DOWNFALL OF CD-R KING A Case Analysis Presented to Prof. Myra Miraflores, CPA, MSA University of Mindanao Matina, Davao City In Partial Fulfillment of the Requirements In MAC 311(Sustainability Strategic Audit) 2nd Semester S.Y. 2022-2023 Felicitas, Catherine Murcia, Kurt Kevin Porta, Joalyn Purgatorio, Jecil Tiu, Tricia Deanne Marie April 2023 Table of Contents I. Executive Summary................................................................ 3 II. Background............................................................................. 3 III. Case Evaluation...................................................................... 4 IV. Proposed Solutions................................................................ 5 V. Conclusion............................................................................... 6 VI. Recommendations.................................................................. 6 VII. Implementations...................................................................... 6 VIII. References................................................................................ 8 IX. Appendix.................................................................................. 9 2 I. Executive Summary This case study examines the CD-R King's reason behind failing continuous operations and presents recommendations for surviving the ongoing environmental changes in the marketplace. CD-R King is one of the well-known leading retailers that offer Filipinos an affordable amount of gadgets. It is one of the busiest shops within and outside the mall, selling electronics and accessories like pens, scrapbooks, and other art supplies. As it has served Filipino customers over the years, it has consistently received unfavorable feedback about its products, which only last up to two weeks. Poorly trained personnel must adequately perform their responsibilities.CD-R King's operations sparked controversy by selling a pirated optical media disc acquired outside the country. The optical media board charged CD-R King and fined it 1.5 million pesos for failing to produce permits for several of its optical media discs. As industries modernize, an increasing number of businesses selling the same products as CD-R King emerges in the business world, providing Filipinos with high-quality, reasonably priced goods that are simple to access online or in physical locations. CD-R King, however, did not adapt to these environmental changes. As industries modernize, they must adapt to environmental changes to determine their company's opportunities and threats. CD-R King needs to test their product to see if it works and how long it will last. As for opportunities, they need to go with the trends delivering current trending products to Filipino customers and using e-commerce as the marketplace on the internet becomes wider. They must hire experienced personnel, formulate a strategy, and gain the trust of their customers by having workoriented employees that do their jobs correctly and provide products that are not only reasonably priced but also high quality. In order to operate lawfully and freely, CD-R King must also be aware of things that are not prohibited or illegal. If CD-R King develops an environmental scanning strategy to determine environmental changes, they can determine how to stay on top of the marketplace. Thus, CD-R King must develop an environmental scanning strategy to adopt environmental changes. While CD-R King provides affordable products, they lack a strategy to scan external and internal factors, in addition to adopting societal changes. II. Background In the Philippines, CDR-King is a well-known retail chain focusing on selling consumer electronics, computer accessories, and other electronic goods. The business was founded in 2001 and has developed quickly to become one of the biggest retail chains in the nation, having numerous locations across the country. With a broad selection of electronic items and competitive pricing, CDR-King serves a broad spectrum of clients. However, the company has faced challenges such as competition from global and local brands, changing consumer preferences, and concerns about product quality and customer service (CDR King, 2020). These issues have impacted the company's performance and reputation in the market. Over the past few years, several CD-R King stores have closed. According to a source from a representative of the leasing department of one of the nation's main shopping malls, CD-R King once had over 500 stores but only has less than ten branches. The 3 source claims that while the CD-R King is still open there, it had already closed several other locations inside the same mall network even before the coronavirus outbreak started. Additionally, the source is aware of a change of ownership for the business. (Caña, 2020). Originally CD-R King was founded in Quiapo, Philippines, by Nicholson Santos and Henry Ngo, the tiny firm on Paterno Street the first CD-R King offered CD-Rs, also known as recordable CDs, when they were the dominant means of data storage. Further, CD-R King opened new locations near colleges and universities and increased their product line to incorporate more modern technology. If CD-R King could do something unique and beat e-commerce, the company would be the most buyable and affordable. III. Case Evaluation CD-R King was a well-known retail establishment in the Philippines that specialized in selling various technological and electronic devices. Nonetheless, the enterprise underwent a striking decline in its business operations in the past few years, resulting in its ultimate bankruptcy. According to various articles in the media, there were multiple factors that led to the downfall of CD-R King. First, CD-R King's inability to adapt to evolving market trends and shifting consumer preferences, such as the increasing prevalence of online shopping or e-commerce and the widespread adoption of mobile devices, resulted in a lack of innovation. Then, the organization depended on selling old-fashioned and substandard merchandise, reducing revenue and popularity or customer loyalty. The business was known for inadequate customer service and quality control measures. Secondly, the company's reputation suffered, and customer loyalty declined due to reports of faulty products, inadequate customer service, and insufficient follow-thepurchase assistance, as disclosed by dissatisfied customers. CD-R King has encountered various legal issues and controversies, including confiscating counterfeit merchandise, non-adherence to safety regulations, and using unlicensed software. The abovementioned concerns have adversely impacted the organization's standing and reliability, potentially leading to a decline in customer trust. Consequently, there was an overextension of everything, contributing to the sales and profit reduction. Furthermore, the idea of expansion and overextension can be observed in the case of CD-R King, wherein the company underwent a rapid expansion by establishing numerous stores throughout the country without adequate planning and market research. The demise of CD-R King serves as a warning to companies to remain attentive and adaptable to market changes, prioritize customer satisfaction, guarantee commitment to legal regulations, and utilize growth attentively. Moreover, it is crucial that an organization must adopt planning and strategic management in conducting such business. As to Kinicki & Williams (2018), an organization must provide direction and momentum, encourage new ideas, and develop a sustainable competitive advantage above all. 4 IV. Proposed Solutions CD-R King encountered multiple challenges, including intense competition, inadequate customer service, substandard merchandise, and a need for more innovation. In order to mitigate these issues, the organization must implement the following proposed solutions this study provides. CD-R King must deliver products demonstrating outstanding performance, durability, and reliability to enhance product quality. The attainment of this objective can be realized through the establishment of partnerships with trustworthy suppliers and manufacturers, as well as the implementation of strict quality control measures on all merchandise prior to their distribution to consumers. Improving customer service must be a top priority for the company, which can be achieved by allocating resources toward the training and development of highly competent and knowledgeable personnel capable of delivering exceptional customer service. It is recommended that companies establish accessible avenues for customers to offer feedback, register complaints, and provide suggestions. CD-R King should prioritize innovation by introducing novel and advanced technological products that are not easily accessible in the current market. This objective can be attained by implementing research and development initiatives and establishing partnerships with technology startups. CD-R King faced stiff competition from other e-commerce platforms that offered related products at lower prices. CD-R King could have conducted regular market research to monitor consumer trends and preferences to stay competitive. This would have allowed the company to adjust its product offerings and pricing strategy accordingly to meet the demands of its target market better. The technology industry is constantly evolving, and businesses in this sector must stay on top of new developments. CD-R King could have conducted regular environmental scans to identify emerging technologies and assess their potential impact on the business. This would have allowed the company to invest in new products and services that align with emerging trends and meet evolving consumer demands. CD-R King's downfall was partly due to supply chain issues and poor inventory management. The company could have focused on improving its operational efficiency to address these issues. This could have involved implementing better inventory management systems, streamlining its supply chain, and training to improve staff efficiency. CD-R King could have diversified its revenue streams to reduce its reliance on electronic gadgets and accessories. This could have involved expanding into other product categories or offering additional services, such as repair and maintenance services for electronic devices. By diversifying its offerings, CD-R King could have reduced its vulnerability to fluctuations in the electronic gadgets market. 5 V. Conclusion To sum it up, the following reasons are behind the downfall of CD-R King, the inability to adapt to evolving market trends and shifting consumer preferences, and the company's lack of innovation resulted in reducing revenue and popularity as well as customer loyalty. Additionally, CD-R King's reputation suffered due to inadequate customer service and quality control measures, reports of faulty products, and insufficient following-the-purchase assistance disclosed by dissatisfied customers. Further, the lawsuit of Optical Media Board accused CD-R King of enabling copyright infringement 1.5-million-dollar penalty for failing to submit permits for sure of the company's optical media disc importation. All of these controversies that CD-R King faced contributed to its downfall. If they want to strive in the business world, they need to innovate and create a plan to test that all of their products are working well before presenting them to the public. Moreover, the company should train all of their employees to work correctly with manners and train them to work online so the workers are fully prepared for the technological world. Overall, everyone planning to be in the business world must note that product quality matters. The price must be able to meet the customer's expectation in terms of quality, make use of modern tools, research and use modern tools to help the business move fast, and lastly, choose the right product to create a viable product that caters to a specific long-term demand. VI. Recommendations The industry's environment is rapidly changing because of technological advancement, globalization, consumer behavior, regulatory changes, and competition. CD-R King must undertake an environmental scanning and industry analysis approach to evaluate its strengths, weaknesses, opportunities, and threats to determine its competitive advantages in the industry. They must raise their awareness of what is not prohibited when submitting compliances to the authority. CD-R King should also focus on internal analysis because it gives insight into the company's performance and helps identify areas where it needs to improve to meet its objectives, helps uncover fundamental competencies, reveals areas of weakness, provides insight into the culture, and helps in decision-making. Moreover, all of these elements contribute to the organization's overall performance. VII. Implementation To put the specific strategies into action, CD-R King could consider the following: Concentrate on product quality: Before releasing any products to clients, CD-R King can form alliances with trustworthy suppliers and manufacturers and apply extensive quality control procedures to every item. The business may also carry out routine quality assurance inspections and tests to guarantee that the items exhibit exceptional performance, durability, and adaptability. Improve customer service: CD-R King can allocate resources toward hiring, training, and developing highly qualified staff members who can provide excellent customer service. The business can set up convenient channels for customers to submit 6 feedback, file complaints, and make ideas through social media, online chat, and email. Prioritize innovation: CD-R King can introduce products with advanced features that are not easily accessible in the current market. This can be achieved by launching research and development projects and developing partnerships with tech companies. Stay competitive: To better satisfy its target market's needs, CD-R King can do systematic market research to track customer trends and preferences and modify its line of products and pricing strategy, as necessary. Stay up to date with emerging technologies: Regular environmental scans can be performed by CD-R King to spot modern technologies and assess how they might affect the company. As a result, the business can invest in fresh goods and services that satisfy changing consumer expectations and current trends. Improve operational efficiency: CD-R King can improve its inventory management systems, streamline its supply chain, and invest in training to improve staff efficiency. This can address supply chain issues and poor inventory management. Diversify revenue streams: CD-R King can expand into other product categories or offer additional services, such as repair and maintenance services for electronic devices. This can reduce the company's reliance on electronic gadgets and accessories and reduce its vulnerability to fluctuations in the electronic gadgets market. 7 VIII. References Caña, P. J. (1970). What Happened to CD-R King? Esquiremag.ph. https://www.esquiremag.ph/money/industry/what-happenedto-cd-r-king-a00289-20201111-lfrm Kvillan. (2021, June 2). With the rise of e-commerce, is it also the end for our beloved CD-R King? POP! https://pop.inquirer.net/85563/with-the-rise-of-e-commerce-is-it- also-the-end-for-our-beloved-cd-r-king Kinicki, A., & Williams, B. (2018). Management A Practical Approach (8th Edition). New York, N. Y.: McGraw-Hill Education. Mae, S. (2022, March 28). What Happened To CD-R King? 3 Business Lessons In Keeping Up With The Rise Of E-Commerce. Business Philippines. https://www.businessnews.com.ph/what-happened-to-cd-r-king-3business-lessons-in-keeping-up-with-the-rise-of-e-commerce-20220328/ 8 News IX. Appendix 9 10 11
