Best Buy, Inc. Analysis
Executive Summary
A shift in consumer preferences towards multi-tasking electronic devices, fast turnover of electronic devices, increase in online sales, and a tremendous decrease in prices for electronics have led Best Buy to the experience of its first net loss in the past decade. But this is not the first time in Best Buy’s history that the company is going through a “near death experience.” The company has reinvented itself multiple times before and it is clear that the time has come for Best Buy to do it once again. Net Loss of $1.2 billion in 2012 serves as an indicator that the company needs to completely revamp its business strategy and, most importantly, to bring in a strong new leader who will conduct and control reorganization (Case Exhibit 3).
In order to stay competitive and to carry on the legacy of the Best Buy brand name several issues have to be addressed. Among them are technological and website improvements (emphasis on online sales), expansion of the global outreach, employee training and retention strategy, inventory management, and development of a strong business culture. Best Buy is on the fast track to extinction, and if the company does not want to end up like Blockbuster or Circuit City several years ago, immediate action to address these issues is required. Best Buy can no longer achieve a competitive advantage using a cost leadership business strategy because companies like Amazon, Wall-Mart, and Target have successfully superseded Best Buy in this strategy, and if Best Buy continues to lower its prices as a response to competition, the company will continue to carry big losses. It got to the point where Best Buy stores serve as “showrooms” for its direct competition and the company is losing not only on sales but on operational expenses as well. The growth of the company for the 2012 fiscal year was about 0.9% in comparison to about 50% growth of its rival, Amazon; and even though Best Buy sales have increased, it has happened
A shift in consumer preferences towards multi-tasking electronic devices, fast turnover of electronic devices, increase in online sales, and a tremendous decrease in prices for electronics have led Best Buy to the experience of its first net loss in the past decade. But this is not the first time in Best Buy’s history that the company is going through a “near death experience.” The company has reinvented itself multiple times before and it is clear that the time has come for Best Buy to do it once again. Net Loss of $1.2 billion in 2012 serves as an indicator that the company needs to completely revamp its business strategy and, most importantly, to bring in a strong new leader who will conduct and control reorganization (Case Exhibit 3).
In order to stay competitive and to carry on the legacy of the Best Buy brand name several issues have to be addressed. Among them are technological and website improvements (emphasis on online sales), expansion of the global outreach, employee training and retention strategy, inventory management, and development of a strong business culture. Best Buy is on the fast track to extinction, and if the company does not want to end up like Blockbuster or Circuit City several years ago, immediate action to address these issues is required. Best Buy can no longer achieve a competitive advantage using a cost leadership business strategy because companies like Amazon, Wall-Mart, and Target have successfully superseded Best Buy in this strategy, and if Best Buy continues to lower its prices as a response to competition, the company will continue to carry big losses. It got to the point where Best Buy stores serve as “showrooms” for its direct competition and the company is losing not only on sales but on operational expenses as well. The growth of the company for the 2012 fiscal year was about 0.9% in comparison to about 50% growth of its rival, Amazon; and even though Best Buy sales have increased, it has happened