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Case Study

Driving innovation (A): The birth of Carmax

By David C. Robertson and Glenn Mercer

17 pages

December 2007

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Reference: IMD-3-1867

Circuit City in 1990 was doing fine, with good profits on rising revenue. But they saw that this would not last forever, and started searching for new avenues for growth. They believed they were good at selling big ticket items, financing those transactions, and running a “big box” retailing business. They commissioned a young employee to find new opportunities for growth. CarMax was born. But CarMax faced early hurdles – how big should the stores be? How fast should they grow? And how should they fight off the threat of Wayne Huizenga’s AutoNation?

Learning Objective

This case can be used as an example of business model innovation, as an example of a company leveraging its distinctive capabilities in new markets, and as an example of strategic use of IT.

Keywords

Car, Retail, Services, Automotive

Settings

United States of America
1990-1999

Type

Field Research

Available Languages

English

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This case study is part of a series

Driving innovation (A): The birth of Carmax
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This case study is part of a series

Driving innovation (A): The birth of Carmax
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