Best Buy Failure in China (International Business)
Introduction
In the world today, there are many companies getting involved in international business, and developing to become a multinational company. Why do these firms want to take the multinational route? One of the dominant frameworks to explain the existence of these multinational companies is the Ownership-Location-Internalisation (OLI) paradigm (Dunning & Lundan 2008).
Running an international business is different from running a domestic business. International business requires you to recognise and understand the cultural differences between countries. Failing to recognise and understand this difference could possibly lead to many difficulties, or worse still, failure. In this essay, I will be discussing the difficulties that Best Buy Co. Inc. faced, and its eventual failure due to the lack of understanding of the cultural differences in its host country, China.
The rise of China has matured into hope for the entire consumer electronics industry. The country’s 1.3 billion consumers and their fast increasing buying power have transformed China into the world’s largest consumer electronics market, a market opportunity that multinational giants cannot afford to neglect (Chen & He 2005). As such, Best Buy was just one of the many multinational companies that tried to enter the Chinese market.
Best Buy Co. Inc.
Best Buy is a multinational retailer of consumer electronics from the United States and operates in the United Kingdom, Canada, Turkey, Mexico, China as well as its home country. Started as the Sound of Music in 1966 as an audio specialty store by Richard M. Schulze, it was later changed to Best Buy Co., Inc. by the board of directors in 1983 and is now the leading consumer electronics retailer in the United States (Pederson 2004). Best Buy sells consumer electronics as well as a wide selection of related merchandise such as music, mobile phones, computers, computer software, DVDs, Blu-ray discs, video games, digital cameras, video cameras
In the world today, there are many companies getting involved in international business, and developing to become a multinational company. Why do these firms want to take the multinational route? One of the dominant frameworks to explain the existence of these multinational companies is the Ownership-Location-Internalisation (OLI) paradigm (Dunning & Lundan 2008).
Running an international business is different from running a domestic business. International business requires you to recognise and understand the cultural differences between countries. Failing to recognise and understand this difference could possibly lead to many difficulties, or worse still, failure. In this essay, I will be discussing the difficulties that Best Buy Co. Inc. faced, and its eventual failure due to the lack of understanding of the cultural differences in its host country, China.
The rise of China has matured into hope for the entire consumer electronics industry. The country’s 1.3 billion consumers and their fast increasing buying power have transformed China into the world’s largest consumer electronics market, a market opportunity that multinational giants cannot afford to neglect (Chen & He 2005). As such, Best Buy was just one of the many multinational companies that tried to enter the Chinese market.
Best Buy Co. Inc.
Best Buy is a multinational retailer of consumer electronics from the United States and operates in the United Kingdom, Canada, Turkey, Mexico, China as well as its home country. Started as the Sound of Music in 1966 as an audio specialty store by Richard M. Schulze, it was later changed to Best Buy Co., Inc. by the board of directors in 1983 and is now the leading consumer electronics retailer in the United States (Pederson 2004). Best Buy sells consumer electronics as well as a wide selection of related merchandise such as music, mobile phones, computers, computer software, DVDs, Blu-ray discs, video games, digital cameras, video cameras