Best Buy case study

Topics: Best Buy, Strategic management, Customer Pages: 8 (1034 words) Published: April 29, 2015


Course Name
Strategic Management

Submission of
“Case 24 Best Buy Co. Inc.: Sustainable Customer Centricity Model?”

Abstract
Best buy Co. Headquartered in Richfield, Minnesota, was a specialty retailer of consumer electronics. It operated over 1,100 stores in the US, accounting for 19% of the market. With approximately 155,000 employees, it also operated over 2,800 stores in Canada, Mexico, China and Turkey.

The company’s subsidiaries included Geek Squad, Magnolia Audio Videos, and Pacific Sales. In Canada, best buy operated under both the best buy and future shop labels.

Best buy was originally known as Sound of Music. Incorporated in 1966, the company started as a retailer of audio components and expanded to retailing video products in the early 1980s with the introduction of the videocassette recorder to its product line. In 1983 the company changed its name to best buy company. Shortly thereafter the company began operating its existing stores under “superstore” concept by expanding product offerings and using mass marketing techniques to promote those products.

In 2000, the company launched its online retail store: bestbuy.com which allowed customers a choice between visiting a physical store and purchasing products online, thus expanding best buy’s reach among consumers. In the same year the company began series of acquisitions to expand its offerings and enter international markets.

Despite the negative impact the financial crises had on economics worldwide, there were increase in sales during the years from 2006 to 2008, however, it didn’t last. Sales dropped 2% in 2009, which was the first decline in 20 years for the electronics giant.

Television sales specially LCD units, which accounted for 77% of total television sales, were the main driver for best buy, as this segment alone accounted for 15% of total industry revenues.
Current Situation
A. Current Performance
From a strategic standpoint, best buy moved from being a discount retailer to a service oriented firm that relied on a differentiation strategy. In 1989 the company changed the compensation structure for sales associates from commission based to non commissioned based. In 2005 the company took customer service a step further by moving from peddling gadgets to a customer centric operating model. In 2000, the company began series of acquisitions to expand its offerings and enter international markets. In 2009 sales dropped 2%, and the company’s long term debt increased from fiscal 2008 to 2009, which was due to the acquisition of napster and best buy Europe.

B. Strategic Posture
1. Mission
Make technology deliver on its promises to customers. “to make life fun and easy”. 2. Objectives
Sustained growth and earnings.
Help customers to realize the benefits of technology.
3. Strategies
Reviewing it’s business model to ensure that it was satisfying customers needs and desires effectively. It’s new strategy was service oriented firm that relied on differentiation.

Strategic Managers
A. Board of Directors
Richard Shultz (former CEO)
Brad Anderson (former CEO)
Brian Dunn (New CEO)

External Environment
A. Societal Environment
1. Economic
The company has most of its operations in United States and the economic conditions of the country are not hidden from anyone. The economic slowdown has affected the business operations of Bust Buy Co. and they are facing consumer related challenges at every point in the market. 2. Technological

The company is highly equipped with the latest gadgets and the technology it requires to facilitate its customer base. 3. political-legal
The company is engaged in various activities to promote the promotion of candidates and...
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