Best Buy: Merging Lean Sigma with Innovation Harvard Case Solution & Analysis


The evolution of Six Sigma came when managers felt a desperate need to implement tools and techniques that fits best in improving the organization’s operational efficiencies. The need to expand businesses nationally and internationally deteriorated the traditional ways in which the operations were carried out (Villanova, 2014). Going global was not handy at all, which pushed the executives to think through for something efficient and timely in the process improvement (Villanova, 2014). Understanding how businesses operated, and how each business unit was interdependent on each other, the need for optimal resource allocation increased. This led managers to think and categorize work according to their urgency and prioritization. Then a solution came namely, LSS (Lean Six Sigma) model, which was simple, sequential and disciplined model to implement but it lagged cultural context as critics say.

The use however, was limited to manufacturing businesses only but later it proved successful in the transactional business too (Villanova, 2014). The primary advantages of the LSS model is all about mitigating defects in the process and reducing variability that ultimately translates into improved customer satisfaction. The six sigma rating is statistical modelling that helps the companies in gauging percentage of defect free products. As a standard, when the six sigma model is applied, then it is said to be have 99.99966% defect free products (Villanova, 2014). The evolution was due to a raised concern of measuring productivity in terms of cost savings. The six-sigma approach helped the analysts in analysing productivity in terms of strategic benefits as this is central to any organization. However, the critique for the model also includes its inability to foster innovation (Villanova, 2014).


a.      Strengths

Six Sigma is used to measure quality consistency in a particular process within a manufacturing firm. It helps to develop precise, accurate and less defective product. Along with this, Six Sigma ensures that best results are obtained through a certain system of manufacturing.

b.      Weaknesses

Six Sigma is applied to producing and planning processes only. It increases the cost because a defective product cannot be sustained in Six Sigma and therefore, it adversely affects profitability. Over reliance on Six Sigma can decrease customer satisfaction.

c.       Opportunities

It can develop balanced approach for stakeholders and their demands. Moreover, it can develop balance between short and long-term goals and creates value stream perspective.

d.      Threats

Six Sigma is being replaced with new manufacturing standards models and more effective processes. Along with this, the method has become obsolete in small manufacturing firms where the order quantity is less. Therefore, organizations are switching to better options.


a.      Bargaining Power of Buyer

The bargaining power of buyer is low for the industry. The market is quite fragmented and people have a lot of options to choose from. The purchase volume is also low. People do not buy goods in bulk therefore they cannot charge higher prices. People perceive electronic goods as luxury items; therefore, they look to purchase low priced goods. The market is highly price sensitive and customers look for less priced products (COMMISSION, 2011).

b.      Bargaining Power of Supplier

The bargaining power of supplier in the industry is quite high for the suppliers. It is because they have a high bargaining power due to the limited number of suppliers in the industry (COMMISSION, 2011). In addition, the suppliers are the ones, who innovate and bring in newer technology for which industry players set high prices; therefore, it makes them a strong force in the electronic industry. Further, it is difficult for the company to become a supplier as well because of the high capital investment associated in the industry with high machinery cost, etc. Along with this, with increasing number of brands in the industry, it makes limited suppliers to set higher prices for the manufactured and electronic goods.

c.       Competitive Rivalry amongst Existing Firms

The rivalry among competitors is quite high for the industry. It is high because of the increasing number of electronic brands in the market. The competitors include: Sony, Samsung, LG, Best Buy, etc. The bargaining power is high because of the high switching cost associated within the electronic industry. People or customers do not have a lot of choices to choose from. As the market is becoming highly price sensitive; hence, it is increasing the competitive rivalry among competitors................................

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