17. Best Buy Strategic Analysis Sub

17. Best Buy Strategic Analysis Submitted by: Taposh D. locations while learning more about the customer’s wants and needs along the way. To achieve aseamless integration the company’s internal logistics system must be integrated to serve stores,physical customers, and online customers.Employees In January 2012, Best Buy was ranked 6th among most hated companies9 by its customerswhen it could not deliver thousands of orders placed for Christmas in 2011. Instances ofmismanagement like these cost Best Buy with bad reputation, negative customer sentiments andfurther alienated it from ever depleting customer base. The company’s line staff must be knowledgeable not only on technology and deviceconfiguration but also on the various products and services that are available to enable oraugment a product. The company must focus on store employees who should exude passion fortechnology and the brands that the company sells. Best Buy’s store employees are the front lineto the customers who visit their retail locations. The customer likely has information on theproduct that they want to purchase. The store employees can add value by demonstrating indepth knowledge about the product and how it integrates with other products or services that areavailable in the store. With hands-on demo units, store employees can delight customers by demonstrating howa device integrates and works with supporting products and services. Functioning demo unitsacross product categories will help the company realize the industry leading customer servicethat is strategic to their success. 17
18. Best Buy Strategic Analysis Submitted by: Taposh D. Turnover rates in retail sales are predictably high compared to other sectors. According toan analysis of BLS data by the National Retail Federation, nearly a quarter (24.6 percent) ofretail workers voluntarily left a job in 2010, substantially above the national average of 16.4percent10. At the end of fiscal 2012, Best Buy employed approximately 167,000 full-time, part-timeand seasonal employees worldwide. Best Buy’s turnover rate is 37%11. Best Buy needs to reducethe employee turnover rate. We recommend Best Buy to turn their employees into brandmessengers. Our strategy of narrow focused differentiation, will lead to selling cutting edgeproducts. This will attract early adopters of technology, who have a passion for sharing theirknowledge as potential employees. These new employees will have a strong affinity to the BestBuy brand.Organization StructureTo execute this strategy and ensure the required focus on synergy the company must restructuretheir three sales channels to fall under a single multi-channel senior vice-president. Alsoreporting to this role will be the Regional Fulfillment vice-president. This role will work closelywith the store managers to streamline online and phone order fulfillment and store deliveries.The company must create corporate level R&D and Training departments. R&D will beresponsible for creating tools and solutions that can be deployed across sales channels. Thetraining department will primarily serve the customer facing employees with relevant and timelytraining on products and services being offered by the store. 18
19. Best Buy Strategic Analysis Submitted by: Taposh D. Sustained Competitive Advantage The big box electronics retail industry that Best Buy is a part of is under under attack.The industry is battling nimble substitutes and internal enemies. Best Buy is the largest and most 19
20. Best Buy Strategic Analysis Submitted by: Taposh D. well known of the group. Substitutes like Amazon.com and EBay are making significant gainsoperating as eCommerce only stores. Walmart and Target are winning with a broaddifferentiation strategy. Best Buy must change its strategy from differentiation to focuseddifferentiation to compete. Best Buy company has several strategic resources that can be leveraged in the fight for itssurvival. Because of its size it maintains favorable access to suppliers and their upcomingproducts. The company has stores in prime locations across the country and internationally. Thecompany has well trained employees across its locations. Finally Best Buy has, because of itshistory and configuration, internal systems and processes that help to move products to storesand into customers’ hands. To win as a focused differentiator Best Buy must reduce both the size of their stores andthe type of products offerred. They must drop products for which there are superior substituteslike audio and video media, and videogames. The stores and online channels should only carry aselection of leading edge electronics and appliances, and supporting products and periferals.Products which have not yet saturated the market will benefit more from the value that Best Buyoffers, Face-to-face customer service by knowledgeable employees in convenient locations. Thecompany will continue to compete in the online channel and should increase the integrationbetween their physical and online stores. The company must invest in research and developmentto find ways to increase the synergy between their resources and customers. The physical storesmust be leveraged to provide online shoppers with fast and efficient same-day delivery. 20
21. Best Buy Strategic Analysis Submitted by: Taposh D. If the company can cultivate synergy between their strategic resources they will establisha sustainable competitive advantage. 21
22. Best Buy Strategic Analysis Submitted by: Taposh D. Appendix Exhibit 1: Best Buy Five Elements of Strategy 22
23. Best Buy Strategic Analysis Submitted by: Taposh D. Exhibit 2: Best Buy – Porter’s Five Forces 23
24. Best Buy Strategic Analysis Submitted by: Taposh D. Exhibit 3: Value Chain Analysis Exhibit 4: Best Buy Stores going out of Business 24
25. Best Buy Strategic Analysis Submitted by: Taposh D. Works Cited1 Chang, A. (November 2012). Best Buy’s new CEO outlines turnaround plan. Retrieved Feb. 14,2013, from MarketWatch: http://articles.marketwatch.com/2012-11-13/industries/35086726_1_comparable-sales-online-appliances-market2 Best Buy FY Annual Reports on Form 10-K, as retrieved from:http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=irol-reportsannual3 Edwards, C. (December 2009). Why Tech Bows to Best Buy. Retrieved Mar. 7, 2013, fromhttp://businessweek.com/magazine/content/09_51/b4160050951315.htm4 The NPD Group, (September 2011). e-Commerce and Consumer Electronics: Online Shoppingand Purchasing. https://www.npd.com/lps/pdf/CE_e-Commerce_Final_Report.pdf5 Wolf, A. (January 2013). Target Extends Online Price-Match; Best Buy May Follow.http://www.twice.com/magazine/retailingetailing/target-extends-online-price-match-best-buy-may-follow/1047906 Accenture (2012). Consumer Electronics Report.http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_EHT_Research_2012_Consumer_Technology_Report.pdf7 Fishman, J (March 2010). The Demand Creation Vacuum – Who is Going to Step Up.Retrieved March 7, 2013, from http://gapintelligence.com/blog/tag/compusa/8 McWillimas, G. (Nov. 2004) Analyzing Customers, Best Buy Decides Not All Are WelcomeRetrieved March 15, 2013 fromhttp://online.wsj.com/article/0,,SB109986994931767086,00.html 9 Hudson, B. (January 2012). Best Buy Among ‘Most Hated’ For Customer Satisfaction. Asretrieved from: http://minnesota.cbslocal.com/2012/01/18/best-buy-among-most-hated-for-customer-satisfaction10 Labor Turnover in the Reatil Industry. Careerbuilder.com. Retrieved March 7, 2013 fromhttp://www.careerbuilder.com/Article/CB-2677-Retai 25
26. Best Buy Strategic Analysis Submitted by: Taposh D. 11 Listen Carefully to Best Buy CEOs Take on Employee Turnover Rate. SeekingAlpha.com.Retrieved March 8, 2013 from: http://seekingalpha.com/article/210512-listen-carefully-to-best-buy-ceo-s-take-on-employee-turnover-rate 26