Environmental Scanning of Best Buy: PESTLE and Porter's Five Forces

This report provides an environmental scan of Best Buy Company, examining its internal and external business environments to identify strengths, weaknesses, opportunities, and threats. The analysis begins with a company overview, followed by a discussion of how environmental scanning contributes to value creation and competitive advantage. The core of the report applies the PESTLE framework to assess the political, economic, social, technological, environmental, and legal factors impacting Best Buy. Furthermore, it employs Porter's Five Forces model to evaluate industry rivalry, customer power, supplier power, the threat of new entrants, and the threat of substitutes. The report concludes with an assessment of the overall business environment and its implications for Best Buy's strategic positioning, highlighting the favorable environment for the company in the US market. The report uses data from 2019 and provides an in-depth look at the company's position in the electronics market.

RUNNING HEAD: ENVIRONMENTAL SCANNING
MANAGEMENT

ENVIRONMENTAL SCANNING 1
Contents
Introduction................................................................................................................................2
Company overview....................................................................................................................2
Value creation and sustain competitive advantage....................................................................3
Environment Analysis................................................................................................................3
External environment.............................................................................................................3
PESTLE ANALYIS............................................................................................................3
General environment..............................................................................................................4
Industry environment..............................................................................................................4
Porters five force model......................................................................................................4
Conclusion..................................................................................................................................5
Bibliography...............................................................................................................................6

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Introduction
The report reflects on ‘Environmental scan’ of ‘Best Buy Company’. Environmental
scanning involves analysing the organization internal and external business environment to
identify strengths, weakness, threats, and recognize opportunities. It assists the organization
in providing right direction and developing better future plans. It is highly essential to gain
information about the rapid changes and their impact on the organization (Zhang, Majid, &
Foo, 2010). Focusing on report structure, the initial section involves brief overview of Best
Buy Company. The next section includes environmental scanning strategy for value creation
and to sustain competitive advantage. The succeeding part comprises of environment
scanning of Best Buy Company through the application of PESTLE framework and Porters
Five Force Model.
Company overview
Best Buy Company is an American multinational organization founded in the year
1966. It offers wide variety of consumer electronic goods and services. Its products mainly
include television, mobile, digital camera and other electric appliances. It also offers
installation, delivery and repair services. Globally, it has around 1288 stores in the year 2019
(Connell, 2019).
Figure 1: Best Buy Stores worldwide
Source: (Connell, 2019)

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Value creation and sustain competitive advantage
Environment scanning assists in determining the trends prevailing in the environment.
Therefore, organization finds an ease in aligning with the environmental trends. It helps the
organization in crating valuable and required products and services for the customers.
Environment scanning will allow Best Buy Company to gain essential knowledge
about the potential opportunities in environment. It will assist in taking early advantage of
recognized opportunity. It provides quality information about the possible threats prevailing
in the business environment. It assists in developing plans and undertaking effective steps to
minimize and eradicate the possible threats. It ultimately minimizes the potential business
risk and aid the organization in raising the profit (Zhang, Majid, & Foo, 2010).
Environment Analysis
External environment
PESTLE ANALYIS
Political factor: The government possess high judicial effectiveness and offers
adequate business freedom to organizations (Heritage , 2019). Thus, US government provides
passable political environment to Best Buy Company.
Economic factor: It includes elements such as Population rate, GDP, Per Capita
Income, unemployment and inflation rate. The population of the country is 325.9 million.
High population strength states that Best Buy Company have high potential customer base.
The Gross Domestic Product is marked at $19.4 trillion with a growth of 2.3%. The Per
Capita Income of population is $59,501. The high PCI states that Americans have high
disposable income and strong purchasing power. The unemployment rate is just 4.4%
(Heritage , 2019). It depicts that high percentage of Americans are employed and they have
adqaute financial resources to purchase products from Best Buy Company. Thus, US offers
highly attractive economic environment to Best Buy Company.
Social factor: It focuses on buying behaviour of population. Americans are showing
increasing rate towards price sensitivity (Statista , 2018). Additionally, with the passing years
there is a decline in brand loyalty among them (Sullivan, 2018). Thus, US offers
unfavourable social environment.

ENVIRONMENTAL SCANNING 4
Technological factor: It considers level of automation, technology and innovation
prevailing in a country. In the year 2019, US rank third for innovative country (WIPO ,
2019). The company will be able to adopt the use of innovative technologies in its work
process. It states that US offers favourable technological environment to Best Buy Company.
Environmental factor: US have passable climatic conditions. It attains low risk from
natural disasters. Thus, it delivers passable ecological environment to perform business
operations.
Legal factor: The US government lays prior attention in safeguarding the patents and
property rights of the business organizations (Heritage , 2019). Therefore, Best Buy
Company experiences fine legal environment in US.
General environment
Best Buy Company offers adequate benefits to its employees. It includes sick and paid
leaves, parental leaves, monetary incentives, and non-financial benefits. It also offers
essential trainings and high management support to its employs (Glassdoor , 2019). This
benefits the company in raising motivated employees. It assists the company in developing
positive work environment in the organization.
On Glassdoor, it has received high number of positive reviews. Employee positive
reviews have assisted the company in gaining rating of 3.8 stars (Glassdoor , 2019). In the
year 2019, it was included among the top 50 best workplaces (Economy, 2019). Thus, it
clearly states that Best Buy Company offers favourable environment to its human resource.
Industry environment
Porters five force model
1. Industry rivalry: Best Buy Company forms the part of electronic industry of US. In
US there are many business organization offering electronic goods. It includes
Walmart, Costco, Target and Staples (Owler , 2019). Additionally, products are not
highly differentiated. Therefore, Best Buy Company experiences high competition.
2. Customer’s power: the bargaining power of customer is mediate because of high
customer strength and high price sensitive among them (Statista , 2018). The
company has mediate threat from customers.

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3. Supplier’s power: They attain lo power because they are not large in size.
Additionally, there are not limited suppliers. Best Buy Company has low threat from
suppliers.
4. Threat of new entrant: The existing players like Walmart, and Best Buy Company has
high goodwill and possesses patent rights (Owler , 2019). Thus, Best Buy Company
experiences subsequently lo threat from new entrant.
5. Threat of substitute: Competitive firms like Walmart offers products at relatively low
and attractive prices. Additionally, the switching from one electronic product to
another is also low. Thus, Best Buy Company attains threat of substitution.
Conclusion
The report summarizes on environment scanning of ‘Best Buy Company’. It is
analysed that environment scanning is highly beneficial in gaining competitive advantage.
From the application of PESTLE model it is analysed that US offers attractive business
environment. It is acknowledged that fine internal environment prevails in business
organization. The Porters five force model states that industry offers passable environment
Best Buy Company. Thus, it concludes that Favourable environment for Best Buy Company
in US.

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Bibliography
Connell, L. (2019, April 1). Total number of Best Buy stores worldwide 2010-2019. Retrieved
December 15, 2019, from Statista : https://www.statista.com/statistics/249585/total-
number-of-best-buy-stores-worldwide/
Economy, P. (2019, December 15). Indeed Just Announced the 50 Top-Rated Workplaces for
2019 (Is Your Company on the List?). Retrieved December 2019, 2019, from Inc.:
https://www.inc.com/peter-economy/indeed-just-announced-50-top-rated-workplaces-
for-2019-is-your-company-on-list.html
Glassdoor . (2019, December 15). Best Buy Reviews. Retrieved December 15, 2019, from
Glassdoor : https://www.glassdoor.co.in/Reviews/Best-Buy-Reviews-E97.htm?
countryRedirect=true
Heritage . (2019, December 15). United States. Retrieved December 15, 2019, from
Heritage : https://www.heritage.org/index/country/unitedstates
Owler . (2019). Best Buy's Competitors, Revenue, Number of Employees, Funding and
Acquisitions. Retrieved 2019, from Owler : https://www.owler.com/company/bestbuy
Statista . (2018, October 10). U.S. consumers' rating of price sensivity 2013. Retrieved
December 15, 2019, from Statista : https://www.statista.com/statistics/269208/us-
consumers-rating-of-price-sensitivity/
Sullivan, L. (2018, September 14). Brand Loyalty Fading Among Americans. Retrieved
December 15, 2019, from Mediapost:
https://www.mediapost.com/publications/article/325143/brand-loyalty-fading-among-
americans.html
WIPO . (2019, July 24). Global Innovation Index 2019: India Makes Major Gains as
Switzerland, Sweden, U.S., Netherlands, U.K. Top Ranking; Trade Protectionism
Poses Risks for Future Innovation. Retrieved December 15, 2019, from WIPO:
https://www.wipo.int/pressroom/en/articles/2019/article_0008.html
Zhang, X., Majid, S., & Foo, S. (2010). Environmental scanning: An application of
information literacy skills at the workplace. Journal of Information Science, 36(6),
719-732.

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