Best Buy

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EXTERNAL ANALYSIS FOR BEST BUY CO. INC.

Introduction

Best Buy Co., Inc. is a public limited company whose stocks are listed in the New York stock exchange. It is a specialty retailer of consumer electronics in United States which accounts for about twenty percent of domestic market retail business in technology based items. It has store in 24 different locations in United States (USSEC, 2011). Apart from its operations in USA, it also carries out its operations in Mexico, Turkey and United Kingdom etc. (Boyle, 2006). As of 2010, company along with its various subsidiaries operates more than one thousand and fifty stores only in domestic markets (USSEC, 2011). It is a private listed company. The stocks of the company are listed in the New York Stock Exchange under the symbol BBY. The company was ranked as a company of the year by Forbes (Tatge, 2006). It was also ranked as a ³specialty retailer of the decade´ (DSN, 2001). It is currently ranked at number 45 in the Fortune 1000 companies list (One Source, 2011). It is among the primary retailers of electronic goods in the United States. During the first quarter of the fiscal year 2011, it has earned revenues over six hundred million (Best Buy, 2011). SWOT Analysis SWOT Matrix The SWOT analysis of Best Buy Co. Inc. is as follows: Strengths y y Market position Networking y y Weaknesses Limited suppliers Lawsuits

y y

Profitable growth in stores business Alliance

y

Limited geographic concentration

Opportunities y y y Acquisitions Expansions Expanding the product lines y y y

Threats Competition slow sales curve increased rental prices

Strengths Best Buy Co. Inc. is the largest consumer electronic goods retailer in USA and accounts for around twenty percent of the market share in the country. The company enjoys unique market position and it was ranked at number forty five in the Fortune global 1000 companies as of 2010 (one source, 2011). The company outlets are present in numerous states of United States. It maintains a strong network which helps it maintain the economies of scale and enhance the brand image. This strong networking enables the company to serve a wide range of customers to penetrate the market more effectively (Data monitor, 2007). Best Buy was regarded as top company for the year in 2004 by Forbes magazine with respect to its growth rate, profitability and community involvements (Tatge, 2004). The company also witnessed an increase in customer satisfaction. The company¶s score in the American Customer Satisfaction Index rose by positive point in 2007 (Data monitor, 2007). It also manages various mobile stores in the United States which is a product of its joint venture with the various

other warehouses. This relationship with the other stores and warehouses has added to the advantage to the company in helping consumers buy and use its products. Weaknesses The company, despite of its market position and profitability, has some weaknesses. The prime one is the dependence on few numbers of suppliers. By the end of 2007, it maintained around twenty five largest suppliers that accounted for 3/5th of the purchases of the company (Data monitor, 2007). Moreover, the company does not maintain long term contracts in black and white with its major suppliers. This can be a great set-back for the company if any of its suppliers turned its back to Best Buy. Best Buy has been the victim of various law suits against its business operations. One of them is a law suit that alleges it charges customers higher than advertised prices based on the internal prices of the company. In 2000, two customers charged the company for hiding the warranty details of a manufacturer in order to sell their own label products. It paid over two hundred thousand US dollars to settle the issue but remain consistent that it is not doing anything wrong (Civil Justice Report, 2001). The company is heavily relying upon its domestic (US) electronics market for revenue...
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