An Organizational Failure - Case Study Example

The development and triumph of Circuit City was discriminated by the downfall of Silo Stores in the period of 1980s and 1990s. But the organization had failed to adjust with the changing environment (Hamilton, “Why Circuit City Busted, While Best Buy Boomed”). Role of Organizational Culture for Failure of Circuit City In the year of 2005, Circuit City had experienced profit of almost 61 million USD where in the first quarter of 2011, the organization had reported a loss of 239.17 million USD.

One of the main reasons for the failure of Circuit City can be identified as its mismanagement of the organizational culture. The company did not respond quite swiftly to the external business challenges which hampered its competency. Organizations which are able to minimize the financial and commercial challenges through effective organizational management strategies can survive and ultimately prosper in the competitive market. The managers of Circuit City had desolated the opportunity of development by their weak administration of company’s assets. . “The Fifth Discipline: The Art and Practice of the Learning Organization”).

In Circuit City the managers and administrators were particularly concerned with their position in the organization lacking in the sense of accountability and belongingness towards the organization. Notably, the CEO of Circuit City had accused the weak microeconomic circumstances for the collapse of the company. However, the market of electronic goods was observed to be strong even in the worst economic conditions (Spolsky, “Why Circuit City Failed, and Why B&H Thrives”). It was further observed that the executives had no sense of obligation for the consequences of their actions.

They had dismissed the honest and talented employees who had but weak performances. In the year 2007, Circuit City had suspended its highly paid employees which comprised of experienced sales persons. The company replaced those employees with some low-priced staffs. It might have been more effective to shift them from one job position to other sectors with the intention to gain the virtues of their individual productivity. On the other hand, the CEO of Circuit City gained 7 million USD as reimbursement in that year which could support the financial propensity of the organization.

Thus, terminating the valuable and productive employees would have been avoided (Hamilton, “Why Circuit City Busted, While Best Buy Boomed”). Another major reason for the organizational failure of Circuit City was the deficiency to present an accurate financial statement that would be effective in revealing the financial stance of the company. However, the financial statement of the company possessed miscalculation of stockholders’