Executive Summary During development from 1949 to 2000, Circuit City achieved aggressive expansion and became the leading company in the electronics retailer industry. However, fiscal 2000 was a major transition year for the company. Increasingly intense competition and declining profitability for years present the company with unprecedented challenges. These problems were caused by the following reasons:1. Overexpansion. The company expanded its business and gained more and more market share at the expense of decreasing profitability.2. Being distracted from core business. The company paid a high price of $114 million for its investment in Divx to no avail in this diversification process. Sticking to the old service model and outdated winning strategy. As consumer demand changed, the company continued to insist on its old service model that had been successful in the past, but was no longer able to retain and attract customers. Problem Statement As recently as fiscal 2000, Circuit City was still the leading consumer electronics company. However, Best Buy, which was extremely competitive with Circuit City, had surpassed Circuit City in terms of sales and operating profits and was growing at a much faster rate. Best Buy's stock price was approaching that of Circuit City. It showed that Best Buy's competition was increasingly fierce. Circuit City's sales and profits in the appliance market have declined due to increasing competition from discount retailers, such as Sears, Wal-Mart and Home Depot. With the development of so For many years the shops had gone out of fashion. Its brand image was no longer as attractive and distinctive to customers as before. Data Analysis Problems existed at Circuit City… middle of the paper… so the company could reduce costs on staff, inventory, and more. Third, the company should fully understand consumers' tastes and preferences and change its full-service model to a self-service model or another more effective model. Always meeting customer demand and providing exactly what they want is important. Next, the company should take advantage of e-business and develop its online business. Online business is an effective complement to the downsized physical business and revolutionized service model. Finally, the company should remodel outdated stores. The restructuring should focus on the differentiating brand image and offer customers a distinctive shopping experience. After the renovation, customers should clearly know what special Circuit City can offer them and put Circuit City first when making a purchase decision.