SWOT Analysis of Best Buy for Entering the Indian Market

This report discusses the potentiality of the Indian market for Best Buy and identifies the positive and negative factors of Best Buy that will determine the effectiveness of doing business in India. It concludes that Best Buy should develop a new private level brand for selling routers for the Indian customers due to the rapidly increasing demand for Wi-Fi routers in the Indian market.

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Executive summary
The aim of this report is to discuss about the potentiality of the Indian market for the business of
Best Buy. This report discussed about the positive and negative factors of Best Buy that will
determine the effectiveness of doing business in India. Moreover it is identified that there are
shortcomings of Best Buy may create hurdles for them. This report concludes that Best Buy
should develop a new private level brand for selling routers for the Indian customers due to the
reason that demand for Wi-Fi routers is rapidly increasing in the Indian market.

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Table of Contents
Introduction......................................................................................................................................3
Market description of the chosen country.......................................................................................4
SWOT analysis of Best Buy............................................................................................................5
Explanation of strengths..............................................................................................................6
Explanation of weaknesses..........................................................................................................7
Explanation of opportunities........................................................................................................7
Explanation of threats..................................................................................................................8
Recommendations............................................................................................................................8
Identification of target market.....................................................................................................8
Recommended new product........................................................................................................9
Marketing mix...........................................................................................................................10
Explanation of the customer value............................................................................................11
Adhering with strengths, opportunities......................................................................................11
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................13

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Introduction
Strategic management is one of the important factors that should be maintained by the
contemporary business organizations due to the reason that effectiveness of the strategic
management of the organizations determines the potentiality of business in the market. It is
becoming more important for the contemporary business organizations to initiate strategic
management due to the reason of huge competition in the market (Vogel and Guttel 2013). Retail
sector is one of the business sectors that are witnessing increase in the intensity of competition.
Thus, the organizations operating in this sector should have the effective mechanism of
determining their internal strengths and weaknesses that will help to design the approach of
strategic management properly.
Best Buy is a leading name in the global retail industry. They are based in the United
States and founded in 1966 by Richard M. Schulze and James Wheeler. In the initial stage, Best
Buy was known as Sound of Music with only having the audio related business
(www.bestbuy.com 2018). However, in the later stage, they change their brand name with the
integration of diverse electronic items. They offer huge varieties of electronic products of all the
major brands along with offering own private level brands. Currently, they are operating in the
United States, Canada and Mexico. They hand their operations in China but that got closed due
to different issues. The product line for Best Buy includes mobile, air conditioners, refrigerators,
television, computers and tablets. In addition, all other accessories related to the electronic items
are also being offered by them. On the other hand, the private level brands of them are Dynex,
RocketFish, Insignia, Modal and Platinum.

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Figure: 1
Market share of Best Buy
Source: (finance.yahoo.com 2018)
According to the reports, Best Buy is having the major market share in the electronic
market in the United States and they are maintaining the market leadership position in terms of
sales as of 2015. This report will discuss about the SWOT analysis of Best Buy in order to
identify their internal effectiveness. In addition, a new product will be recommended for them in
entering a new country.
Market description of the chosen country
India is selected due to the reason that India is the second largest country in the world in
terms of population. Thus the market potentiality is huge and it will help Best Buy to cater to
larger section of customers. It is reported that electronic appliances market of India will touch the
US$ 400 billion market by 2020 (Shenoy 2018). Moreover, it is also stated that during the period
of 2017-2020, demand for electronic items in India will grow at the rate of 41 percent. Thus, this
is a huge potentiality and business opportunity for Best Buy to enter in the Indian market and tap

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this growing market. Major electronics retailers operating in the Indian market are Chroma,
Reliance Digital, Next and E-Zone. These brands are having the major market share and forming
a oligopoly market. Thus, the market concentration is low in Indian electronic retailing market.
This will led Best Buy to face high level of competition in the Indian market. However, in the
recent time, online market is growing at a rapid pace and more customers are opting for online
mode in buying electronic items (Thamizhvanan and Xavier 2013). Thus, it is important for Best
Buy to have both the online and offline mode in doing business in India. This will enable them to
cater to customers from both the rural and urban areas.
SWOT analysis of Best Buy
SWOT analysis will be done in order to identify the positive and negative factors in the
business operation of Best Buy.
Strengths
 Huge expertise in marketing activities.
 Market leadership in the United States.
 Having presence in outside of the
United States.
 Favorable brand value and identity.
Weaknesses
 Less presence in online mediums.
 Limited only in three countries across
the world.
 Operating expenses are more for them.
 Caters to luxurious goods. Thus more
vulnerable to economic recession.
Opportunities
 Electronic market is growing especially
in the developing market like India.
 Growing diversity of the electronic
Treats
 Economic slowdown.
 Emergence of new competitors.
 Poaching of online retailers.

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items.
 Options of using the brand name in
entering other sectors.
 Initiating more e-commerce will help
them to cater to larger customer
sections.
 Declining level of customer loyalty.
Explanation of strengths
Best Buy is operating the retailing sector till 1966. Thus, they are having huge expertise
and understanding about the trend and preference pattern of this market compared to some of
their competitors. This will help them in marketing their products in the Indian market along
with designing the business strategy that will fetch maximum outcome (Hamilton and Chernev
2013). Already they are having market leadership position in the market of the United States.
This is creating a favorable brand image for them and will help them to further penetrate in the
Indian market (Zhang 2015). Moreover, being in the market leadership position, Best Buy is
having the idea and knowledge about how to operate in this sector. Currently, they are having
presence in Canada and Mexico outside of the United States. Thus, they are also having the idea
and knowledge about the trend and pattern of the international business. This knowledge will
help Best Buy to effectively enter and operate in the Indian market.

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Explanation of weaknesses
One of the major weaknesses of Best Buy is having less market presence in the online
market. This is mainly due to the reason that Best Buy is highly and traditionally depended on
the brick and mortar stores. Thus their online presence is much less than some of their
competitors especially the Amazon in the United States (Wang et al. 2013). In doing business in
India, this will be a major weakness for Best Buy due to the fact that online marketing is
increasing at a rapid rate. Best Buy is only having presence in Mexico and Canada outside of the
United States and thus they do have any idea about the marketing trend in the Asian region.
Moreover, Best Buy had to close their operation in China due to various issues, which are also
one of their major weaknesses. Operating expenses of Best Buy are also more compared to their
online rivals such as Amazon due to the fact that they have to maintain their brick and mortar
stores (Little and Coffee 2013).
Explanation of opportunities
As discussed earlier, India is witnessing one of the highest growth rates in the electronic
market. Thus, entering in the Indian market will provide huge business opportunities for Best
Buy. Currently, electronic goods comprise of huge diverse items ranging from audio systems to
gaming consoles (Cunningham and Froschi 2013). Thus the more will be the diversity of the
items; the more will be the market coverage and inclusion of diverse customer segments for Best
Buy. They are also having favorable brand value that can be leveraged in different other sectors.
This will increase the market area for Best Buy.

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Explanation of threats
The major threat for best Buy will be the economic recession due to the reason that they
offer luxurious items, which are vulnerable to economic slowdown (Kluza 2014). Customers will
first cut their budget of electronic items during the economic slowdowns. In addition, Indian
market is already having number of small and large retailing brands. Thus, emergence of new
brands in the market will lead to increase in competition and reduction in profitability for Best
Buy. With having number of retailers operating in the market, customers are now having more
choices and thus their loyalty level is less.
Recommendations
Identification of target market
It is recommended that in terms of demographic segmentation, the target customer
segments should be the middle age people between the age of 25 and 60. This is due to the
reason that according to reports, middle age population is one of the major portions of the total
population of India. Moreover, this age group will have professionals who are having the interest
and affordability to buy electronic items. The upper age group of 50 to 60 is being targeted due
to the reason that India is having the trend where people in their retirement stage buys expensive
electronic items.

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Figure: 2
Demography of India
Source: (www.indexmundi.com 2018)
In terms of geographic segmentation, metro cities and tier I cities should be targeted at
the first phase due to the reason that metro population of India is having the awareness about the
latest electronic items and also they are having the affordability. In terms of the behavioral
segmentation, customers with having jobs or business or having favorable economic conditions
will be targeted along with those who are having the knowledge of latest products.
Recommended new product
It is recommended that Best Buy should come up with own range of Wi-Fi routers under
their private level brand. This is due to the reason that in the Indian market scenario, most of
large electronic retailers are not having their own brand of Wi-Fi routers rather they sell the third

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party brands. Thus, if Best Buy can introduce own brand of Wi-Fi routers in more affordable
cost, then it will help to tap the growing demand of routers in the Indian market.
Marketing mix
Product  Product will be the Wi-Fi routers.
 It will be offered in different variants for different customer
requirements.
 Will meet the internet frequency level of India.
Price  Market penetration pricing strategy will be maintained in order to have
maximum market coverage (Li, Xu and Li 2013).
 It will be priced low than their close competitors.
 This will help Best Buy to have more brand identity in the Indian
market.
Place  The product will be online only. It will only be sold through online
channels (Yang, Lu and Chau 2013).
 Target market in metro cities is having favorable internet penetration.
 Only available through the online marketplace of Best Buy.
Promotion  Social media marketing will be extensively used. Customers having
presence in the social media can be catered through online channels also
(Felix, Rauschnabel and Hinsch 2017).
 Television commercials will also be initiated in order to reach out to
maximum number of customers.

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Explanation of the customer value
The major value that will be provided by the new product is cost effectiveness.
Customers will be able to have routers in less cost compared to the existing products in the
market. In addition, as the product will be online only model, thus the customer convenience will
be more in buying them. The routers will offer world class quality in transmission and speed of
internet. Thus, overall value for the customers will be enhanced. Customers will also be provided
with warranty and after sales service.
Adhering with strengths, opportunities
The recommended product will effectively adhere to the strengths and opportunities of
Best Buy due to the reason that this product will be online only model and this refers that Best
Buy will be able to tap the growing online market in India along with competing with the online
players. In addition, the favorable brand value of Best Buy will help them to push the sales of
privet level brand of routers in the India. This will effectively helps in brand extension for Best
Buy. Thus, with the help of this recommended product, Best Buy will be able to leverage on their
indentified strengths and opportunities.
Conclusion
Thus, it can be concluded that entering in the Indian market will be the beneficial for Best
Buy due to the huge market opportunities for them. This report discussed about the internal
effectiveness in the forms of SWOT analysis to determine the positive and negative factors for
Best Buy. In addition, in this report, it is concluded that Best Buy should develop a new private
level brand for selling routers for the Indian customers due to the reason that demand for Wi-Fi
routers is rapidly increasing in the Indian market. Moreover, it is also concluded that the new

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product should be marketed through online channels only. This will help them in having
effective utilization of the online mediums along with tapping the growing demand for online
marketplace in India.

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Reference
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