This decision was based on the fact that the company was trying to pursue a cost leadership strategy to compete in a saturated market. The highest paid employees were those with the most experience and tenure. These experienced, successful, well-paid, and loyal employees were cut from Circuit City and quickly became a wealth of talent available to their competitors (Mehrmann 2009). This turned out to be a "stuck in the middle" scenario for Circuit City. They neglected to upgrade and protect their core competencies that competitors took advantage of. The company's decision to pursue non-core businesses such as creating CarMax, a used car retail chain and introducing a proprietary DivX player, which turned out to be a huge flop, and attempting to merge with Blockbuster have led to a further erosion of the company's competitive advantage (Rothaermel