Strategic Management of Best Buy

This paper focuses on the strategic management of Best Buy, a renowned global consumer electronics retailer. It discusses the industry overview, competitor analysis, Porter's Five Forces, internal analysis, and provides recommendations for improving the business.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
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Author Note

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Executive Summary:
The paper is focused in the elaboration of the business operations of a chosen company Best
Buy. The organization is one of the renowned global consumer electronics retailer. The paper
assesses the consumer electronics industry and provides a discussion regarding competition
inside the organization. In addition to this, the paper also summarizes an analysis of the
internal environment of the selected organization. Apart from this, the paper elaborates the
financial performances and the strategic performances of the selected organization and along
with that, it identifies the competitive advantages for the organization. With a precise focus
on the findings, the paper provides some important recommendations for the chosen
organization in order to improve their business.

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Introduction:
The modern business world is observed to experience a notable growth in the retail
sector (Rhodes & Brien, 2014). Many of the organizations, operating in the mentioned
industry are seen to flourish and achieve the desired growth in a significant manner. One such
organization in the retail industry of the United States is observed to be in the form of Best
Buy. The paper is focused in the elaboration of business operations of the mentioned
company. The mentioned organization is one of the renowned name in the American
consumer electronics industry for the excellence in their products and the services. Apart
from this, the selected organization is known for the significant incorporation of the
technology and innovative ideas into the products and the services for achieving the
preferences of the customers in a better manner. The company has established a significant
business due to their excellence in reaching out to the people or the potential customers with
the products and the services and that is pretty evident with the opening of 1008 number of
outlets across the globe (Bestbuy.com 2019). Apart from that, the paper analyses the internal
and the external environment of the chosen organization. With a precise focus on the finding
of the analysis, the paper also recommends some of the key developmental strategies for the
chosen organization. The selected organization is seen to focus on the effective formation of
the strategies for entering the high income groups in a better manner with the increment of
the product chain and application of the suitable pricing of the products.
Industry Overview:
The consumer electronics market of the chosen cuntry is expected to have a
significant growth in the coming years. The expected revenue of the chosen industry in the
year 2019 is 76998 million US dollars (Statista.com, 2019). Apart from that, the revenue of

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the chosen indusry is expected to achieve a growth of 6.2% over the time span of 5 years
starting from 2019 to 2023 (Statista.com, 2019).
Competitor Discussion:
The major competitors of the organization are observed to be Walmart, Target
Corportation, Costco and Staples. The revenue of one of their fiercest competitor, Walmart is
seen to be 514.415 billion US dollars and for Target Corportation, the sum of the revenue is
observed to be 71.88 billion US dollars at the end of the 2017-18 finnancial year
(Walmart.com, 2019). Costco had a revenue of 129 billion US dollars in the year 2017 and
Staples is observed to achieve 20.217 billion US dollars in the year 2016 (Costco.com, 2019).
Porter’s Five Forces:
Threat of new entrants: Low
With the concerns regarding the infrastructural development and the significant
competition of the market based on the application of the competitive pricing policy, the new
organizations are seen to find it difficult to enter the market. Along with that, the significant
market share of the leading organizations of the industry such as Walmart, Target
Corportation, Costco and Staples along with BestBuy is considered to be a major conbcern
for the new entrants in the indutry as it creates considerable amount of difficulty in reaching
to the customers with the information of the products. Hence it is pretty evident that the
chosen organization faces notably limited impact of the new organizations that are entering
the global and national consumer electronics market.
Threat of Substitution: High
With the almost equal stand of the organizations in terms of applying the low pricing
policy for the achievement of the larger customers and with the intention of producing quality

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products in the cheapest rates possible, the leading organizations of the consumer electronics
industry such as Walmart, Target Corportation, Costco and Staples are providing notable
amount of options for the customers to choose from. Hence the threat of substitution for the
organization is evaluated to be high.
Competitive Rivalry: High
The chosen business indusry is seen to be significantly competitive with the
representation of the organizations such as Walmart, Target Corportation, Costco and Staples
(Target.com, 2019). In addition to this, the basis of the compaetition is observed to be the
quality of the products and the achievement of the preferences of the customers through the
design of the products.
Bargaining Power of the Buyers: High
As it is pretty evident that the market leaders of the mentioned industry such as
Walmart, Target Corportation, Costco and Staples are able to put their best efforts in
competiting, for the applicaion of the low pricing of the products even after maintaining the
desired quality of the products, the customers are left with considereable number of options
to choose for purchasing the products.
Bargaining Power of the Supliers:
Consumer Electronics industry is seen to experience notably limited imapct of the
suppliers due to the achievement of the considerable number of the suppliers that are capable
of produing quiality materils, producimg the supply on time along with the capability of
producing accurate amount of supply.

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Internal Analysis:
Core Competencies:
The chosen organization is observed to have a significantly strong brand awareness
across the globe and that has the potential to provide comparatively more market limelight to
the products and the services of the chosen organization. Adding to this, the representation of
the chosen company in 1008 number of locations is significant in producing a global reach
for the products of the company. Apart from this, the excellence in the operations of the
125000 number of employees recorded in the year 2018 is seen to be significant in producing
an expressive market advantage to the chosen organization (Bestbuy.com, 2019).
SWOT Analysis:
Strengths
 Strong Online business conduction.
 Global Presence.
 Skilful Employees.
Weakness
 Inefficient strategy in penetrating
high income groups.
Opportunities
 Increment of the product chain of the
company.
 Improved online marketing
activities.
Threats
 Increasing labour and the
employment charges.
Strengths:

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The organization is seen to be notably strong in the reaching to the customers through
the effective usage of the online media and along with that, the presence of the company in
the regions such as China, Canada, Puerto Rico and Mexico is seen to be significant for the
chosen organization in generating larger amount of revenue (Bestbuy.com, 2019). Adding to
this, the improved skills and the competencies of 125000 number of employees of the
company is considered to be of great significance for the growth of Best Buy (Sec.gov,
2019).
In the modern business world, the intense competition of the market is seen to be one
of the major concern for majority of the organizations and under such situation, the
organizations that are able to establish a strong presence in terms of reaching to the customers
with the products and the services that they offer, is of great significance in the generation of
a larger amount of revenue. With a precise focus on the above mentioned fact, majority of the
modern business organizations are seen to employ various online and offline marketing and
promotional strategies which have the potential to provide them the base for communicating
their message or information to the customers. As mentioned earlier, the company is able to
establish a significantly strong brand with the increasing number of opening of the outlets and
that helps the company in attracting a larger number of customers.
In addition to this, with a precise focus on the increasing online business activities
from the part of the organization, it is pretty evident that the company will be able to generate
a larger amount of revenue. Apart from this, the increment in the online business conduction
of the company will enable the selected organization to reach out to a larger number of
customers in an efficient manner.
With a precise focus on the increasing market competition, it is pretty evident that the
importance of the quality in the services of the employees and the products of the

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organizations are notably high. The improvement in the performances of the employees and
in the quality of the products that the organizations offer to the customers are seen to be
crucial factors for the organizations in gaining the competitive advantage over the competitor
organizations. With a precise focus on the above mentioned fact, the selected organization is
seen to introduce considerable number of training and developmental activities in an attempt
to improve the quality of services of the employees. The training and the developmental
activities have played a crucial role for the organization in the improvement of the skills and
competencies of the employees of the organization and that is pretty evident with the
increasing market share of the selected organization.
Weakness:
The application of the effective penetration strategy for the high earning customers is
seen to be a major concern for the chosen organization. This is seen to affect the generation
of the revenue of the chosen company.
Opportunities:
The increment of the product chain of the company with a precise focus on the
lifestyle segment, improving the online media communication for attracting larger number of
customers and the usage of the better strategy for the penetration into the emerging
economies for achieving increased number of customers are observed to be the major
opportunities for the chosen organization (Pendry & Salvatore, 2015). Considering the
intention of penetrating the emerging economies, the organization is in need to introduce
products at cheaper rates. This will be significant from the part of the organization as the
application of the low pricing for the products of the company, will enable the company to
target a larger number of customers. Considering the various aspects of the emerging
economies, it is much needed that the company target the low income groups with the

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cheaper rate products and that will notably contribute to the growth of the selected
organization.
Threats:
The significant changes in the government policies, the increment in the labour and
employment charges and the potential of the competitor organizations in providing
significantly tough competition to the chosen organization are seen to be notable threats for
the successful business conduction of the mentioned business organization (Till, 2014).
Adding to this, the increasing labour and the employment charges and the increasing number
of modifications in the employment legislations have the potential to affect the business
operations and the financial stability of the selected organization.
Strategy Performances:
The organization is seen to employ low pricing strategy for the products and the
services that they offer to the customers. Adding to this, the urgency of the organization in
implementing the preferences of the customers in their design and maintaining a high quality
of the products are seen to be of great significance for the organization in better management
of the business conduction of the organization (Awadh & Saad, 2013). With a precise focus
on the increasing intensity of the competition in the modern consumer electronics industry, it
is pretty evident that customers are notably inclined towards the business organizations that
effectively meets their requirements and acknowledges their preferences through the design
of their products. The selected company is able to use their improved infrastructure in a
significant manner for the designing of their products in accordance to the preferences of the
customers and that is evident with the increasing sales of the organization. However, many of
the organizations of the modern consumer electronics industry are seen to compromise with
the quality of the products while trying to meet the varying preferences of the customers. The

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strategy of the selected organization of maintaining the quality of the products while
achieving the varying requirements of the customers through the design of the products, is
been to be crucial in their growth.
Financial Performances:
The application of the above mentioned strategies has notable impact on the
organization’s financial performances and that is pretty evident with the increasing revenue
of the organization which increased to 42.15 billion US dollars at the end of the 2017-18
financial year (Bestbuy.com, 2019). The company generated an operating income of 1.84
billion US dollars and a net income of 1 billion US dollars at the same period of time
(Bestbuy.com, 2019).
Discussion:
The organization has the potential to use their effective presence across the globe
along with the improved social media activities for the increment in the number of customers
and profit as well. Considering the dynamics of the modern business world, it is visible that
the increase marketing and the promotional activities both in offline and online, has the
potential to enable the selected organization in communicating the information regarding the
products and the services that they offer to the customers. With the increasing marketing
communication, the organization will be able to reach to a larger customer base and that will
certainly increase the possibility of the sales of the products of the selected organization.
Hence it is pretty evident that the organization will be able to acquire a significant amount of
profit from the increment in the marketing and promotional activities specifically with the
attractive social media advertisements. However, the organization is seen to have an
ineffective strategy in place for penetrating the high earning customer group.

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The increment in the product chain of the organization along with the formation of the
better strategy for the effective management of the business operations of the company will
be significant for the chosen organisation. The increment in the product chain of the
organization will enable the organization to serve the customers with larger number of
products and that will also be crucial for the organization in meeting the varying demand of
the customers in an efficient manner. On the other hand, the organisation is in need to
efficiently cope up with the increasing labour charges and the changes in the government
legislations for conducting their business in a sustainable manner (Barrientos, 2013).
Strategic Elements of the Organizational Culture:
One of the crucial factor that belongs to the organizational culture of the organization
is the spirit of innovation. From the design of the products, it is pretty visible that the chosen
organization is able to incorporate the presence of technology in a significant manner. The
application of the innovative solutions in the design of the products is pretty visible and that
reflects from the quality and the packaging of the products. The incorporation of the
technology in the business operations of the selected organization notably helps the
organization in the identification of the preferences of the customers and the varying
demands of the customers. With a precise focus on the increasing competition of the
consumer electronics market, it is pretty evident that the organizations that are capable of
identifying the needs of the customers and managing the design of the products in accordance
to the preferences of the customers, will be able to achieve a significant edge in the market
competition. The selected company is able to achieve that excellence in the incorporation of
the technology and that is pretty evident with the application of the Radio Frequency
Identification Device (RFID) in the stores of the selected organization. The incorporation of
the RFID has enabled the chosen orgnaization to track the bestseller products and share the
information to the relevant parties associated with the process of manufacturing of the

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products for the selected organization. The application of the RFID has enabled the
organization to establish a smooth flow of communication across the warehouses,
manufactures, suppliers and the store representatives regarding the products and that is seen
to help the selected organization in a significant manner in case of manufacturing the
products in accordance to the preferences of the customers. The fast exchange of the
information regarding the bestseller products helps the selected organization in improving
their efficiency which is crucial for the organization in avoiding stock out. Hence, as a result,
the prompt services of the organization with the suitable products for the customers is seen to
play a crucial role in the generation of notable amount of competitive advantage in favour of
the selected organization.
Strategic Elements of Human Resources:
As mentioned earlier, the selected organization is seen to put strong emphasis on the
quality of the products that they offer to their customers and on the quality of the employees
of the organization. The increasing number of training and the developmental activities,
conducted from the part of the organization, is seen to be crucial in the improvement of the
quality of the performances of the employees of the organization. As a result of the
occurrence of increasing number of training and developmental activities, the selected
organization is able to improve the skills and the competencies of the employees in the much
required fashion for the manufacturing of the products that reflect optimum level of quality.
Apart from the point of quality, the improvement in the level of competency of the employees
of the organization has enabled the organization to manufacture the products in accordance to
the preferences or requirements of the customers. This significantly helps the selected
organization in involving the customers with the business operations of the company. As a
result, the formation of the customer loyalty proves to be crucial for the organization in
influencing the customers of the organization for the repetitive purchases of the products of

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the selected organization. The effective identification of the developmental needs of the
employees and the production of the suitable solutions to the employees are seen to be crucial
for the success of the organization. The improvement in the quality of the products and the
services of the employees have the potential to create a competitive edge for the selected
organization in the consumer electronics market.
Strategic Elements of the Cost:
It is petty from the above discussion, that the selected organization is seen to apply the
competitive pricing policy. The application of the competitive pricing is seen to be significant
for the organization in expanding their products to the new markets and along with that, the
application of the mentioned form of pricing helps the selected organization in introducing
products at cheaper rates. The introduction of the products at cheaper rates enables the
selected company to serve a large number of customers compared to the competitor
organizations and at the same time, the pricing helps the chosen organization target the low
income groups in a more efficient manner. This will certainly put the company one step
ahead of the competitor organizations in case of business expansions specifically in the small
towns and cities.
Recommendations:
With a precise focus on the weakness of the mentioned organization, it is
recommended that the organization must incorporate effective strategies for penetrating the
emerging economies and for penetrating the high earning groups in an efficient manner for
the increment in the generation of profit. The organization must make sure that they be able
to introduce products at cheaper rates for entering the new markets as they have significant
amount of opportunity of increasing their business growth with the business expansions. With
a precise focus on the strength of the organization in the online business conduction, the

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organization is in need to improve their social media activities in a more efficient manner for
the effective communication regarding their new products to the customers of them. This will
certainly increase the online sales of the selected organization. Considering the intense
market competition, the importance of the quality in the products and the services of the
organization is notably high. Hence the organization must keep an eye on the improvement of
the quality in their products as well so that they be able to differentiate their products in the
market competition.
Conclusion:
On a concluding note, the chosen organization is expected to conduct their business in
a more efficient manner with the effective management of the concerns regarding the
increment of the labour charges, the changing legislations of the government and the
ineffective penetration strategy for the customers belonging to the high earning groups. Apart
from that, the effective usage of the social media will also be a key factor in the success of
the chosen organization.

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References:
Awadh, A. M., & Saad, A. M. (2013). Impact of organizational culture on employee
performance. International Review of Management and Business Research, 2(1), 168-
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Barrientos, S. W. (2013). ‘Labour chains’: analysing the role of labour contractors in global
production networks. The Journal of Development Studies, 49(8), 1058-1071.
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Costco.com (2019). Costco. Retrieved from https://www.costco.com/
Pendry, L. F., & Salvatore, J. (2015). Individual and social benefits of online discussion
forums. Computers in Human Behavior, 50, 211-220.
Rhodes, C., & Brien, P. (2014). The retail industry: statistics and policy. House of Commons
Library www. parliament. uk/briefing-papers/sn06186. pdf.
Statista.com (2019). Statista - The Statistics Portal for Market Data, Market Research and
Market Studies. Retrieved from https://www.statista.com/
Target.com (2019). Target : Expect More. Pay Less. Retrieved from https://www.target.com/
Till, C. (2014). Exercise as labour: Quantified self and the transformation of exercise into
labour. Societies, 4(3), 446-462.
Walmart.com (2019). | Save Money. Live Better. Retrieved from https://www.walmart.com/
Sec.gov. (2019). Document. [online] Available at:
https://www.sec.gov/Archives/edgar/data/764478/000076447818000013/bby-
2018x10k.htm

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