Strategic Analysis of RadioShack Corporation

StrategicAnalysis of RadioShack Corporation

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StrategicAnalysis of RadioShack Corporation

RadioShackCorporation is an American enterprise established in the year 1921.This company that deals with the authorization of electronics retailstores in the United States and some European parts as well as SouthAmerica was founded by Milton Deutschmann and TheodoreDeutschmann(Collingspar).The company is intensified in linking clienteles with tailoredsolutions as well as realizing the possible ways out of theup-to-date consumer technology [ CITATION Kra13 l 1033 ].RadioShack Corporation worldwide retail network comprises ofapproximately 39,600 employees across more than 4,400 companiesoperated and licensed stores that are in the United States as well asparts of Mexico. This company operates not less than 900 stores thatare dealers in the company’s products in 25 different nations [ CITATION Rad08 l 1033 ].Someof the RadioShack’s products include headphones as well asspeakers, smart toys, wearable technology, power accessories and homeentertainment. RadioShack has been in operation for the last ninedecades. As of December 31st2013, RadioShack recorded percentage revenue of 37.2% compared to40.1% as of December 2012 [ CITATION NYS13 l 1033 ].

AnOverview Of The Industry and Its Analysis

RadioShackCorporation basically deals as well as competes in the franchise ofelectronics retail stores industry. The company has been anoutstanding player in this form of business for the last 90 years(Vardi par).Nevertheless, in the recent past, this Corporation has been broughtalmost to its knees by its competitors. In the recent past,RadioShack Corporation’s results have been very unsatisfactory(FitzgeraldandMichael par).Recently, the company has been struggling to put its feet on theground in the industry due to the emerging rivalry from online retailtitans such as Amazon, Best Buy, Inc, Big LotsInc. and othercompetitors, as reflected in the Appendix2.

RadioShackCorporationexperienced a deterioration of Annual Revenue for the fiscal yearended 30thDecember,2013 by -19.34%to $ 3,434.30 million, as compared to $ 4,257.80 in Annual Revenuereported in the previous year. The failure in company`s annual Saleshastened, from the -2.75 % decrease, in the fiscal year ended on30thDecember,2012. Comparing the results to its rivals, RadioShack reported totalrevenue decrease in the 3 quarter 2014 year on year by -20.21%,despite revenue increase by most of its competitors of 10.36 %,recorded in the same quarter. This is shown in the appendix2.RadioShack`s Revenue were slashed by -27.97% in the second quarterfrom the same quarter a year ago to $ 674 millions, while sales inTechnology retail industry fell only by -18.76%, and underachievedthe 5.87% Revenue growth in the Retail sector. Retail sector grewabove market average, while Technology Retail industry and RadioShackCorporation results underperformed, in the second quarter.Successively company`s Revenue was constant from the second quarterresults. Looking into annual growth, sales grew by -4.06% on averagein last five years, while S &amp P 500`s including only Businesseswith the second quarter results, average yearly sales growth is2.51%. This is reflected in the appendix1.

ExternalAnalysis of RadioShack Corporation

RadioShack’sPorters 5 forces Analysis

Thereare number of important environmental factors that have affectedRadioShack Corporation in a negative way. The Porter’s 5 Forcesanalysis is well displayed in RadioShack Corporation.

  • Supplier Power:RadioShack is hit so hardly by supplier power. This is so because most of the suppliers have been rising up prices for the products, thus making the firm’s rivals to beat it. RadioShack also has been switching from one supplier to another. This has affected it negatively.

  • Substitution Threat: RadioShack Corporation has had a threat of substitution [ CITATION SEC13 l 1033 ]. There is a close substitute product in the market. Most of the firm’s customers are no longer buying its products since customers have switched to other products that are readily available as well as cheaper. This has reduced market attractiveness of the company.

  • Failure to Give Dividends to the Shareholders Dividends can make a Corporation expand and have more customers. According to CnnMoney.com, the Board of Directors reviews allocation of capital decisions, including declaration of dividends. Since July 25 2012, the Board of Directors of RadioShack made a decision to suspend the company’s quarterly dividend [ CITATION CNN13 l 1033 ].

  • Stiff competition from its rivals such as Amazon and eBay despite competition from other stakeholders in this industry, there has been the introduction of new and more sophisticated electronics in the U.S market by RadioShack’s rivals (Halkias par). There was a huge demand for wireless accessories by consumers as well as portable speakers and adapters in the U.S., while RadioShack’s total sales declined marginally (0.5% y-o-y) driven by the impact of 2.5% fewer stores in the U.S., its comparable store sales grew by 1.3% annually. Comparable store sales increased for the first time since Q4 2012 as the company marked its sixth consecutive quarter of strong growth in its signature line of products. This is well reflected in appendix 2.

  • Threat of New Entry: There are many new entries in the industry that RadioShack’s deals in. Profitable markets have attracted new entrants and this has eroded profitability. The economies of scale, patents, government policies and capital requirements are also not favorable for RadioShack.

InternalAnalysis of RadioShack Corporation’s Resources and Capabilities

InternalAnalysis of RadioShack shows that the firm has actually resources andcapabilities that it seems not to be exploiting so as to make itsuccessful. The firm is actually good at some capabilities that willenable it flourish once again (Lesliepar).The company can focus on what is good at, or prepared to be good atand make it its core goal to get back on its feet. These are

RadioShack’sSWOT Analysis

Strengths

  • Deal with the Consumer Electronics Business and Aim at Stabilizing its Margins RadioShack can have stable margins in its high margin signature business and improving margins in the consumer electronics business. As the firm concentrates on refurbishing its product variety and change the position of its brand, extra sales volumes can help stabilize margins (Priore par).

  • New Strategic Partnerships: As part of its improvement strategy, RadioShack has decided to go into a strategic partnership with a couple of players in the industry. These two players are&nbspNASCORP and Maker Media. RadioShack’s objective With Maker Media is to regenerate its brand to&nbspgo after the younger demographic as well as the Do-It-Yourself (DIY) client section. The second option became disillusioned with the firm in lieu of the 2009 re-setting implementation by the sequence and generally deserted it. NASCORP is a&nbspdistributor of wholesale products as well as a service provider for approximately 4,000 college stores of books. Partnering with it unlocks a chance for RadioShack to enter into a&nbspnon-old-style bazaar. The allied institutions will&nbspconnect RadioShack-trademarked gears in their college grounds bookstores and this will be supplied with some of the firm’s widely-known items (Kathryn par).

  • Refurbishing Product Variety: In Q2 2013, RadioShack drovein the direction of&nbspeliminating identical inventory as well as fruit less inventory through advertisings and authorization proceedings. The firm has a word that it has&nbspdistinguished the SKUs which can&nbspinitiate demand in a given store’s occupation region so that it can modify&nbspthe variety as well as focus the inventory on merchandises that produce the mainstream of its profits in addition to its sales. The corporation is correspondingly streamlining the number of private brands in its assortment [ CITATION Rad131 l 1033 ].

  • Ideal Stores: RadioShack has opened its first ideal store in Manhattan with an objective to&nbsprevive its practice in stores. The firm has not less than ten sites that are being constructed lately. RadioShack will as well have more others that it is intending to open by the end of the year [CITATION Rad13 p 15-22 l 1033 ]. This corporation as well plans to work towards more visible advertising and promoting of the RadioShack brand on new-age media platforms and revamped stores, which will emphasize its interactive experience [CITATION Rad13 m Rad132 l 1033 ].

  • Technology Use and Mobile Outlets: RadioShack has a plan to efficiently leverage technology with a mobile outlets application using various softwares’, such as android and apple (Zmuda par). This will make the company’s portfolio grow annually, since it will be making a significant investment in technology. All this is what the company is actually good at, or prepared to be good at (Biggs par).

  • Longevity in the industry: RadioShack has been in the industry of electronic retail stores for the past more 91 years. This should be an advantage of being in the industry for so long, so it can use this as a strategy for its growth. Being in the industry for a long time means that this firm understands the operation of this business.

  • Strong Market Position as well as World-wide Brand Recognition: Despite RadioShack’s current predicaments, it is a well-known company across the world, since it has quite a number of stores in many countries. It was a well-recognized company before its downfall. It can use this to gain competitive advantage more in extending into international market and raising its sales.

  • Diverse Product Mix: RadioShack portfolio of products is diverse. The corporation deals with headphones, electronic appliances and many more products. This mix of products caters to all age groups and demographic factors.

  • Thanking its Customers: The strategic plan that corporation has of thanking its customers will help it gain loyalty with its customers. Customers are a huge part of any business entity and learning to attract and maintain them is so paramount for the corporation.

Weaknesses

  • Poor Human Resource Management and Poor Management at large: RadioShack has based its management on the upper management instead of retail based management. This has had a very negative toll on the company, since it is going down each and every financial year. Poor human resource management has led to the firm laying-off good members of staff who have the knowhow on how to help the corporation.

  • Negative large corporation image: Being one of the large corporations, RadioShack has really fallen under so much inspection, and it has to invest in corporate social responsibility activities so as to keep tight control over labor practices.

  • Expensive products: With a huge competition in the market, RadioShack has a disadvantage of setting the price for its products so high. This has seen it loose many clienteles to its rivals. The corporation says that it is dealing with differentiation so as to cope with the competition but differentiating their products has had a financial strain on its budget, thus bringing the firm down to its knees.

Threats

  • Too much competition competition is the biggest threat so far that RadioShack with the market being at a stage of maturity. RadioShack faces too much pressure from its rivals such Amazon and eBay.

  • Developed Countries Economy: In a progressively economically unified world, an economic crisis such as the one in the year 2008 could have a dribble consequence from the developed market to the developing ones. This threat will hurt revenue for RadioShack as clients move away from best product mix to stay in inadequate budgets during economic adversities.

  • Developed Nations Market Fullness: Most of the RadioShack’s revenue is derived from the development markets. This is a threat, since there is increased market fullness presently.

Opportunities

  • Expansion of Retail Operations: RadioShack is an electronic retail firm. This can be such a huge opportunity for the company if it expands the operation.

  • Expanding Product Mix as well as Presents: The Company has expanded its products and started selling portable products. This is a great opportunity for RadioShack and it will enable it increase its revenue.

  • Brand Extension: RadioShack has a powerful brand of DIT. This will enable it to tap into product diversification as long as it keeps it in check.

RadioShack’sStated Competitive Positioning

InJanuary 27th,2014, RadioShack announced its new brand positioning. Thispositioning enunciates the objective of the brand and serves as thecornerstone for the firm’s competitive advantage. The brand says.“It Can Be Done, When We Do It Together”. The slogan is meant tohelp the firm collaborate with clienteles so as to assist them todiscover what is possible through technology. This new positioning isrooted in the objective of RadioShack as the brand that that enablescustomers, filling a void when consumers need knowhow as well as someadded skill to bring the idea of technology to reality. The CEO ofRadioShack, Joe Magnacca, said that the firm is realigning its brandaround its main objective, which goes beyond the firm’s greatproduct assortment and price match guarantee. He said, “RadioShackhelps consumers find the products they need to connect and powertheir lives. More importantly, RadioShack can help createtechnology-based solutions that make anything possible.”

TheFirm introduced a new integrated marketing campaign in earlyFebruary. This campaign focused on how anything is possible when itis done together. The slogan is “Do It Together (DIT).” Thesenior vice president as well as chief marketing officer of thisfirm, Jennifer Warren said that an extensive research had beencarried out on the firm’s role in the market place. From thisresearch, the firm believed that it was going to deliver on apositioning that stated anything is possible when ‘we Do ItTogether’. This positioning was meant to differentiate the firmfrom its rivals. The concept was introduced to partners at CES(Consumer Electronic Show), and according to Jennifer Warren, theconcept was received in a positive manner. She said that thenew DIT creative capitalizes on one of RadioShack`s truedifferentiators – its associates. The idea that RadioShack and itsassociates have the know-how to bring consumers` ideas to life iscentral to the multifaceted campaign. The marketing plan includes TV,radio, print, digital, social and in-store executions, created with ahow-to perspective in mind and placed to reach and engage a verytech-forward audience. This RadioShack creative is the first to debutfrom new advertising and media partner, Austin-based GSD&ampM.

ItCan Be Done at RadioShack

Thenew positioning will impact core competencies of the RadioShack brand– people, products, pricing and how we engage our neighborhoods–through both internal and consumer-facing changes. Hiring andtraining practices our merchandising and product developmentstrategies featuring the latest in technology and consumer centricdesign in stores will align to truly showcase the collaborativenature of the RadioShack brand. &quotWe want to make sure ourconsumers recognize that RadioShack is their close-to-home techresource,&quot said CEO Magnacca. &quotRadioShack is here to helpyou discover what`s possible with the best product, friendly expertsand solutions for every budget.&quot [CITATION Rad132 l 1033 ]

Comparisonof the value of the firm’s resources and capabilities against thecompetitors

Sharesof RadioShack, according to the New York Share Exchange (NYSE:RSH)flowed over 67% in pre-market trading recently. This was reported byBloomberg that the firm is finally coming to terms with StandardGeneral on a refinancing arrangement. Nevertheless, trading in thestock was paused just before the opening bell with news unresolved.Trading is yet to resume and this has disillusioned a good number ofday traders (Aldenpar).Official news of a deal was not released until Friday evening, whenRadioShack issued a press release through PR newswire. A consortiumof investors led by Standard General has replaced GE Capital asRadioShack`s lead lender under the company`s senior secured assetbased credit facility (ABL Facility). Though no details werereleased, it is assumed that the total commitment by new investorswas $590 million. The terms of the credit availability for the ABLFacility has also been changed to provide RadioShack greaterflexibility heading into the fourth quarter(Jonespar).When you compare this to the firm’s giant rivals such as Amazon,you will notice that they are doing so well. This is so wellreflected in the appendix2.

RadioShack’sFinancial Performance Analysis

RadioShack’sfinancial performance is really in a wanting position. Even after theBoard Directors stopped paying dividends, the company is stillsliding down (Wassermanpar).Its financial performance has gone from bad to worse as reflected inappendix4.According to Anthony Chukumba, an analyst at BB&ampT CapitalMarkets, RadioShack’s shares are trading at a very low rate. Hesaid, “We think the stock will be ‘dead money’ at best untilcurrent trends begin to show some sign of stabilizing.” Revenuerecently fell to $-27.97 as shown in Appendix3.Itsgross margins have declined from 45.4% in 2008 to 36.7% in 2012. Thefirm’s revenue contributionfrom the mobility division has risen from 44.2% in 2010 to 51.4% and53.1% in 2011 and 2012, respectively. In Q2 2013, RadioShack’sinitiative to&nbspmove through unproductive inventory and test newpromotional vehicles put additional pressure on its gross margins.RadioShackCorporationexperienced a deterioration of Annual Revenue for the fiscal yearended 30December, 2013 by -19.34%to $ 3,434.30 million, as compared to $ 4,257.80 in Annual Revenuereported in the previous year. The failure in company`s annual Saleshastened, from the -2.75 % decrease, in the fiscal year ended30December, 2012. Comparing the results to its rivals, RadioShackreported total revenue decrease in the 3 quarter 2014 year on year by-20.21%,despite revenue increase by most of its competitors of 10.36 %,recorded in the same quarter. This is shown in the appendix2.

Recommendations

  • Change of Upper Management to Retail Management: RadioShack’s biggest problem and biggest liability is its upper management. The upper management is what is really killing RadioShack and the earlier they realize that the better for them. I recommend that RadioShack’s management is should be changed completely.

  • Consumer tastes and lifestyle is kind of shifting towards high level of technology. RadioShack should start thinking of high level technological appliances so as to suit consumer preferences and tastes. The corporation should also consider having more portable products so as to attract more customers.

  • The corporation should learn the strategies of building and retaining clienteles’ loyalty through having a strong, good relationship between the customers and the corporation. The corporation as well has to retain customer loyalty by coming up with a plan to delivering their commodities to their customers. This will help boost the corporation’s sale since most people are busy nowadays. This is highly recommended for the corporation in the face of so high completion in the market.

  • RadioShack has not yet tapped into rural markets yet. It would be recommended that in their growth strategy, they venture into saturated markets where their competitors have not yet reached.

  • Set goals and define a clear vision for the future. This firm lacks a clear vision for the future that’s why it can’t get up from its knees. It is recommended that the firm sets goals and define its future vision.

  • Employee education programs. The Corporation needs to come up with programs to educate and train their employees.

  • Clearly define brand as specialty electronics business. This is as well highly recommended for RadioShack Corporation to move ahead.

WorksCitedAlden,William. RadioShack Says It May Have to File for Bankruptcy (11September 2014). TheNew York Times.RetrievedNovember 12, 2014.Biggs,John. Radio Shack rebranding: Why? Why!?.TechCrunch.RetrievedNovember 12, 2014.Collings,Richard. RadioShack`s Last Best Hope May Be Another Refinancing (13August 2014). TheStreet.RetrievedNovember 12, 2014.Fitzgerald,Drew and Michael,Calia.RadioShackDraws on Credit Line as LossesDeepen (2014).TheWall Street Journal.RetrievedNovember 12, 2014.Halkias,Maria. RadioShack has received notice that it may be delisted fromthe NYSE (25 July 2014). TheDallas Morning News.RetrievedNovember 12, 2014.Jones,Michelle RadioShack Corporation Hires Bankruptcy Expert As CFO (15September 2014). ValueWalk.RetrievedNovember 12, 2014.Kathryn,Jones. Fix-It Service Remodels Radio Shack (1994).TheNew York Times.RetrievedNovember 12, 2014.Leslie,Patton and Chris, Burritt. RadioShack CEO Gooch Leaves as LivelyNamed Interim Chief (2012).Bloomberg.RetrievedNovember 12, 2014.Lopez,Ricardo. RadioShack`squarterly loss more than triples to $98.3 million.(10 June 2014). Los Angeles Times.Retrieved November 12, 2014.Priore,Matt. RadioShack: `Lifeline` Just A Risk Free Cash Advance On 4:1Dilution For Shareholders (4 October 2014). SeekingAlpha.RetrievedNovember 12, 2014.Vardi,Nathan. Julian Day`s RadioShack Turnaround Has Been A Failure.Forbes.RetrievedNovember 12, 2014.Wasserman,Todd. RadioShack Trading for Under $1, Could Be Delisted FromNYSE(2014). Mashable.RetrievedNovember 12, 2014.Zmuda,Natalie. RadioShack`s Journey to Bring Back a ForgottenCustomer.AdvertisingAge.RetrievedNovember 12, 2014.

CNN. CNN Money. phD Thesis. London: Adventure Works Press, 2013.

Kramer. RadioShack Corporation.NYSE (2013): 50-62.

NYSE. &quotQ2.&quot NYSE:RSH (2013): 32-46.

RadioShack. A RadioShack Corporation. 5 Nov 2008. 12 Jan 2013 &ltwww.radioshackcorporation.com&gt.

RadioShacks. Form for FY ended on December 30th 2013.RadioShack: RSH News (2013): 15-22.

&quotRadioShack News Daily.&quot Form FY (2013): 20-34.

SEC. &quotA Sec Corporation.&quot 7 November 2013. SEC`s web site. 7 November 2013 &ltwww.sec.gov&gt.

Appendix1: RadioShack Growth Comparisons

RSH Revenue Growth Rate Comparisons

Company

Industry

Sector

S&ampP 500

Y / Y Revenue Growth (Q3 MRQ)

-27.97 %

-18.76 %

5.87 %

3.91 %

Q / Q Revenue Growth (Q3 MRQ)

0 %

-1.54 %

7.57 %

0.37 %

Y / Y Revenue Growth (Q3 TTM)

-19.87 %

-9.49 %

3.53 %

%

Seq. Revenue Growth (Q3 TTM)

-8.49 %

-0.96 %

1.74 %

0.99 %

Revenue 5 Year Average Growth

-4.06 %

4.19 %

4.89 %

2.51 %

Expected Revenue Growth (Y/Y)

11 %

7.89 %

5.27 %

Source:CNNMoney.com

Appendix2: RSH`s comparison of Quarterly Growth Rates to its Competitors(in%)

COMPANY NAME

TICKER

REV. Y / Y

REV. SEQ.

INC. Y / Y

INC. SEQ.

RadioShack Corporation

3 Q

RSH

-27.97 %

0 %

AMAZON.COM, INC.

3 Q

AMZN

20.4 %

6.41 %

BEST BUY CO., INC.

3 Q

BBY

-4.34 %

-1.54 %

-42.75 %

-68.33 %

BIG LOTS, INC.

2 Q

BIG

-2.46 %

-6.7 %

10 %

495.52 %

eBay Inc.

3 Q

EBAY

11.84 %

-0.3 %

-2.32 %

-0.44 %

FAMILY DOLLAR STORES, INC.

3 Q

FDO

4.47 %

-1.69 %

-66.29 %

-57.53 %

GameStop Corp.

1 Q

GME

7.02 %

-45.81 %

24.54 %

-69.16 %

SEARS

2 Q

SHLD

-9.67 %

1.7 %

STAPLES, INC.

2 Q

SPLS

-1.78 %

-7.68 %

-20.15 %

-14.9 %

TARGET CORPORATION

2 Q

TGT

1.69 %

2.09 %

-61.7 %

-44.02 %

APROX. MARKET

3 Q

SUBTOTAL

10.07 %

2.89 %

-65.71 %

-70.77 %

Source:CISMarket.com

Appendix3: Growth Rates of RSH`s Income

RSH Operating Income Growth Rates Comparisons

Company

Industry

Sector

S&ampP 500

Y / Y Operating Income Change (Q3 MRQ)

-6.15 %

-2 %

6.65 %

Seq. Operating Income Change (Q3 MRQ)

20.81 %

0.47 %

1.27 %

Y / Y Operating Income Growth (Q3 TTM)

122.1 %

4.1 %

11.91 %

Seq. Operating Income Growth (Q3 TTM)

-14.96 %

-1.02 %

1.64 %

Operating Income 5 Year Avg. Change

-25.19 %

3.31 %

15.08 %

Appendix 4. RadioShack Corp(NYSE:RSH)

0.8959

Data as of Nov 12

&nbsp-0.0242&nbsp/&nbsp-2.63%

Today’s Change

0.55

Today|||52-Week Range

3.09

-65.54%

Year-to-Date

Topof Form

Bottomof Form

&nbspvs.Retail Trade

Topof Form

Chart

Bottomof Form

Source:CNNMoney.com

Appendix5: Barriers to Entry Checklist

BARRIERS TO ENTRY CHECKLIST

LEVEL

Competition

So High

Construction

Medium

Life cycle Stage

Poor

Capital Intensity

Medium

Technology Change

Medium

Regulation &amp Policy

Medium

Industry Assurance

None

Source:CNNMoney.com