Doomed Year
Case Study 3: Best Buy
1. Identify and explain any 5 general environment factors that have impact on the industry that Best Buy is involved in. The general environment factors included the demographic segment, political/legal segment, technological segment, economic segment, and global segment.
Economic Segment
The economic downturn and tightening of credit in the most recent decade has resulted in the declining growth of Best Buy and the demise of its competitors such as Circuit City and CompUSA. The speed and extend of economic recovery will influence growth opportunities in the future. Even though personal income is on the rise in US, recession induced trends such as increased financial prudence could delay the increase in demand of luxury, high-end, and discretionary products. The economic recession also influenced inflation and trade balances internationally. The exchange rates are also impacted by the recession, which in turn affect the viability of international expansion.
Political/Legal Segment
When a company operates using bricks-and-mortar retail outlet in a US state, all sales made within that state, both in-store and online, are subjected to sales tax. However, firm that does not have a “physical presence” in a state does not have to charge sales tax to its online customers. This issue is up for debating on whether distribution centers fall within the definition of “physical presence” with online retailers threatening to pull distribution centers and the jobs they provide from any state that says it is so.
Technological Segment
The increased use of the Internet provides businesses with multiple challenges and opportunities, both in terms of the range of products offered as well as new ways to conduct business and access customers. Additionally, the smartphone and tablet trend toward the consolidation of functions such as computing, messaging, phone calls, GPS navigation, games, camera, and etc will influence both the demand for these
1. Identify and explain any 5 general environment factors that have impact on the industry that Best Buy is involved in. The general environment factors included the demographic segment, political/legal segment, technological segment, economic segment, and global segment.
Economic Segment
The economic downturn and tightening of credit in the most recent decade has resulted in the declining growth of Best Buy and the demise of its competitors such as Circuit City and CompUSA. The speed and extend of economic recovery will influence growth opportunities in the future. Even though personal income is on the rise in US, recession induced trends such as increased financial prudence could delay the increase in demand of luxury, high-end, and discretionary products. The economic recession also influenced inflation and trade balances internationally. The exchange rates are also impacted by the recession, which in turn affect the viability of international expansion.
Political/Legal Segment
When a company operates using bricks-and-mortar retail outlet in a US state, all sales made within that state, both in-store and online, are subjected to sales tax. However, firm that does not have a “physical presence” in a state does not have to charge sales tax to its online customers. This issue is up for debating on whether distribution centers fall within the definition of “physical presence” with online retailers threatening to pull distribution centers and the jobs they provide from any state that says it is so.
Technological Segment
The increased use of the Internet provides businesses with multiple challenges and opportunities, both in terms of the range of products offered as well as new ways to conduct business and access customers. Additionally, the smartphone and tablet trend toward the consolidation of functions such as computing, messaging, phone calls, GPS navigation, games, camera, and etc will influence both the demand for these