Principles of Management Case Study: BBBY Analysis and Strategies

This case study analyzes the challenges faced by Bed Bath & Beyond (BBBY), focusing on the decline in net profit and stock prices. The analysis begins with identifying the core problem and then delves into a SWOT analysis and Porter's Five Forces to understand the internal and external factors affecting the company. The study proposes three feasible decisions: increasing revenue, reducing costs, and fostering innovation. The solutions involve strategic planning, including financial stress tests and strengthening the balance sheet. The document also highlights the importance of a contingency plan, emphasizing the need to prioritize profit improvement and manage potential risks. The student's work provides insights into strategic management, offering a comprehensive framework for addressing the challenges faced by BBBY.

Running head: PRINCIPLES OF MANAGEMENT 1
Principles of Management
Name
Institutional Affiliation
Date

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Principles of Management
Q1
Regarding the case study of BBBY organization, the immediate problem that the
management needs to solve is the decline in net profit of the company along with a drop stock
prices which are at 50% and 45% respectively (Richard, 2018). A decline in net profit is a
critical matter as it indicates that a firm has unhealthy business operations coupled with problem
from various areas of organization such as method of production, employee management and pay
scale. It is also very detrimental to the financial welfare of a company and will scare off
investors. On the other hand, 45% depreciation of stock prices is alarming and may pose
financial issues to the company such as takeover threats since shareholders will be unhappy,
negative public perceptions and fewer investments.
Q2
The following analysis outlines the important consideration that management should
make while making their decisions.
a. SWOT analysis
The strength of BBBY is that is has a wide market reach. The company has its store over
all of the US states and has also overseas presence in Puerto Rico and Canada. The company can
use this market presence to increase their sales volume.
The weakness of the incorporation is its inability to compete with multinational firms.
The company has not approached this competitive market with the right strategy to steer it to the
forefront of the industry. This has led to the decline of net profit and drop in the stock prices.

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The opportunity presented for BBBY is that it can adopt digital marketing and compete
efficiently as well as improve its customer relations.
The threats are the stiff competition that the company is facing and the inability to
compete efficiently.
b. Porter’s five force analysis
1. Threat of new entrants
BBBY firm is situated in a robust retail industry that attracts new entities. New entrants
have led to the eventual decrease in profitability that BBBY was enjoying. Companies like Wal-
Mart and Amazon have made it more difficult for the incumbent BBBY firm (Dyer, 2019).
2. Threats of substitute
Wal-Mart and Amazon have brought better substitute to the kind of services that BBBY
was used and have taken away BBBY market share. Amazon and Wal-Mart have adopted better
technologies leaving BBBY to lag behind as they scoop profits from this viable market.
3. Bargaining power
BBBY has been under pressure due to its initiative to transform its value chain to adopt
new technologies. Taking this initiative is costly and customers have become sensitive to their
changes in prices of products.
4. Bargaining power of suppliers
Since BBBY has limited suppliers, suppliers have been charging high prices for their resources.
5. Competitive rivalry

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BBBY has lost in this aspect since it has not managed to compete effectively. From this
analysis, the Porter’s five forces analysis is the best analysis since it captures the internal and
external factors that affect BBBY firm congruently.
Q3
The three feasible decisions that management can opt for to solve this problems are;
1. Increase revenue
BBBY can increase its income sales by increasing the volume of sale. According to the
SWOT analysis, the strength of BBY is that it has a wide market reach which it can use to
increase the sales of its products (Sydney, 2017). the company can focus on increasing sales
while decreasing expense simultaneously
2. Reducing cost
BBBY can reduce cost that incurs as operating expenses as it adopts new technologies. It
can do this without jeopardizing the quality of its product through its expansive market reach.
Since it is a large firm, the production cost is reduced in several ways through making supplies in
bulk and its cost of advertising, development, and administration being spread out.
3. Be innovative
BBBY has failed because of its ignorance to adopt innovative marketing earlier enough.
The company should therefore adopt aggressive marketing technique and use digital technology
to attract and satisfy the needs of consumers.
Q4

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BBBY can reach these solution through applying strategic plan. This plan will involve
the company conducting a financial stress test to determine how the reduced net profit and
decline in stock prices have affected the company (Smith, 2017). This firm can do this with a
forecasted income statement, balance sheet and cash flows. Since the company have noticed the
growth opportunity, BBBY should approach the change needed with an open mind. It needs to
strengthen its balance sheet to enable a strategic move that will lead to growth. Lastly, BBBY
needs to grow its customer base by creating a memorable customer experience,
Contingency plan
The most crucial matter for BBBY is to improve its net profit. It should thereby channel
its resources to elevate its profit instead of changing its marketing technique (Agogue et al.,
2017; Wolf &Floyd, 2017). BBBY should also be aware of the potential risk it is facing as its
initiative is leading to failure and worsening the situation. The best way is to execute the
recommended plan with a strategic move.

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References
Agogue, M., Berthet, E., Fredberg, T., Le Masson,P., … & Ystrom, A. (2017). Explicating the
role of innovation intermediaries in the “unknown”. A contingency approach. Journal of
Strategy and Management.
Dyer, J. (2019). Strategic management: Concepts and cases. Wiley.
Richard, F. (2018). Principles of Management. Northern Alberta Institute of Technology.
9B18M105.
Smith, R. D. (2017). Strategic planning for public relations. Routledge.
Sydney, G. (2017). Bed Bath and Beyond Falls Despite Earnings Beat.” Nasdaq, December 21,
2017, accessed February 4, 2020, www.nasdaq.com/article/bed-bath-and-beyond-falls-
despite-earnings-beat-cm896089.
Wolf, C., & Floyd, S. W. (2017). Strategic planning research: Toward a theory-driven agenda.
Journal of management, 43(6), 1754-1788.