The electronics industry is fast becoming a competitive one all over the world, mainly attributed to the readiness and preference of people to acquire the latest technologies. The innovation behind the establishment of these new technologies and the costs that accompany it has made many electronic companies to be very conscious about their costs of production. It was with this reasoning that Circuit City, a world-class electronics firm, decided to get rid of 3,400 of its highest paid employees, in 2007.
However, the competition in this industry dictates that a company establishes excellent customer service, so as to convince the customers on the uniqueness of their products. Pundits, therefore, predicted that Circuit City’s move to lay off its most experienced crop of employees was suicidal to its business operations, and would cause poor performance in the market. Circuit city, indeed, went on to perform poorly in the years subsequent to this massive lay-off, but some other factors may have contributed to this. The question that every business minded person is asking, however, is whether this massive lay-off of staff was directly to blame for the poor performance of the company.
I, in particular, think that the above statement is true. The massive lay-off of experienced staff did cause Circuit city to perform poorly in the market. For instance, the customer satisfaction index for Circuit City rapidly fell to 69 in 2007, subsequent to the massive lay-off. Although it has tried to pick up from their, the customer satisfaction index has not gone back to its former peak of 73. This is thought to be because of the loss of experienced employees who had developed better customer relations strategies. The importance of customer relations to the performance of the company is thus seen in its Best Buy Year stock prices, which fell from 50 in 2007 to 28.08 by 2009.
However, the data provided indicate that the company has had even lower stock prices in the past, even before the massive lay-off of staff in 2007. For instance, in the Best Buy Year stock prices for 2003 an 2001 stood at approximately 18 and 17 respectively. This is much lower than what the company has been trading on since the massive lay-off of 2007.