Communication Strategy at Radioshack

DATE: October 19, 2012

ACTION: Julian Day, CEO, RadioShack Corporation

INFO: Julian Day to understand the critical issues at RadioShack and Take action

From: J. Caesar, Lead - Corporate Communication, RadioShack Corporation

Subject: WORKFORCE REDUCTION, PROFITABILITY ISSUES AT RADIOSHACK

Background

* There has been a series of changes at executive management level including ten new appointments to vice-presidential and C-suite level positions since 2004. The CEO has been changed three times during the period 2004-06.

* Competition in the market place and instability in the market has brought down the business of RadioShack. Due to lower business RadioShack's stock prices are lower than 2004 level. [Common Stock Information, Annual K 10 Report 2005 and 2006]

* RadioShack is at third place with Best Buy Inc. at the top followed by Circuit City Stores, Inc. [Competitor Financials, RadioShack: Mergent Online, May 3, 2007].

* To reduce overhead costs 400 employees has been laid off through email communication. This has drawn negative criticism from employees, investors, press and professional organization.

Discussion

Due to ten changes in the executive management level including three changes in the CEO position during last three years, there is lack of direction where RadioShack is headed. Future strategic and growth planning is hampered. The firm's ability to assess competition, face crises and optimum usage of its resources has been hit by instability in leadership positions.

RadioShack is underperforming since 2004. The stock prices have plunged by30-35% of their 2004 level. The investors' confidence in the firm is going down due to this. There has been 29% decrease in share holders' equity in last three years. Acquiring new assets and maintaining regular operations to ensure profitability will be hampered as less equity capital will be available for use. Also, the firm's market capitalization will also decrease.

RadioShack is at the third place in the market due to increased competition and internal instability. Due to weak financials and lost investor confidence the firm will continue to underperform. The key areas that need to be addressed to bring the firm back to its 2004 level at par with its competitors are given below:

1. Increase average unit sales volume

2. Rationalize the firm's cost structure

3. Grow profitable square footage of retail space.

To reduce the overhead costs 400 employees have been let go recently. The mode of dismissal of these employees through email has caused