Business Policy: Best Buy Case Study - Industry Characteristics

This case study provides an analysis of Best Buy's industry characteristics, focusing on market growth rate, the competitive landscape, and the level of concentration within the retail customer electronics industry. It identifies key competitors such as Amazon and Walmart and discusses the barriers to entry and exit. The study also highlights industry trends like multi-channel product delivery and vendor partnerships, as well as challenges including pricing strategies and technological advancements. Furthermore, it estimates the industry's profitability based on ROE, ROA, and ROC metrics, referencing strategic management and business policy sources. The case explores Best Buy's transformation strategy, 'Renew Blue,' and its impact on comparable-store sales and online growth.

BUSINESS POLICY
Reinventing Best Buy
-Case Study of Best Buy

 Market growth rate- -2.8% in the fiscal year
2017
 Total number of competitors- Estimated to
be around 15
 Level of concentration – Highly
concentrated as it comes from industry’s
biggest players such as- Best Buy, Amazon,
Walmart etc.
BEST BUY-INDUSTRY
CHARACTERISTICS

Ease of entry and exit- Barriers to entry and exit are
rigid owing to huge amount of investments needed to
enter as well as difficulty to liquidify and leave the
industry
Target audience- Small business, local business
owners are the main target audience of this industry
Competitive forces in the industry- Consumers
database, showrooming and no sales tax

 Multi- channel product as well as service
delivery has been the trend in this sector.
This means that the customers are served
through online, in –store and in their
residence. However, in store consumers
benefits from the service offered by the
firms while online customers enjoys speedy
delivery. In addition, vendor partners
investing in the stores is also the trend of
this industry.
TREND IN THE INDUSTRY

Characteristics of product- The products offered by the
industry are not differentiated and hence the customers get
homogenous electronic products. Competitive low pricing
strategy, online convenience and advertising campaign
establishes differentiation in the industry.
Problems in industry- Reluctant to change in service
offered to the customers, pricing strategy of the rivalries,
advancement of new technology, government regulation of
respective country creates problems in this industry.
Estimated profitability in industry- This retail customer
electronic industry recorded to 23.6% ROE ( Return on
equity), 8.2% ROA ( Return on assets) and 17.8% ROC
( Return on capital)

 Wheelen, T. L., Hunger, J. D., Hoffman, A.
N., & Bamford, C. E. (2017). Strategic
management and business policy.
pearson.
 Cotter, R. V., & Fritzsche, D. J. (2014). The
business policy game. Developments in
Business Simulation and Experiential
Learning, 21.
REFERNCES