Best Buy Case Study
Abstract
After acquiring a stake in Five Star, a retailer of appliances and electronics in China, Best Buy’s VP John Noble is responsible for launching a dual brand strategy to China as he did in Canada back in 2002. The plan was to open three stores in less than two years in China while Five Star was planning on opening 25 additional stores. Entering China would prove to be much more difficult than neighboring Canada as a country with 1.3 billion consumers which is a lot of people to please. “China was chosen as the second international expansion market primarily due to the overall market opportunity, consumer fundamentals and macro-economic factors (Ivey, 2006).” In addition to the Chinese being very frugal, there was also the issue of the concept of credit, or lack there of in China. About four percent of households in China used credit cards, compared to 75 percent in the United States (Ivey, 2006). Best Buy quickly realized that branding in China was not what really attracted the consumers (Ivey, 2006).
Best Buy Inc Best Buy had been interested in entering China since the 1990’s. By that time, China had been hosting many of the United States and Europe as far as different manufacturing products. The option of dual branding was what Best Buy was thinking in order to essentially join forces with Chinas retailer of electronics and appliances, Five Star. By coming together, Best Buy in United States thought that the two companies would be even stronger as one. This sort of dual branding worked very well in Canada and presumably would have the same success in China.
Competitors
Some of the main competitors of Best Buy are Wal-mart and Costco. The competitors were constantly increasing their CE retail market and in particular they increased the products that were less complex therefore easier to sell. Internet shopping and distributors such as Amazon or sites like that are another example of a competitor in the CE market.
After acquiring a stake in Five Star, a retailer of appliances and electronics in China, Best Buy’s VP John Noble is responsible for launching a dual brand strategy to China as he did in Canada back in 2002. The plan was to open three stores in less than two years in China while Five Star was planning on opening 25 additional stores. Entering China would prove to be much more difficult than neighboring Canada as a country with 1.3 billion consumers which is a lot of people to please. “China was chosen as the second international expansion market primarily due to the overall market opportunity, consumer fundamentals and macro-economic factors (Ivey, 2006).” In addition to the Chinese being very frugal, there was also the issue of the concept of credit, or lack there of in China. About four percent of households in China used credit cards, compared to 75 percent in the United States (Ivey, 2006). Best Buy quickly realized that branding in China was not what really attracted the consumers (Ivey, 2006).
Best Buy Inc Best Buy had been interested in entering China since the 1990’s. By that time, China had been hosting many of the United States and Europe as far as different manufacturing products. The option of dual branding was what Best Buy was thinking in order to essentially join forces with Chinas retailer of electronics and appliances, Five Star. By coming together, Best Buy in United States thought that the two companies would be even stronger as one. This sort of dual branding worked very well in Canada and presumably would have the same success in China.
Competitors
Some of the main competitors of Best Buy are Wal-mart and Costco. The competitors were constantly increasing their CE retail market and in particular they increased the products that were less complex therefore easier to sell. Internet shopping and distributors such as Amazon or sites like that are another example of a competitor in the CE market.
References: Dawar, Niraj; Chandrasekhar, Ramasastry. Case No. 9B09A016. Published 6/26/2009, Revised 5/11/2010. Richard Ivey School of Business, 2006.