Best Buy Company Analysis - Case Study Example

? Best Buy Case Analysis College: Best Buy Case Analysis The Best Buy Company Inc is a multinational corporation that has ventured into the electronic market in the USA and is now subject to numerous market forces that are threatening to push it out of the market. Although the organization has remained competitive in the market, its revenue in the last three years indicates that market forces are becoming stronger and are already threatening to overwhelm its operations. However, the business environment in the 21st century has become very dynamic and the organizations have to engage effective differentiation strategy to survive in the competitive business environment. To achieve this, an organization needs to understand their market environment, capitalize on their strengths to overcome business threats and weakness and take and take advantage of any opportunities that arise in the market. Below is a case analysis of Best Buy Company Inc and suggestion of new strategies that this firm can employ to remain profitable and successful. Roy (2011) recognizes the need for an organization to conduct as environment scanning to understand better the business market which is essential in strategic management. He identifies the Porter’s five forces Model (PFFM) as one the superior tools of environmental scanning. In this model, the five market forces include the consumer and supplier bargaining power, competitive threats from other sellers and entry of new goods, and the intensity of the competitive rivalry within a market environment. As Roy states, the ability of an organization to understand its external and internal market environment, determines its ability to develop strategies to differentiate in the market. If the word of this economist is something to go by, then Best Buy must understand its market environment to overcome its business threats. The electronic business market is competitive and new market entrants have become a great threat to this market. New market entrants have been motivated by the attractive electronic market that is worth billions of dollars globally which qualifies it as the best market industry. The new entrants have reduced the supplier bargaining power and consequently increased the consumer bargaining power (Roy, 2011). This means that the market prices are inclined to go down and the customers will expect more quality goods ever than before. With the proliferation of technology, new products have been launched and some electronic products are on the verge of becoming obsolete. For instance, the entry of smart phones with wireless hotspots has considerably reduced the demand for Modems, while the entry of tablets in the market has threatened the existence of computers. The cumulative effect of these market trends is that the competition in the electronic business market has greatly intensified. Best Buy has managed to remain strong in the market due to its innovative strategy and the fact that it has enjoyed a good company profile in the public. In its innovation strategy, the organization has managed to catch with the technological changes that are characteristic of the 21st century market environment. The organization has invested in online marketing that has helped the organization to hit the international market and online marketing has helped them to keep in touch with their customers and notify of business changes. On the other hand, the organization has shown a lot of weakness in its product differentiation strategies, which has become a big blow for the organization. The company has rolled out too many brands that have made it impossible for the organization to optimize on the brands. Consequently, the organization has experienced a revenue depreciation of about 7% per year and this is expected to get worse if corrective actions are not engaged (Hoskisson, Hitt, and Ireland, 2012). In terms of profitability, the organization falls below Walmart and Amazon.com, its major competitors, and this shows that the organization has a hope to regain its position in the market. The major challenge that has faced this organization is the existence of a stiff competition from both dominant and new market entrants. Walmart, for instance, has employed priced reduction strategies in the retail market and has managed to push out the Best Buy from the retail market. Amazon.com has managed to promote an online bar-code reading program that has made an online best seller in the market today, a strategy that the organization has given thrust to this organization (Hoskisson, Hitt, and Ireland, 2012). Another challenge that has faced this organization is the increasing cost of wages that are threatening to reduce the revenues of this organization even further a trend that is indicating a looming danger in the future of the organization. In brief, the market challenges in this organization are becoming a great barrier to the development of the organization. From a critical point of view, Best Buy Corporation Inc has to reform its organization strategy to offset the market pressure and remain profitable in the future. While it is crucial for the organization to remain innovative and to maintain its international strategy, the organization requires concentrating on fewer brands and optimizing their sale. For instance, the organization reduce the goods that have no future in market such as high frequency televisions and concentrate more on smart phones that have Android software platform. This will ensure that the organization remains relevant in the market and acclimatizes to the customer demands. Another worthy strategy would be to redefine its supply chain by reducing intermediate suppliers that often add production overheads to the organization. Reduction of the operational cost enables an organization to supply their customers with cheaper and quality goods (Lambert, 2008). In a nutshell, the organization leadership has to remain innovative while adjusting its supply chain management and eliminating obsolete goods in its stores. In conclusion, Best Buy has been threatened by numerous market challenges that have seen the organization lose more revenue every fiscal year. New market entrants have intensified the competition and this has reduced the suppliers bargaining power and increased the customer bargaining power in the Electronic business market. While Best Buy has remained used technology to push its business across the international boundary, it has remained weak in management of its supply chain and has remained static in adopting relevant market products. Consequently, its revenue has declined each year and the only hope for this organization is to deploy effective leadership and new management strategies to secure the future of this organization. References Hoskisson, R., Hitt, M. and Ireland, D., (2012). Strategic Management Cases: Competitiveness and Globalization; Finding the Best Buy. London: Cengage Learning. Lambert, D., (2008). Supply Chain Management: Processes, Partnerships, and Performance. Jacksonville: The Hartley Press. Roy, D., (2011). Strategic Foresight and Porte’s Five Forces Model: Towards a Synthesis. Norderstedt: GRIN Verlag. Read More