1. SWOT ANALYSIS OF BEST BUY

Historically the company has been experiencing various strengths over time that give it an edge in the consumer market segment. The first strength was its transformation from general electronic retail to an online store in 2000; the acquisitions of Magnolia Hi-Fi in 2000, Future Shop in 2001, Geek Squad in 2002, Jiangsu and Pacific Kitchen in 2006, alliance with Carphone Warehouse in 2008 give it a solid global market presence (Hoffman, 2010).  The top-down managerial model with district supervisors managing retail store at that level was also an opportunity. The equipping of the human resources with the sufficient product knowledge to educate customers about the products sold was also a great strength.  Retention of employee talent was also another key strength. The weakness included the large capital requirement for entrance in new markets that limited its growth, lack of sufficient funds to pay for its acquisitions and subsequent increase in long-term debt and at the same time a reduction in sales revenue.

There were several opportunities to tap for unrivaled growth. The emergence and adoption of internet as a platform of online sales presented global expansion opportunity. The presence of several suppliers throughout the world gave the company an opportunity to deliver products to any part of the world very fast. Specializing marketing goals into segmentation presented an opportunity to specialize its consumer education. Threats included poor brand reputations when employees misrepresented warranty cases, denied customers to apply guarantee match and it was sued in 2009 threatening brand reputation.  Additional threats included increased low-cost competition from Wal-Mart, GameStop Corp, Radio Shack, and others (Hoffman, 2010)). Furthermore, increased online competition from Amazon electronics and Netflix Films threatened its online presence.

1. Strategies Used by Best Buy

The company used various strategies such as differentiating itself in terms of quality, by offering a customer-centric model that was aimed at providing customers with sufficient customer education on products, so that its customers could make the right purchase decisions. Its customers got an opportunity to ask any questions before buying and only bought the products that suited their needs the most. In addition, the company combined convenience strategy, by adopting and using the online selling platform to reach the global market audience. The company also used the talent management strategy, whereby all the employees who had been previously trained were retained throughout time, and instead given many more lessons to expand their product knowledge.

The marketing strategy used was centered on four main goals, which included reaching customers at their niche levels, clearly separated customers in ways that they could be handled effectively. The global expansion strategy was that of the mergers and acquisitions, whereby the different acquisitions also remained managed independently, which made it easier for the whole company to work together.  The logistics strategy used by Best Buy was based on proximity to customers based on the customer purchase place in relation the nearby retail or supplier outlet, where products would be sourced and sent to customers.

1. Contribution of Functional Areas of Best Buy

The various areas of the company that contribute to its overall management include the maintain of the company’s management system of keeping the various mergers and acquisitions leaderships and management different, but merging or converging the core value of the company’s vision of customer-centricity. The customer-centricity, as a functional area of customer service gives the company an advantage of contributing quality and care in the customer to ensure that customers are taken care of in any of its retail outlets (Hoffman, 2010). The maintenance of separate leadership and management styles for the different acquisitions is that industry leadership leaderships and management styles differ from industry to the other, and given that the company has both brick and mortar retail stores, as well as the e-commerce platforms, and entrainment retail outlets, applying one style of management or leadership may make it difficult to achieve the current results achieved.  On-site retail supervision cannot be applied in the e-commerce platform and subsequently, the same style may not be possibly applied effectively at the entertainment centers.

While the online platform has been key in reaching a global market audience, it has been used to grow the company’s global market presence and subsequently contributing to its global expansion. Best Buy Mobile, Napster, Jiangsu and  Carphone Warehouse have all contributed to streamlining the different industries of operation that Best Buy operates in, including electronics,  supply chain and logistics, and the entertainment industry among others.

1. Issues Affecting Strategic Competitive Advantage of Best Buy

From the case, there are a lot of factors that are affecting the competitive advantage of the company. The first one is that while employee talent management was the core differentiation factor, its reduction in quality with the company’s global expansion, and the need to give employees more training on new products increased the pressure on employees to get and retain quality training. Instead, many started to become confused or lacked clear product details, which made them miss out some product points to explain to customers.

Secondly, the high costs of training limited the company’s ability to adopt and utilize the low-cost competitive differentiation model, making it impossible for it to reduce its retail prices, and thus, giving its competitors a cost-advantage over it. While the company sought to be globally competitive, its limited retail presence globally, made it unable to create and match the kind of reach and reputation that other competitors such as the Amazon and Netflix achieved, reducing its online sales lead.  Lastly, the inability to achieve the type of global expansion that gives the company a leading competitive advantage to match those of the Amazon, E-bay, Ali-Express, Alibaba, and even Shopify, have reduced its global presence in many countries around the world.

1. Recommended Solutions for Best Buy to Improve its Competitive Advantage

One of the most under-utilized competitive advantages that have proven to be successful by other companies is that of supply chain competitive advantage. Companies such as Amazon have extensively exhausted this competitive advantage, and manage to deliver their products to their customers within 24-48 hours after purchase, thereby reducing customer wait times, and increasing its competitive advantage over others. In a similar manner, Best Buy needs to adopt the fast deliver method, whereby products will be shipped to customers within the shortest times possible, such that customer trust can be increased and thus, give it a higher competitive advantage as opposed to its competitors.  Achieving fast deliver may mean two things. One is that the company should increase its warehouse outlet presence to enable customers pick products from the nearest outlet, or working with other suppliers just as other Dropshipping companies do.

Secondly, the low cost advantage can be adopted, because most of sales are now happening online and thus, there is a reduced need for increased expenditure on employee training. Instead, the company should focus on providing customer-satisfying sales copies of product landing pages so that customers can get all the information that they need from the product sales page. Thirdly, the company should focus mass advertisement, based on the niche differentiation. Having already established itself as electronics retail outline, the online sales environment provides an opportunity for regaining its initial brand reputation as an established electronics outlet. Retail specialization increases, customer confidence, trust and loyalty and these provide it with an opportunity to utilize its retail advantage.

                                           References

Hoffman, A.N. (2010). Strategic Management and Business Policy: C A S E 24 Best Buy Co.           Inc.: Sustainable Customer Centricity Model? Industry Six—Specialty Retailing. New       York, NY: Prentice Hall.