BEST BUY COMPANY CASE ANALYSIS Harvard Case Solution & Analysis

BEST BUY COMPANY CASE ANALYSIS Case Solution

SWOT Matrix

STRENGTHSWEAKNESSES
·         Highly skilled salesforce and workforce of over 125,000 employees.

·         Fortune 100 Company.

·         Global presence in Canada, China, Puerto Rico, Mexico and Europe in addition to the U.S.

·         One of the largest specialty electronic retailers in US.

·         Customer centric, community involvement.

·         Locations of the company are accessible and visible.

 

·         Poor mobile phone sales

·         Dependent on third party vendors and manufacturers

·         Poor customer service

·         Internal ad agency

OPPORTUNITIESTHREATS
·         Positive outlook for global consumer electronics market

·         Rising popularity of e-commerce will boost top-line growth.

·         Looking for outside ad agency.

·         Enhance appeal to women.

·         Online internet sales.

·         Global expansion

 

·         Stiff competition from online retailers

·         Rising labor wages in the U.S.

·         Increased rental prices and slow sales curve.

·         Music piracy

·         Circuit city

Strengths

            Best buy Company is one of the largest electronics products retailers in US and it accounts for a total of 20% of the total market share of the country. A unique position is enjoyed by the company in the market and it was also ranked in 2010 on number forty five among the 1000 global Fortune companies. The outlets of the company are easily accessible and are present in numerous locations of the United States. A strong network is maintained by the company which enhances the brand image and the economies of scale of Best Buy Company. In terms of the growth rate, community involvement and profitability, the company was recognized as the top company by Forbes magazine in the year 2004. The score of the company also rose in the customer satisfaction index in the year 2007.

Weaknesses

            The prime weakness of the company is the dependence of the company on few suppliers. By the end of the year 2007 the company had maintained just 25 of the largest suppliers  and this only accounted for the 3/5th of the purchases of the company. Along with this another major weakness of the company is that it does not maintain long term contracts with its key suppliers. The company has also been a victim of many lawsuits regarding its business operations. The company was charged in 2000 by a major customer for hiding all the warranty details of the manufacturers so that the company can sell its own label products. The company paid hundred thousand dollars to settle these charges. Finally, the company heavily relies on its US electronics market for the generation of revenue. This has resulted in the slow growth rate for the company.

Opportunities

            The U.S. Department of Commerce reports that online retail sales in the U.S. grew from $169.3 billion in 2010 to $297.2 billion in 2014.  E-commerce sales also increased approximately 14.4% between 2013 and 2014.  Canadian retail e-commerce sales saw improvement as well.  A compound annual growth rate (CAGR) of 15% is expected between 2014 and 2018.

            An increased demand for consumer electronics is anticipated over the next several years.  With an increase in household income and the availability of innovative technology products, the growing demand for consumer electronics provides a positive outlook for the company’s plans to capture a greater share of the market. With a current focus on customer service and support, a shift will be necessary to reduce the threat from competitors that have dominated the online retail market.  A shift in focus that concentrates more on increased online sales will also reduce the threat incurred by the steady rise in U.S. labor wages.

Threats

            The above SWOT matrix identifies areas which Best Buy must take into consideration in order to increase revenue, gain market share and remain competitive.  As a major player among electronic retailers, Best Buy is in a position to focus on a broader customer base. ...................

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