Critical Analysis: Best Buy When Best Buy first opened it was an event that an electronics store could hold such a variety of products, have knowledgeable employees, and offer competitive prices at the same time. Although in 2012 it was reported that revenues for Best Buy increased, the company still fell victim to the problems of having a decrease in net income and operating cash flow. “The company reported revenues of (U.S. Dollars) USD 50,705.00 million during the fiscal year ended March 2012, an increase of 1.93% over 2011. The operating profit of the company was USD 1,085.00 million during the fiscal year 2012, a decrease of 54.30% from 2011. The net loss of the company was USD 1,231.00 million during the fiscal year 2012, as against a net profit of USD 1,277.00 million during 2011 (Strategic Analysis 1).” It is obvious by these numbers that Best Buy, a company that has been historically successful, has been running into some recent troubles. In this report I will identify all of the potential reasons for Best Buy’s recent poor performance, as well as offer my opinion for the primary reasons for Best Buy’s recent sub-par performance.
As a company, Best Buy can be held at fault for some of its performance struggles purely from an internal point of view. Best Buy is categorized as the “leading global electronics and appliance specialist retailer (Passport 4).” They have obtained such success from their warehouse type stores, with specific services offered inside (Geek Squad and MindSHIFT). Using this success as a basis Best Buy strategized to expand their stores in the United Kingdom, China, and Turkey, in hopes of expanding to obtain more revenue and more net profit. However this strategy backfired and these stores in the international market were forced to close in 2011. These store closures carried a 2.6 billion dollar charge with them, which were reflected in the 2012 fourth quarter results.
Bibliography: "Best Buy Co, Inc. - Financial and Strategic Analysis Review." Best Buy Co, Inc. Global Date, 3 Aug. 2013. Web. "Best Buy Co Inc In Retailing (WORLD)." Passport. N.p., Apr. 2012. Web. Savitz, Eric. "Best Buy: Grasping At Straws." 29 Mar. 2012: n. pag. Print.