130 Part 2: Strategic Actions: Strategy FormulationPaul Hawthorne/WireImage/Getty Images
It it early stages (this photo is from 2003), Radio
Shack was very successful but it lost its focus as it
tried too many different strategic approaches.Strategic Focus
RadioShack’s Failed Focus Strategy: Strategic Flip-FloppingRadioShack filed for bankruptcy in February 2015 after nearly
a century of being a mainstay in American malls and on “Main
Street” throughout the United States. Of course, one reason
is that the business of selling electronic components prod-
ucts has been degraded by online sellers such as Amazon.
RadioShack tried to avert bankruptcy by closing stores, but
its finances deteriorated faster than expected. Because of the
financial distress, it had turned to private equity for capital as it
tried to turn around its poor performance, but the demands by
these creditors increased the decline.
The real strategy difficulties, however, pertain to its efforts
to pursue many different trends without a consistent under-
lying strategic approach. RadioShack was founded in Boston
in 1921, 94 years prior to its bankruptcy. It flourished in the
1970s and 1980s by focusing on “electronic gadgetry.” At
first their strategy focused on ham radio enthusiasts. When
Charles Tandy took over as CEO in 1963, the chain had been
well established for decades with a focus on hobbyist and
do-it-yourselfers. At the time, RadioShack eschewed national
brands and sold private RadioShack brands including acces-
sories, batteries, and a wide range of transistors and capac-
itors. All of these items could be heavily marked up. One
could describe this as a focus differentiation strategy with an
emphasis on electronic gadgets that the customers could
improve through modifications and accessorizing. “The target
audience was people who needed one piece of equipment
every week,” focusing on technologically oriented people with
enthusiasm for RadioShack’s products.
They also had a 100+ page catalogs filled with stuff like
stylus’, tape head demagnetizers, Realistic (RadioShack private
brand) receivers and speakers, intercoms, and boomboxes.
CB radios became another trend the RadioShack consumers
followed, which became popular during the oil crisis in the
early 1970s. When this trend slowed, they focused on personal
computers. The TRS 80, one of the first mass-market personal
computers, helped to replace the CB radio boom. This com-
puter, with 16K of memory, used software designed by a “little
known start-up named Microsoft.” However as the computer
business became commoditized and profit-margins decreased,
RadioShack needed a new “anchor” product. They found it in
cell phones.
In the 1990s, Radio-Shack opened a number of big box
electronic stores, including Incredible Universe, Famous
Brand Electronics, and Computer City. These were essentially
“anti-RadioShacks.” These RadioShack-owned brands were
ultimately pillaged by large online sellers of electronic prod-
ucts and became an albatross for RadioShack even though
the large volume of products sold allowed them to reach
the peak revenue in 1996 ($6.3B). RadioShack was a specialty
store. These large stores failed because, as CEO Leonard
Roberts looking back lamented, “I don’t think we knew how
to operate those stores.”
However, RadioShack was good at selling cell phones
when they became popular. Their customers were intrigued
but intimidated with this new product, and the salespeople
could spend time helping them to pick the right product.
However, signing someone up for a mobile phone contract
took 45 minutes, and many stores were staffed for long
stretches by a single employee. Their regular customers in
search of the right small electronic component or accessory
often left in frustration because they couldn’t get the help
needed because RadioShack employees were focused on
selling cell phones. Likewise, RadioShack lost in e-commerce.
They tried a ship-to-store model with RadioShack Unlimited,
but RadioShack’s executives never truly committed to
e-commerce. In essence, because its differentiation focusstrategy on the hobbyist and electronic enthusiast was com-
promised by trying to focus on different trends and achieve
growth, seemingly required by capital markets, RadioShack
was never able to recover its focus and apply a consistent
strategic approach.