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Best Buy Co Inc Sustainable Customer Centricity Model Case Solution

Solution Id Length Case Author Case Publisher
1967 3150 Words (14 Pages) Alan N. Hoffman Rotterdam School Of Management
This solution includes: A Word File A Word File

Best Buy is the biggest consumer electronics retailer globally. Best Buy aims to empower and enrich people’s lives through technology. It had 1400 outlets, 140,000 employees and reported $50 billion revenues in FY13. The consumer electronics industry is under rapid expansion with great opportunities for Best Buy in the emerging markets.

The nature of the industry allows Best Buy to be impacted by both, the internal and the external environment. In the consumer electronics industry and for Best Buy, the bargaining power of the suppliers is high while the bargaining power of buyers is low. The threat of substitute products is low, and threat of new entrants is also low. On the other hand, internal rivalry within the industry is high.

So in conclusion, it can be said that the competitive pressure for Best Buy is high due to the negotiation power of the suppliers and the high internal rivalry. Internally there are several strengths and weaknesses associated with Best Buy but overall Best Buy is a stable organization performing its business well in the industry.

Following questions are answered in this case study solution

  1. Executive Summary 

  2. Introduction and Company Overview 

  3. Mandate 

  4. External Analysis

  5. Internal Analysis

  6. Exhibit 1: SWOT Analysis

  7. Exhibit 2: Porter’s Five Forces

Case Analysis for Best Buy Co Inc Sustainable Customer Centricity Model Case Solution

2. Introduction and Company Overview 

Best Buy, originally known as Sound of Music, which was found in 1966. The company changed its name to Best Buy Co.; Inc. (Best Buy) in 1983and launched its first website in 2000. Today, it’s the biggest electronic retailer worldwide (Best Buy, 2014) and reported annual revenues of over $50 billion in FY13 (Best Buy, 2014). Best Buy hosts over 140,000 employees in about 1400 stores in the US (Best Buy, 2014). 

Best Buy is competing in a rapidly expanding Consumer Electronics Industry. With globalization, many organizations are now tapping into the developing countries which have fast emerging economies. The consumer confidence in technology is on a rapid rise reaching a peak in March 2014 after seven years when the Index of Consumer Technology Expectations reached 90.4 (PWC, 2014).

This report will continue with the discussion of the Best Buy mandate followed by an Internal and External Analysis of Best Buy. Official websites of Best Buy, PWC, Yahoo and other thirds parties have been used to ensure the authenticity and the quality of the information in this report. Due to time and resources constraints, the scope of this report is limited but shall serve the purpose of this report. 

3. Mandate 

i. Mission 

The mission of Best Buy is to enrich and empower peoples' lives through technology. Best Buy has divided this core purpose into two parts. The fist one is to help customer in all steps of a product purchase starting from purchase decision making till the recycling of the technology products and solutions. The second part includes establishment of deals with vendors to effectively sell their products and solutions in line with the mission of Best Buy (Best Buy, 2014).

ii. Goals and Strategy

The strategy of Best Buy is to be an authority and destination for technology products and services. The three major imperatives that Best Buy management is focusing in their transformation strategy of Renew Blue: Ignite the Possible are as follows (Best Buy, 2014):

  1. Improve the operational performance at Best Buy.

  2. Build the foundational capabilities which are necessary for the future growth of Best Buy.

  3. Leverage the unique assets of Best Buy to create significant differentiation which is meaningful to the stakeholder’s i.e. the customers and the vendors.

These goals are aimed at serving the Best Buy’s mission of serving customers and creating meaningful differences in their lives (Best Buy, 2014). All of these are a part of Best Buy's effort to achieve a long term goal of generating an operating margin of 5-6% and an ROI (on Capital) of 13-15%.

iii. Values and Guiding Principles

Best Buy has company policies and corporate statements as set guidelines for all stakeholders as per the law and the rules and regulations of Best Buy. These values and guiding principles apply to everyone at Best Buy including management, suppliers, vendors, employees, and Best Buy communities, Business Partners, Investors and Shareholders. Best Buy has a Best Buy Carbon and Energy Corporate Statement for reducing carbon emissions, a Best Buy Environmental Policy for being an environment friendly organization, a Paper Procurement Corporate Statement for protection and efficient use of the world’s resources, an Ethics code which applies to all employees, management, vendors, suppliers and even customers, Political Activity and Government Relations Policy to guide employees on political activity pertaining to employment at Best Buy, Standards for Recyclers as Best Buy facilitates the recycling of all its products, Suppliers Code of Conduct which applies to all of its suppliers, Conflict Minerals Corporate Statement and Best Buy Human Rights Corporate Statement pertaining to Best Buys interests and support for Human Rights (Best Buy, 2014). 

iv. Stakeholder Analysis        

Every organization has some stakeholders who are impacted by the functioning of the organization or vice versa. Stakeholders may be primary or secondary. Primary stakeholders include all those who directly have an economic exchange the organization such as customers, shareholders, suppliers and employees. Secondary stakeholders do not have a direct economic exchange but can be affected by the organization such as government (and its agencies), communities and the media.

Customers provide business to the organization by purchasing products from Best Buy, shareholders invest money in Best Buy expecting profitable returns, Suppliers supply products to Best Buy and employees persuade, help and assist customers in purchasing from Best Buy in exchange of a salary, benefits and good working conditions. 

Government as various stakeholder concerns with Best Buy including taxation, value-added taxation, employment, legislation, diversity, legalities, and externalities and reporting since Best Buy is a public company. Communities have stake in Best Buys impact on environment, employment, involvement, Shares and truthful communication. The media play a vital role in making or breaking the reputation of Best Buy in the eyes of the customers. 

4. External Analysis

The External Analysis for Best Buy was done using Porter’s Five Forces, PESTLE Analysis and the opportunities and threats in the market were explored as part of the SWOT Analysis.

i. Porters Five Forces    

Based on Porters Five Forces it was analyzed that firstly, the bargaining power of Best Buy's suppliers is very high mainly because there are only a limited number of suppliers who can provide the products as per the demand of the market. The suppliers such as Sony, Samsung, Apple, etc. are the ones who can provide the fresh of the production line products. With the rapid change in technology, a change in consumer demands is also swift. There is no room for Best Buy to lag in providing the most updated product. It is highly impractical for Best Buy to manufacture a similar product on their own and sell it so Best Buy doesn’t have any choice other than to accept the terms of the supplier and get products from them. Also, the suppliers have the upper hand in this situation as the entire market has their product on the shelf. They don’t need Best Buy, Best Buy needs them. If the customer does not find the desired product at Best Buy; they will just go to some other competitor and buy the product that they desire. 

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