Best Buy Strategic Analysis

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Best Buy Strategic Analysis

By | July 2007
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The overall analysis of Bets Buy's new strategy focusing on "customer-centricity" is leading the company in the right direction to grow competitively and profitably. Best Buy's 2004 Financial Results (B: 3.0) demonstrate that since its implementation, profit margins have grown 2.3% from the prior year. However, there are intangible obstacles that hinder the execution of the strategy in the long-term, and give opportunity to growing competitors such as Wal-mart and Dell (A: 4.0) to replace Best Buy as a market leader in consumer electronics. ISSUES

Strategic Decision-Making is in the Hands of Mid-level Managers and Sales Associates With the implementation of customer-centricity, customer focus is regarded more highly among the value chain, giving lower-level employees more power in the profitability of operations. As it stands, lower-level employees will need to take on a higher-level of leadership (B: 4.8) and are expected to make strategic decisions in anticipation of customer buying behaviours (B: 4.1). The major issue among this new placement of responsibility is that store-level and field-level employees have little understanding of corporate objectives. Therefore, they are less likely to make decisions in the best interest of the organization (B: 4.1). There are currently no control measures put forth by Best Buy to ensure that there is goal congruency at the lower-levels with the company's strategic objectives and financial objectives. The implications of this issue are extremely severe as lower-level employees have the autonomy to make decisions that may potentially drive down productivity and increase cost substantially. The latter is a detrimental issue because growing market leaders such as Wal-mart and Dell pride their reputation on being a low-cost provider; this is a competitive area that Best Buy may loose to in the long-term.

Corporate Culture is Complacent and Resistant to Change
Another prevalent issue is that Best Buy's corporate...
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