Best Buy Co. Case Analysis

 

 

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Best Buy Co. Case Analysis

 

 

 

 

 

 

 

 

 

 

 

 

(APA: Title in all CAPS upper left)                                                                                                  

Deleted:

Deleted: External Analysis¶

 

Where is your Executive Summary?

Formatted: Left

Deleted: With the information gathered, there are no evidence of direct political influence on this industry. Since

 

 External Analysis                                                             

 

With the information gathered, there is no evidence of direct political influence on this industry. Since many products as well as services are imported, there is potential. For example, the European and Chinese tariffs could potentially impact this industry. These are the minor political factor displayed within this industry.

The economic factor with this industry is that consumer electronic compound growth rates have declined in recent years. Even so, this industries revenue has doubled since 2015 indicating the industry is continuing to grow. Macroeconomic issues also directly effect this industry. Recessions have slowed consumer spending, increased housing, then started increasing consumer spending in this industry since 1990. The number of larger firms has decreased by 4% with Circuit City leaving in 2010.

Consumers annually spend $439. (on what in what period?) The most significant change is how people shop. The rapid growth of online sales and the decline in instore sales has dramatically changed this industry. The second largest seller in this industry, Amazon, sells 100% online. Best Buy’s sells in primarily stores and their online sales is only 9.8% of their overall sales as of 2017. Most sales occur in the fourth quarter due to holiday shopping. These are some of the Social and demographic factors that directly influence this industry.

The technological factor of this case is that their upgrades are opportunities for new sales. Products can become obsolete quickly and, difficult to sell at a price to earn a profit. Online sales increased because of improved online technology. Amazon uses online technology to increase its market

many products as well as services are imported, there is potential. For example, the European and Chinese tariffs could potentially impact this industry. These are the minor political factor displayed within this industry

The economic factor with this industry is that consumer electronic compound growth rates have declined in recent years. Even so, this industries revenue has doubled since 2015 indicating the industry is continuing to grow (p. 819- 820). Macroeconomic issues also directly effect this industry. Recessions have slowed consumer spending, increased housing, then started increasing consumer spending in this industry since 1990. The number of larger firms has decreased by 4% with Circuit City leaving in 2010 (p. 808-810).¶

Consumers annually spend $439 (p. 808). The most significant change is how people shop. The rapid growth of online sales and the decline in instore sales has dramatically changed this industry. The second largest seller in this industry, Amazon, sells 100% online. Best Buy’s sells in primarily stores and their online sales is only 9.8% of their overall sales as of 2017 (p. 814). Most sales occur in the fourth quarter due to holiday shopping. These are some of the Social and demographic factors that directly influence this industry.¶

The technological factor of this case is that their upgrades are opportunities for new sales. Products can become obsolete quickly and, difficult to sell at a price to earn a profit. Online sales increased because of improved online technology. Amazon uses online technology to increase its market share of consumer electronics: 43% of its sales are consumer electronics (p. 812). This has pressured Best Buy to expand its own online. As of 2017, Best Buy’s online sales increased from 6% to 9.8%, and currently 20% of Best Buy’s online sales that are picked up at stores (p. 814), which increases foot traffic in their stores. Online sales of consumer electronics increased from 17% to 20% from 2017 to 2021 (p. 809). Therefore, online sales are growing tremendously in just under five years.¶

The environmental factor of this case is that while Best Buy is not a Triple-Bottom-Line company, it increased its environmentally friendly presence by offering an electronics recycling program. This shows their goal of improving their environmental sustainability (p. 816). Their competition Amazon does not offer this. Best Buy definitely has some improvements to do in this field, yet they are taking the initiative by starting programs such as this one. ¶

There weren’t many legal factors with this case study, yet we do know that non industry legal issues arise with mergers, acquisitions, and partnering agreements. Best Buy is not… [1]

 

 

 

 

share of consumer electronics: 43% of its sales are consumer electronics. This has pressured Best Buy to expand its own online. As of 2017, Best Buy’s online sales increased from 6% to 9.8%, and currently 20% of Best Buy’s online sales that are picked up at stores, which increases foot traffic in their stores. Online sales of consumer electronics increased from 17% to 20% from 2017 to 2021. Therefore, online sales are growing tremendously in just under five years.

The environmental factor of this case is that while Best Buy is not a Triple-Bottom-Line company, it increased its environmentally friendly presence by offering an electronics recycling program. This shows their goal of improving their environmental sustainability. Their competition Amazon does not offer this. Best Buy definitely has some improvements to do in this field, yet they are taking the initiative by starting programs such as this one. (Stick to importance of environmental stewardship in the

industry; this is not abot Best Buy but external factors.)

 

There weren’t many legal factors with this case study, yet we do know that non industry legal issues arise with mergers, acquisitions, and partnering agreements. Best Buy is not going through any of these type of situations at the moment. So just like the external factors, for the legal factors there are no evidence of direct legal influence on this industry.

Porter’s Five Forces

 

There is low threat from new entrants due to high capital costs but a high threat due to rivalry between existing firms. Stores and online presence require significant lead time and capital investment. Also, price competition is high between rival firms. This is what was gathered for Best buys competition portion.

 

 

 

 

Suppliers are a medium threat to this industry because there is competition to obtain preferred suppliers.(Which increases supplier power) Firms are also partnering with high-end suppliers like Apple,

to provide dedicated floor space and special trained staff to sell these products. Retailers like Best Buy are also beginning to compete with suppliers by offering their own brand. Furthermore, new suppliers can appear due to new technology.

The buyer’s factor with Best Buy is somewhat of a high threat, since buyers have little switching costs. Buyers often do showroom purchasing by visiting stores to test products and then shop online for the best price. Stores like Best Buy are struggling to compete with other online retailers like Amazon because of their prices. Buyers have many choices and can buy from major retailers like Target or Walmart. Buyers also have the option to purchase their products from several online retailers like Amazon and Wayfair. In addition to those online retailers, companies like Apple and Microsoft offer their own online store.

As for the Substitutes factor, it is a low threat to this industry. Discretionary spending is used for consumer electronics. This is done so that other substitutes would include discretionary spending items like travel, joining gyms, and going to a theatre. Being that this was such a low threat, this is something that Best Buy shouldn’t have to worry about anytime soon.

Complements are not exactly threatening to this Industry. Even though this is true, opportunities from complements increase their profits. Firms can offer complementary services and products. Best Buy purchased Geek Squad, and now offers both instore and home expert service. All retailers offer complementary products like USB drives, HDMI cords, protective cases. Most retailers also offer warranties on their products. Besides increasing profits, some of these items can enhance the consumer purchasing experience.

 

 

 

 

Industry Attractiveness

 

The key drivers in the consumer electronics industry are technology and price. Improvements in technology provide new and upgraded products. Even so, one of the consequences of improved technology is that existing products become obsolete and must be sold at depressed prices. This industry is still very attractive and dynamic, and revenue is still growing. Prices will keep dropping, while Best Buy is still fighting to compete. Best Buy understands that with those challenges come opportunities. In fact, the next big technology breakthrough is being developed now and will soon be available for sale.

Internal Analysis

 

After looking at Best Buy financial data, we can see that they struggled in 2012. Their sales and profits were steadily declining which cause their stock price to drop as low as $11.99 per share. Best Buy was operating at a net loss and was heading towards a downward slope, however in a major turning point, Best Buy hired Hubert Joly as the new CEO and his turnaround strategy called Renew Blue which provides values to customers in form of advice, service, and convenience at competitive prices which helped Best Buy to regain its competitive advantages. One of the first thing that Joly did was invest in transforming a team of top managers that has a passion for leading and retraining employees to focus on providing unique, multichannel customer experience.

Best Buy value chain consist of its primary activities such as supply chain. Best Buy has partnerships with leading technology company such as Apple and Samsung to provide an in-store and personal buying experience. Best Buy also has warehouses located in most major metropolitan areas which cut cost and allow customers in the area to have same day online orders. As for Best Buy operations, they utilize a “Grab-and-go store format which is convenience for their customers and reduce

 

 

 

 

employment cost by one-third. The allocation of the store space is carefully design with specialize trained staff for that line of product. This increases value for its customers because customers are having a better buying experience and are more satisfied with their purchases.

To stay competitive among large competitors such as Amazon, Best Buy had to redesign each of its distribution centers and create metro ecommerce to better meet customers demand. Best Buy

customers can have multiple options when shopping such as, online ordering or In-store pick up. Another one of Best Buy primary strengths in the value chain is their private-label brands Geek Squad, Insignia, Dynex and Rocketfish. Not only does Best Buy Geek Squad add value to its customers through product repairs but continuous support for its products.

As for Best Buy support activities in the value chain, Best Buy continuously invests in research

and development to innovate its current services and add new services. They are also looking for growth opportunity outside of the U.S. They currently operate internationally in Canada and Mexico and formerly in China until February 2011, and in Europe until the end of 2012 where it they merged. With Best Buy’s new management team that is dedicated to build up the company, they will be able to achieve a sustainable competitive advantage.

Best buy core competencies include its partnerships with its venders in leading technology companies. They also have their own private-label brands with unique experiences for customers. (Not

the actual core competencies; what capabilities created these resources?)They offer specialized sale teams

 

that help customers with a positive buying experience. Also try adding a grab-and-go store format to help the store reduce cost and makes it convenient for customers.

 

 

 

 

Now let’s dive into (too informal)Best Buy financial ratio. Best Buy was able to turn a profit in

 

the years of 2013 and 2014. BestBuy profit margin ratio increased from -0.98% in 2012 to 3.06% by the end of 2014. Best Buy Earnings per share also increased from -2.89 in 2012 to 3.86 by the end of 2016. This is a good indication for investors because it shows that the company is making a profit. However, Best Buy quick ratio is less than 1 from 2012 through 2016. This means that Best Buy may not be able to fully pay off its current short-term liabilities. (Wouldn’t this be a weakness in your SWOT?)

What’s the business level strategy?

 

Other weaknesses form your SWOT or VRIO?

 

Issue Identification

 

 

Best Buy’s performance was concerning, and many thought the company was heading towards bankruptcy. The company took a quick turn around when they hired a new management team. The company set a mission to attract and inspire leaders and employees. The priority for the company was to create a top management team that possesses the needed expertise, and a commitment to helping the company take on a new transformation. These implementations were necessary for the company, and it has helped the company gain a competitive advantage within this industry. In addition, Best Buy provides top notch customer service by making sure customers have access to service through tech support provided from Geek Squad or directly from store staff. (Get into the main strategic issue.)

Although Best Buy has made a great turnaround in the past couple of years, they still have some areas to work on. In terms of weaknesses, Best Buy is not well known globally because a great majority of their stores are located in North America. The company must work on brand expansion globally to diversify their customer base and reach a larger audience. The company has mastered customer service

 

 

 

 

and has a strong focus on in-store experiences for their shoppers. Although the company provides in person customer service options, the company should also focus on their online shopper experience.

As for their opportunities, Best Buy should work on increasing online sales as demand for electronic products is on the raise. This is an opportunity that we find extremely important going forward for Best Buy. There are new technology items being released every single day. This is why it is important that Best Buy get in front of technological trends and provide an easy and seamless approach to getting the products from their shelf to the customer.

The external threats for Best Buy are, that Best Buy is threatened by the decline of firms in the industry. When the number of firms decrease, this increases the competition between rivals. Firms will attempt to lower prices much further on products and services in order to undercut their competitors. The technology market is a rapidly grown market with new innovative products every week. There is always a newer product that comes out, that is promoted as being twice as faster than the previous model. Best Buy needs to understand that products have rapid upgrades which result in short life cycles for products.

(You need to describe the primary strategic issue that you will be generating 2 alterntives for.)

 

Alternatives

 

There are quite a few alternatives that Best Buy could seriously consider when addressing their key issues of where they currently stand against their competitors and generally as a business looking to grow. One important alternative to note for Best Buy is finding a way to expand their online market in a unique way and create a better experience for their customers. Another alternative is for Best Buy to reenter international markets to increase global differentiation in hopes of increasing sales. (Again, what

is the primary strategic issue these alternatives are for?)

 

 

 

 

Best Buy will need to differentiate their presence online in a unique way. In 2017, only 17% of Best Buy’s total revenue was from online sales. The problem that Best Buy faces is transitioning the popularity the store has to the same level of usability online. They could develop more store-like experiences online by providing stimulated samples of video and sounds, plus provide links to skilled representatives that can answer all questions or concerns for the customer. A “quiz” could be offered asking customers what kind of product they’re looking for, what the use would be, and any preferences they have. Customers could get real time feedback suggesting them products. The benefit of considering this alternative is a better customer experience that could result in more sales. One downside is that is that Best Buy’s customers may just prefer the in-store experience and this change wouldn’t lead to any tangible growth. Stockholders can benefit from this alternative because the more people that can get the same experience online as they would in stores can lead to more sales in the long run, even if the customer places orders for pick up. (Creative!)

As of 2015, Best Buy has been solely servicing North America. The company faced a financial strain and closed all international stores, which was in their best interest at the time. However, this is an untapped market with large earning potential. (Is this your second alternative? Name it.)Best Buy could

enter markets in developing countries to sell their older and more obsolete products that wouldn’t sell in over saturated North American markets. This could in turn create a better global presence for Best Buy. However, there was a previous failure with expanding internationally. There’s a possibility it could fail again if not executed properly or if selling these products turns out to be more difficult than estimated. If successful, stockholders would benefit from a growing market share that Best Buy could gain from being more globally recognized. (Light on analysis of pros and cons for both alterantives.)

Recommendations

 

 

 

The best option for Best Buy would be the implementation of a new, user friendly, online interface. This option will keep them most competitive with the market leader, Amazon, who is a solely online retailer. Best Buy would need to start making selections for web developers to start the project immediately. It may be in their best interest to hire some fresh faces with different backgrounds to work on the project as well.

The selection process would take about three months. After candidates are selected, the website production would take about six to nine months and cost the company around half a million dollars. Best Buy would then also need to train existing website customer support employees on how to use the site and how to service customers. This would take about three months and may cost the company a few hundred thousand dollars. Marketing would need to be extensive to get the word out and the campaign would need to be rigorous for a year.

They could offer special discounts exclusively online and would need to do email campaigns.

 

They should also do targeted ads on websites and search hosts. This would cost about one to three million dollars. Since Best Buy would be mainly training existing employees, this option would be relatively inexpensive and would rely on proper training. The website development for this option is crucial but the success also heavily weighs on marketing efforts. If Best Buy could increase their online sales, they would have a chance at becoming market leader once again.

To measure success for this option would be quite easy. Best Buy would need to monitor their                                                                                                            online sales to see if there is any growth. They can track what percentage of sales are happening online and in store. It would still be very important to monitor in store sales, as the goal of this new development isn’t to transition more sales online, but to expand total sales. Best Buy doesn’t want to cannibalize it’s in store sales through online efforts. The goal is to gain new customers. However, their efforts won’t result

 

 

 

 

in change overnight. It would be best to keep tracking this information yearly for about five years. If Best Buy’s marketing reach is far enough and successful, they will be able to gain more recognition and secure higher profits.                                                      

 

Executive Summary (An Executive Summary goes in front. It should provide a brief overview of

 

the case and of what you will cover in te paper.)

 

In conclusion, the overview for Best Buy is that they started off as a music store and quickly grew into a consumer electronical store. Best Buy has had many different changes, different leadership and failures over the years. Best Buy’s general strategy is to growth through acquisitions of other consumer electronics firms. This is how Best Buy was able to multiply there earnings rather fast. The key findings are that Best Buy acquired many great assets that helped maintain a growing revenue stream for years.

Companies like Geek Squad were purchased by Best Buy, which truly helped them to maintain an increasing revenue stream.

 

The key issues of this case are, Best Buy will need to reinvent themselves in order to compete with their competition going forward. Best Buy doesn’t have any international presents currently, it has becoming increasingly harder to compete with online competitors price point, and Best Buy is afraid of the decline of electronical technological firms like their self. One alternative that we were able to come up with is for Best Buy too attempt to expand their online presence. We found this to be extremely important for Best Buy to compete with any of their online competitors. Another alternative For Best Buy is to Attempt international expansion again. for this Best Buy will need to do Tim proper data collection of any country they decide to expand into. They will need to know cultural factors of the land, to know how to best supply their consumers.

 

 

 

 

Our top recommendation for Best Buy is too develop a new user-friendly interface for their online shoppers, to create a better online presence. With This new interface, it will offer consumers discounts that will be beneficial to Best Buy. This firm should use the data from the discounts their sells growth. Furthermore, Amazon does something extremely similar to what we are suggesting. They use ads that you’ve liked, and things you’ve purchased to market products to you. This is the evolution of online shopping, and Best Buy needs to evolve with the times, like their competitors have.

 

 

 

 

 

 

 

 

 

 

Deleted: ¶

 

 

 

 

Industry definition: Consumer-electronic retail segment of general retail industry.

 

 

Pages (65-70)

 

Description of the Forces (what trend is actually increasing or decreasing, or what event is causing an impact?) Pos. or Neg. Effect ? Description of how this trend might affect average industry (not just this organization) profitability
Political Forces:    
(None identified)    
Economic Conditions:    
Industry revenue is growing. Revenue doubled from 2015 to 2021. (pg.808) (Industry’s of Best Buy’s? p. 808 of what?) Pos. Increased sales generally means increased profit. But profit margins might be less due to increased competition.
The rate of growth has decreased over that same time period. (pg. 808) & (820) Neg. Strong and increased demand could allow for retailers in this industry to continue their profitability. Industry is still growing but not at the same rate as before
From 1998 to 2004, the number of firms in this industry with over 100 employees declined by 4% per annum. (pg. 808)

 

 

Effects of the 2008-09 recession?

 

Increased consumer spending on electronics?

Neg. Decline of firms usually means the weaker firms left the market leaving only the strong ones in the market.

 

Decline of firms in this industry means tougher competition (negative).

 

 

 

 

Sociocultural (and Demographic) Forces:    
In 2017, the average revenue per

U.S. customer purchasing consumer electronics was $439.09 (pg. 808) & (821)

What’s the trend?

Pos. If the average consumer is purchasing over $400 worth of products annually, the demand will continue in the years on. (Assumption)
Increase of online shopping means people are not going into stores like they used to. Pos. and Neg. In-store shopping has decreased (negative) but the demand for products is still very high, especially through online-shopping (positive).
     
Technological Forces:    
Products have rapid upgrades and shorter life cycles (pg. 808) Neg. Electronic products have shorter life cycles which means products become obsolete quicker. Older products are heavily discounted to sell. While the need for upgrades creates more demand in this industry, this demand is limited to the technological elite. “Today’s must-have is tomorrow’s bargain commodity at Walmart”
Online shopping presence Pos. and Neg. Firms that have improved their online presence are growing better than other firms. Firms with poor online presence are losing sales.
Product and part cannibalization have led to the evolution of consumer electronics as a measure of socioeconomic status in countries. (pg. 808) Pos. and Neg. This allows firms to offer their own brands at lower prices. Due to the socioeconomic status of consumer electronics, technology is available to a more widespread demographic (positive). However, the technological elite are always looking for the newest technology and will look for the best and won’t respond to just price incentives. (negative).
Environmental Forces:    
Increased demand for environmental sustainability Pos. and Neg. This depends on how well companies can adapt to incorporating and creating sustainability within their organization.
Recycling electronics and appliances Pos. Firms that can successfully offer recycling without suffering losses will have an advantage.
Legal Factors:    

 

 

 

 

(None identified)    

 

 

 

 

 

 

 

Suppliers – Manufacturers and distributors of electronic devices

Bargaining power of suppliers:

 

  • Fewer suppliers to rely on than other industries. (-)
  • Suppliers offer many differentiated products. (+)
  • Many private-label brands sell directly to the retailer. (+)
  • Suppliers unlikely to enter consumer- electronic retail industry but (0)
  • Retailers becoming suppliers. (+)
  • Change in technology creates new suppliers (+)
  • Change in technology loses suppliers (-)

 

(see pp. 79-80) & (815-816)

 

Medium threat to this industry– major brands competes with each other to be preferred supplier. New technology can create new suppliers.

Substitute products:

 

  • (0)
  • Going to the movies or a play at a (0)
  • Joining a gym. (-)

 

 

(see pp. 82-83) & (815-816)

 

Low threat to industry profitability – Substitutes are most often combined with industry products, not substituted permanently.

Risk of entry by potential new competitors:

  • Capital requirements are (+)
  • Economies of scale are harder to attain. (-)
  • Entry or expansion of online competitors. (-)

 

 

Rivalry among established companies:

 

  • Demand for products is increasing. (+)
  • Retailers competing with suppliers. (+) How is this positive?
  • Competitors using online sales to compete with stores. (-)

 

 

(see pp. 83-88) & (809-813)

 

High threat to this industry profitability – few strong competitors. One strategic mistake can doom firm. Online selling is biggest threat.

Buyers – Consumers

 

Bargaining power of buyers:

 

  • Buyers have little to no switching costs. (-)
  • Many firms to choose Some with little service, some with lots of service. Online versus in store. (-)
  • Buyers will show no threat to entering consumer-electronic retail industry. (+)
  • Buyers are normally individuals or smaller businesses. (0)

 

Complements: Describe the role of complements in this industry (see p.80):

  • Computer repair and installation services Geek Squad). (+) (How is this positive for trhe industry, not just Best Buy?)
  • Power cords, USB drives, laptop cases. (+)
  • Sound systems for large screen TVs. (+)
  • Extended warranties. (+)

(see pp. 88-90) & (816)

 

Low threat to industry profitability – Complements offer opportunities to expand profits.

 

The consumer-electronic retail industry is in very high demand due to the increase of electronic product usage. There is a lot of rivalry from competitors within this industry, especially now with online shopping taking over the in-store experience. Because it is a low threat of entry by potential competitors, this allows for companies already in the industry to continue to dominate. Due to Best Buy having some exclusive products this another advantage over other competing companies.

 

 

 

 

 

 

    External Factors
   

The idea here is connecting specific s / W with specific O / T so that in each cell you will have something like S1, O2. See examples in instructions.)

Some “Core competencies” are just strengths.

Opportunities:

1.          The demand for electronic products is at an all-time high. This allows for prolong and increased profits.

2.          The increased demand for environmental sustainability gives Best Buy the opportunity to incorporate more sustainability into their company.

3.          Bettering the process of online shopping allows for an opportunity to improve online sales.

Threats:

1.         In-store shopping is not as popular Online shopping has become very cause concerns for stores who mak in-store shopping.

2.         Products have rapid upgrades and means that the firms in this indust with the demand and possible com older products at heavily discounte

3.         Best Buy is threatened by the decli industry because this will increase between rivals (price wars).

Internal Factors Strengths that lead to a sustained competitive advantage:

1.          New management team with experience in other successful companies and dedication to build up and support this company.

Core competencies:

2.          Partnerships with vendors in leading technology companies.

3.          Private-label brands create a unique experience and increase profit.

4.          Computer repair and product support creates an even more unique experience for customers.

5.          Special training for employees and salespeople.

6.          “Grab-and-go” store format creates easy and efficient process for customers.

SO Alternatives:

 

1.          Use industry knowledge to expand online presence.

 

2.          Negotiate additional partnering or joint venture contacts with suppliers to provide “shelf” or “floor” space for that supplier.

 

3.          Advertise expert trained staff to attract buyers who want extra service.

ST Alternatives:

 

1.          Use industry knowledge and suppl keep products new and to be able products that did not sell. Or ask f original price for products that did obsolete.

 

2.          Add expert sales force advice to m better.

 

3.          Use connections with suppliers to during price wars.

Weaknesses:

1.          Online sales provide only less than a quarter of yearly sales.

2.          International sales are very low, most stores are located in U.S.

3.          Focus more on in-store experiences rather than online shopping experience.

4.          Specialized training can be costly, especially if training is needed for all employees.

5.          By lowering prices to compete with competitors, this can decrease yearly revenue.

6.          Incorporating recycling programs can create higher costs and lower revenue.

WO Alternatives:

 

1.          Find a way to expand online market in a unique way (i.e. not copying Amazon)

 

2.          Advertise recycling program to boost company image especially with younger more socially conscience buyer with growing disposable income.

 

3.          Advertise expert trained staff to attract buyers who want extra service to improve customer in-store

experience.

WT Alternatives:

 

1.          Develop unique online shopping e providing a store-like experience t simulated samples of video and so customer service reps who have sp and experience on the product sho

 

2.          Develop international markets in s world countries to sell older and o Use a different store or brand nam should only be known for top quali

 

3.          Develop a mentor program for in-s reduce training costs.

 

Strategic Alternatives Matrix for Best Buy

 

 

 

 

o

 

 

 

 

 

 

 

 

Strengths in Support Activities

Decreases Costs? (Cost drivers related to low cost leadership on pp. 192-201) Increases Value to the customer

? (value drivers related to differenti ation on pp. 188-

192)

Strength leading to a Sustainable Competitive Advantage (pp.

115-119):

Valuable (V), Rare (R), Costly to Imitate (I), and Organized to Capture Value (O)

Strengths in Primary Activities

(list resources and capabilities below):\

     
Supply Chain Management:      
Warehousing X   V, I
Vendor partnerships with leading technology companies.   X V, R, I, O
       
Operations:      
“Grab-and-go” store format X X V, R, O
Built or leased big box stores X   V, I, O
Purchased high-end consumer-electronic chains, mall-based music and entertainment retailer. X   V, R, I
Vendor allocated floor space and special trained

sales staff.

  X V, O
       
Distribution:      
Online ordering   X V
In-store shopping/in-store pick up X X V, O
       
Marketing & Sales:      
Private-label brands (Geek Squad, Insignia, Dynex,

Rocketfish, etc.) .(pg. 806)

X X V, R, I, O
Accentuate the additional services offered.   X V, O

 

 

 

Impressive customer service.   X V, R
       
After Sales Service:      
Computer repair and product support (Geek squad)   X V, R, I, O
Warranties   X V
Installation services   X V, R, O
Recycling X   V, R, O

 

 

 

 

 

Strengths in Support Activities

Decreases Costs? (Cost drivers related to low cost leadership on pp. 192-

201)

Increases Value to the customer? (value drivers related to differentiat ion on pp. 188-192) Strength leading to a Sustainable Competitive Advantage (pp.

115-119):

Valuable (V), Rare (R), Costly to Imitate (I), AND Organized to Capture Value (O)

Research and Development:      
Continued innovative research and new services. X   V, O
Looking for growth outside of the U.S.   X V, O
Information Systems:      
Acquired Dealtree to implement customer returns, trade-ins and liquidation programs. (pg. 805) X X V, R
Acquired Mindshift in attempt to move into managed IT services. X   V, O
       
Human Resources:      
Invested in improving training for employees and

salespeople.

  X V, R, I, O
View customer service as valuable and important.   X V
       

 

 

 

Accounting and Finance:      
Decrease shipping costs to customers to better compete with other competitors. (pg. 814)   X V, R, I
       
       
Firm Infrastructure, including Culture, Leadership, Processes, Policies and Procedures:   X  
Commitment to customer-centricity. X X V,
Creation of top management team to help with

Best buy’s continued transformations.

  X V, O
Very proactive and involved CEO (Joly).   X V, I

 

 

 

 

 

  Weaknesses (Most of these are not weaknesses.) Decreases Value? Increase Cost?
 
Primary Activities    
Supply Chain Management:

None Identified

   
Operations:

Most stores are located in the U.S.

X  
Distribution:

Online sales only represent 17% sales. (pg. 816)

X  
Marketing and Sales:

Only 8.4% of sales are international. (pg. 805)

X  
After Sales Service:

Recycling program eventually lowered revenue and

  X
  created higher costs. (pg. 816) (How did it lower revenue?

Do you mean profit?)

Support Activities    
Research and Development:

Focusing too much on in-store experience and not enough on online shopping experience. (pg. 814)

X  
Information Systems:   X
  Creating IT systems can be expensive. (But is IT adding

value? Overly expensive?)

Human Resources Management:   X
  Highly specialized training can be costly. (Like IT,

worthwhile expenses are investments, not weaknesses.)

Accounting and Finance:   X
  Lowering prices to compete with competitors.
Firm Infrastructure:

Management is always changing; people come and go

X  
  quick. (Management turnover)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Best Buy Co., Inc. (September 7, 2017).

Works Cited

 

Formatted: Font: (Default) Times New Roman

Formatted: Centered

 

 

 

 

 

Your appendices were well done for the most part, and paper content tracked reasonably well with them. Detail and analysis were light in sections, with a few misunderstandings of concepts like PESTEL putely for external factors and the nature of core competencies. Executive Summaries are like abstracts and should start a paper. See additional comments throughout.

Formatted: Left

 

 

Executive Summary                                                                  7.5 / 10

 

External Analysis                                                                      23 / 25

 

Internal Analysis                                                                       21 / 25

 

Issue Identification                                                                    12.5  / 15

 

Alternatives                                                                             13.5 / 15

 

Recommendations 13 / 15
 

Appendices

 

PESTEL

 

 

 

6.5 / 7

 

5 Forces

 

6 / 7

 

Value Chain / VRIO

 

6 / 7

 

SWOT

 

6 / 7

 

 

I was looking for your separate SWOT appendix, but you integrated it with your SWOT Matrix; OK.)

Formatted: Indent: Left: 0.75″, First line: 0″

 

Alternatives Matrix                                                         6 / 7

 

Writing and APA                                                                     -1

 

 

 

TOTAL                                                                                 

 


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