Maintaining Impartiality: A Case Study of Best Buy's Failure in China
Added on 2019-09-21
14 Pages3400 Words286 Views
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BEST BUY COMPANYInternational Business
Table of ContentsIntroduction......................................................................................................................................2Best buy growth internationally.......................................................................................................2Entering the Chinese Market........................................................................................................2From five star to best buy................................................................................................................3Company Analysis...........................................................................................................................4Price strategy................................................................................................................................4Consumer Concentric Strategy....................................................................................................4Business strategy in China...........................................................................................................4Unprofitable Expansion...............................................................................................................5An oligopolistic Market...............................................................................................................5Best buy reason of failure................................................................................................................6Alternative strategy..........................................................................................................................6Conclusion.......................................................................................................................................6References........................................................................................................................................7
IntroductionIn this present paper, we will discuss the company which rapidly grew internationally, namely, Best Buy. The paper also describes the analysis of the company, reason for failures, and alternative strategy for managing the company. Best buy is an American multinational consumer corporation which was established in 1996. Thecompany lies in retail industry and it's headquartered is in Richfield, Minnesota. The company operates in Mexico and Canada. The founder of the company is Richard M. Schulze. The company operates under pacific sales brand; best buy mobile, Magnolia Audio video, Geek squad, and insignia in the United States. The first store of the company was opened by the personal savings of founder, and then in 1967 the Bergo and Kencraft Company were acquired by the sound of music. The profit of the first year was $58,000. The company ranked in the top ten of “Americas Most Generous Corporations” in 2005 by Forbes. The total assets of the company are $14,421 Billion, and total equity is $4.977 Billion (Best Buy: Expert Service et al., 2016). The total market share of the company in consumer electronic market is 22% in the United States. The company is having the higher opportunity of expansion in the international market. The company is focusing on expanding in the United Kingdom. The level of service of the company is much better among its competitors. The company has traditionally expanded through acquisition outside and within the country. The company is rapidly grown in the market through its dual branding strategy.
Best buy growth internationallyThe company had successfully placed in America, but the rapid expansion in international market faced a massive struggle by the company. The international expansion is tempting for the retailers for sustaining the higher returns. The company entered into the china market in 2011, but the company faces a huge struggle with local competitors in a crowded retail market. The company had opened the elven store in china. The company lost more than half of its initial investment in China by not getting the profit from eleven stores in china. The company was unable to generate sales and cover its operating expenses then the company decides to close its stores in china. Entering the Chinese MarketThe company decides to twice its efforts in foreign market because of domestic market threats. The potential market is represented by china which shows as an opportunity for the company. The company decides to enter in 2006 by the five-star acquisitions which are the third largest retailers in electronics. The economic and social factors show the great opportunity to the company. The annual gross domestic product of china is 10.7%, and emerging of the middle class is strong which increases from 6.5 Million to 80 Million. For example, the profit of Gome is increased to 189%, and it is the largest retail chain of electrical home appliances in China. The company operates three global offices in china which helps to buy from the Asian manufacturers directly. The private label products are improved through offices in china which helps to increasethe sales of the company that directly impacts on the profitability of the company in an accounting year.
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