, April 5). RadioShack’s Blueprint for a Rebirth, Planned by a Hedge Fund. Retrieved from The New York Times: http://www.nytimes.com/2015/04/06/business/radioshacks-blueprint-for-a-rebirth-planned-by-a-hedge-fund.html?_r=0