In June 2019, Tech Mart, appointed Corie Barry as the new CEO. After having just two CEOs in its firs 43 years of operations (Richard Schulze and his successor, Brad Anderson), Tech Mart went through three top leaders in a six-month period in 2012. Brian Dunn resigned in April amidst a personal scandal after just three years at the helm. At the same time, founder Schulze stepped down from his role as chairman of the board and tried to reassert his control via a bid to take the company private. Hubert Joly assumed the lead position from interim CEO George Mikan in August 2012, and he immediately sought to turnaround Tech Mart and return it to profitability. Joly picked his successor in 2019, Corie Barry, who is the fifth CEO and first female leader of Tech Mart. Joly remains as chairman and Barryhas become one of the youngest CEO of a S&P500 company. After appointing Hubert Joly as CEO in 2012, Tech Mart experienced an impressive turnaround, and itsurvived a shakeout of traditional retailers following Amazon’s disruption. Tech Mart’s stock performance likely owes as much to the struggle of other traditional retailers as to the success of its own efforts. Amazon remains a concern with its 2017 acquisition of Whole Foods now giving it a physical presence where customers may be able to pick up purchases, including consumer electronics. In a partnership with Sears, Amazon also rolled out appliance sales nationwide in 2017. Tech Mart has also increased its reliance on the North American market, and insider stock sales outnumber purchases. The selection of Corie Barry suggests no new significant changes in Tech Mart’s strategy;however, consumer electronics and retail in general continue to adapt to changing technology andconsumer tastes. Holding steady may work, or it may simply hasten the firm’s demise. The case describes the company’s history. Tech Mart was founded by Dick Schulze as an audio specialty store in Minnesota in 1966. It grew rapidly over the next few years due to its focus on providing added value at costs comparable to competitors, holding an IPO in 1969 and reaching $1 million in annual revenues by 1971. The company continued to expand by adding locations and product lines, changing its name from Sound of Music, Inc. to Tech Mart in 1983. Shortly thereafter, Tech Mart adopted its now-familiar superstore format with an increasingly diversified product range within the consumer electronics retail industry. It went public on the NYSE in 1987. Tech Mart’s next retail innovation, named Concept II, combined a grab-and-go format with low prices and a wide assortment in 35,000-square-foot retail warehouses. Its breadth of product selection was facilitated by its big-box format (large volume). The success of this approach propelled Tech Mart to $1 billion in sales revenues and landed it on the Fortune 500 by 1995. In 2000, Tech Mart entered a new phase of inorganic growth through acquisitions, purchasing multiple companies both domestically (for example, Magnolia, Geek Squad, Napster) and abroad. The Geek Squad provides complementary 24- hour technology service and repair for a wide range of electronic devices. Because of its volume, Tech Mart could offer a broader selection, carry the necessary inventory on-site, and negotiate preferred contracts with suppliers. Also, vendors often paid Tech Mart to have dedicated space inside its “big box” stores. Tech Mart’s history dovetails with the development of the consumer-electronics retail industry, which also expanded rapidly in the second half of the 20th century. Demand for home electronics increased with the post- World War II suburban migration, with strong growth continuing through the mid1990s. As the electronics retail industry matured, smaller competitors went out of business while superstores like Tech Mart and Circuit City increased their control of the market. The next major shift occurred when Amazon pioneered online retailing in 1998, leading to yet another period of expansion and market consolidation. Revenues tend to be both cyclical (tied to macroeconomic factors) and seasonal (dependent on holiday sales) in nature. Product life cycles have grown increasingly shorter,as manufacturers cannibalize their own products to maintain customer interest and loyalty.dditionally, by offering private label brands, Tech Mart could improve the selection of lower-priced items that also limit price comparison. Prior to the 2008 recession, Circuit City was one of the top three consumer electronics retailers (along with Tech Mart and Radio Shack). Discuss how Tech Mart Co’s traditional business-level strategy (cost leadership/differentiation) evolved over time from 1971 to under Joly’s leadership. b) What functional structure would be most appropriate for the traditional strategy?
In June 2019, Tech Mart, appointed Corie Barry as the new CEO. After having just two CEOs in its firs 43 years of operations (Richard Schulze and his successor, Brad Anderson), Tech Mart went through three top leaders in a six-month period in 2012. Brian Dunn resigned in April amidst a personal scandal after just three years at the helm. At the same time, founder Schulze stepped down from his role as chairman of the board and tried to reassert his control via a bid to take the company private. Hubert Joly assumed the lead position from interim CEO George Mikan in August 2012, and he immediately sought to turnaround Tech Mart and return it to profitability. Joly picked his successor in 2019, Corie Barry, who is the fifth CEO and first female leader of Tech Mart. Joly remains as chairman and Barry
has become one of the youngest CEO of a S&P500 company.
After appointing Hubert Joly as CEO in 2012, Tech Mart experienced an impressive turnaround, and it
survived a shakeout of traditional retailers following Amazon’s disruption. Tech Mart’s stock performance likely owes as much to the struggle of other traditional retailers as to the success of its own efforts. Amazon remains a concern with its 2017 acquisition of Whole Foods now giving it a physical presence where customers may be able to pick up purchases, including consumer electronics. In a
however, consumer electronics and retail in general continue to adapt to changing technology and
consumer tastes. Holding steady may work, or it may simply hasten the firm’s demise.
The case describes the company’s history. Tech Mart was founded by Dick Schulze as an audio specialty store in Minnesota in 1966. It grew rapidly over the next few years due to its focus on providing added value at costs comparable to competitors, holding an IPO in 1969 and reaching $1 million in annual revenues by 1971. The company continued to expand by adding locations and product lines, changing its name from Sound of Music, Inc. to Tech Mart in 1983. Shortly thereafter, Tech Mart adopted its now-familiar superstore format with an increasingly diversified product range within the consumer electronics retail industry. It went public on the NYSE in 1987. Tech Mart’s next retail innovation, named Concept II, combined a grab-and-go format with low prices and a wide assortment in 35,000-square-foot retail warehouses. Its breadth of product selection was facilitated by its big-box format (large volume). The success of this approach propelled Tech Mart to $1 billion in sales revenues and landed it on the Fortune 500 by 1995. In 2000, Tech Mart entered a new phase of inorganic growth through acquisitions, purchasing multiple companies both domestically (for example, Magnolia, Geek Squad, Napster) and abroad. The Geek Squad provides complementary 24- hour technology service and repair for a wide range of electronic devices. Because of its volume, Tech Mart could offer a broader selection, carry the necessary inventory on-site, and negotiate preferred contracts with suppliers. Also, vendors often paid Tech Mart to have dedicated space inside its “big box” stores. Tech Mart’s history dovetails with the development of the consumer-electronics retail industry, which also expanded rapidly in the second half of the 20th century. Demand for home electronics increased with the post- World War II suburban migration, with strong growth continuing through the mid1990s. As the electronics retail industry matured, smaller competitors went out of business while superstores like Tech Mart and Circuit City increased their control of the market. The next major shift occurred when Amazon pioneered online retailing in 1998, leading to yet another period of expansion and market consolidation. Revenues tend to be both cyclical (tied to
as manufacturers cannibalize their own products to maintain customer interest and loyalty.dditionally, by offering private label brands, Tech Mart could improve the selection of lower-priced items that also limit price comparison.
Prior to the 2008 recession, Circuit City was one of the top three consumer electronics retailers (along with Tech Mart and Radio Shack).
Discuss how Tech Mart Co’s traditional business-level strategy (cost leadership/differentiation) evolved over time from 1971 to under Joly’s leadership. b) What functional structure would be most appropriate for the traditional strategy?
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