Radio Shack Strategic Management Research Paper

Radio Shack Strategic Management - Research Paper Example RadioShack is primarily focused on the US market where as at the end of 2011 it employed 34,000 people, and owned and operated 4,476 stores under its brand and an additional 1,496 stores under the Target Mobile centers brand. RadioShack’s products and services are categorized into four platforms: mobility, signature, consumer electronics and other sales. The mobility platform consists of prepaid and postpaid wireless handsets, commissions and residual income, tablets and e-readers. The signature platform includes home entertainment, wireless, computer, and music accessories; general purpose and special purpose power products; headphones; technical products; and services (RadioShack 3). The consumer electronics platform includes personal computing products, laptop computers, digital music players, residential telephones, GPS devices, cameras, digital televisions, and other consumer electronics products (RadioShack 3). Other sales include sales generated by the Target Mobile centers, sales to independent dealers, sales generated by RadioShack’s Mexican subsidiary, sales from www.radioshack.com website and sales to other third parties through the company’s global sourcing operations (Rad ioShack 22). The contribution of each of these product platforms in 2011 is displayed in Figure 1 below. In 2011, RadioShack net sales increased by 2.6%, to $4,378 million over its 2010 revenues. However, the company’s gross margin went down by 3.5% to 41.4% within the same period. This was largely attributed to change in the company’s sales mix within its largest product platform, the mobility platform, towards lower margin smartphones and tablets (RadioShack 20). The company has sound financial strength depicted by its quick ratio of 1.61 and current ratio of 2.73. Figure 1: RadioShack Product Platforms (RadioShack Corp 1) 2.0. Strategic issues There are two major strategic management problems facing RadioShack Corporation: merchandise mix and growth strategy. To begin with, RadioShack established its mobility platform as the more attractive unit and has continued to steer corporate resources towards it. Figure 1 above, shows mobility devices accounted for 51.4% of the company’s net sales in 2011, up from 46.1% in 2010 and 35.3% in 2009 (RadioShack 22). Howev er, the high competitive rivalry in the retail consumer mobility industry, short product cycles, and its much lower margins has made the company vulnerable to weak consumer spending. For this reason, on March 2, 2012, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on RadioShack to ‘B+’ from ‘BB-’, with outlook also moved from stable to negative (FitzGerald Para 2). This downgrade lowers investor and creditor confidence on the organization. Ultimately, the lowered rating may affect RadioShack’s ability to raise financial capital for any major investments that it may seek in future. RadioShack’s senior management