Best Buy Case Study Essay

Best Buy is a multinational retailer of consumer electronics, computing and mobile phone products, entertainment products, appliances, and related services. The company operates retail stores and call centers and conducts online retail operations under a variety of brand names such as Best Buy, Best Buy Mobile, The Carphone Warehouse, Five Star, Future Shop, Geek Squad, Magnolia Audio Video, Pacific Sales, and The Phone House (Bestbuy.com, 4). The domestic segment consists of all operations within the United States, while the international segment includes all operations in Canada, Europe, Mexico, and China. The Best Buy 's success is contingent on the market 's demand for electronics. The company 's strategy is to provide good customer service combined with lower prices (news.cnet.com). Best Buy 's success is directly related to economic conditions, the cost of goods, and other things like fuel prices. The company 's strategy depends upon the ability to offer customers a broad selection of name-brand products; therefore, leading its success to depend upon satisfactory supplier relationships (Bestbuy.com, 8). Best Buy, as it is included in the retail segment, is a seasonal store. Their stronger quarter is the fourth quarter, which they can contribute to the holiday season for their success.

Furthermore, Best Buy’s rapid expansion(s) did brought with it, usual high debt levels and uncommon low profit margins that eventually forcing Best Buy (the firm) into slowing down the firm’s expansion and reconsidering few-to-some of its low-cost strategy or strategies.

Best Buy is electronic retailer that has brand names under 11 brand names in the United States. The company also has services in Canada, China, Europe and Mexico. It specializes in selling technology and entertainment products and services. The company became successful by using a low cost strategy and high cost customer service practices. The company has a lead market position because of its differentiation strategy, its brand names that are reputable and the many series of acquisitions.

The company truly extended itself worldwide in 2003 with the unveiling of a global sourcing office in Shanghai, China. Currently Best Buy operates three offices within China. They are located in Shanghai, Beijing, and Shenzhen. The primary function of the China locations is to buy the products in which Best Buy Co., Inc. sells. Over the next year and a half, Best Buy Co., Inc. is planning on opening what they refer to as “lab stores”(Best Buy Geeks Run amok). The company is taking every opportunity possible to acquire as much information it can about Chinese buying patterns

In 1988, personal computers were added to the product line. Four years into the superstore strategy, Highland, the industry number two, lowered its prices in Minneapolis, Best Buy’s heartland, selling at 10% above cost. Best Buy margins fell sharply. In search of a new approach, Best Buy conducted consumer research and discovered the customers had a poor image of superstores. They saw shopping as a stressful experience and felt pressured by salespeople into buying expensive items. Customers wanted an enjoyable shopping experience and a no-pressure selling environment.

Financial Strengths and weaknesses at Best Buy Corporation Best Buy Co., Incorporated experiences low gross margins and rising confliction from competitors with lower prices on especially on electronics While Best Buy Co., Incorporated is showing improvement over the rivalries in the feeble worldwide economy, the gross margins are not up to stakeholder’s guidelines. This is because of the ascent of rivalry in the innovation market, giving space for organizations like Amazon and Wal-Mart which offer practically identical items at a lower prices. With the innovation business sector being in steady change, the foundation of business sector fragments for individual stores in light of geographic area and population and the procurement of different

The industry is also suffering from the problems of substitutability of products that they are offering. Each department store is offering different lines of products that are in direct competition with other products. This is therefore creating an industry that is

In the operating level, the biggest objective of the Best Buy operating department is to expand its growth domestically and internationally and reduced its operating expenditures in-store. By 2012, the total number of stores in US is 1103, opened 7 and closed 3. In the same year, the total number of stores in Europe, Canada, China, and Mexico are 2393, 256, and 204, 8 respectively, opened 145, 31, 41, and 2 respectively, closed 109, 2, and 3 respectively (United States Securities and Exchange Commission, 2012). However, Best Buy operating department is not able to achieve its second objective until it implements a good strategy to reduce these expenditures.

Best Buy’s mission is to provide a consumer electronic “superstore” that is able to satisfy various needs of the customer. Their acquisition of many brands with different focuses, such as Magnolia Audio Video, Geek Squad, and Speakeasy, show the diverse nature of the companies that Best Buy owns. The companies are then generally combined into one store front to create the

Centre owners will continue to actively manage the retail mix, making sure the retailers are state of the art bricks-and-clicks operators and managing the other activities such as marketing, ambience and social experience to continue to create the most compelling product for our customers and hence compelling investments for investors.

The Internet has changed the way we do virtually everything, including the way we shop. However, shopping is not the only thing that has changed. In the last decade we have changed the way, we apply for loans, study, and even plan a vacation. Doing any of these things would have been impossible a few decades ago. At present, online banking, paying bills, ordering new services, and shopping online have become part of our daily lives. Traditional brick-and-mortar stores have been around much longer than online stores, but we cannot deny that online shopping is giving the traditional stores competition. Many consumers still choose to shop at regular brick-and-mortar stores because they like to see and

Business like Amazon wants to make buying item from their business easier for customers. This is why Amazon offers E-retailing which gives customer option to go shopping online. The internet has had impact change on consumers shopping habit as shopping online has numerous advantages which is why online shopping continues to gain popularity. Some of the advantages of E-retailing is that it’s convenient as consumers are able to go shopping at home which could help them save cost on travelling and also gives consumers an option to compare prices of different products as there are wide range of products being sold online.

Wal-Mart’s business strategy relies on low production costs which it can pass on to its customers. If Wal-Mart were a country then it would be China’s eighth largest trading partner ahead of Russia, Australia, and Canada. Wal-Mart’s non-Chinese owned suppliers operating in China number nearly 5,000 and all of them benefit from a low valued yuan compared to the dollar. The 176 million worldwide customers of Wal-Mart also benefit from the low valued yuan. With nearly 70% of Wal-Mart’s products coming from China a sharp increase in the value of the yuan against the dollar can be devastating for the company as the increased costs for

It makes sense for Best Buy to worry more about Wal-Mart, which is getting more involved in electronics retailing, and less about Circuit City. The competitors are a diverse lot today, and for them to continue to grow they're going to have to get much better at everything they do and define themselves in clear ways. Best Buy's plan is to revamp its stores according to the types of customers they serve. A strategy previously mentioned, customer centricity, focuses on targeting five prototypical customers, all of whom have been given names: "Jill," a busy suburban mom; "Buzz," a focused, active younger male; "Ray," a family man who likes his technology practical; "BB4B" (short for Best Buy for Business), a small professional employer; and "Barry," an affluent professional male who's likely to drop tens of thousands of dollars on a home theater system. Their most current focus is on a "Jill" based store, the soccer mom who has money to spend but typically hasn't a clue of where or how to find products in the store. According to the data Best Buy has collected, Jill shops a few times a year, usually twice at an electronics store, but she usually spends a significant amount.

* Low brand awareness in Chinese CE market. The problem here is that Best Buy doesn’t have any brand awareness in China because it was the first multinational company to have entered the retail end of Chinese CE market. Compared to the two main competitors , Best Buy is in a bad situation concerning brand awareness because these two competitors have been the first Chinese companies to establish themselves in this industry and they own both about 20 % of market share in the Chinese CE market.