Company Analysis

Company Analysis of Best Buy

TABLE OF CONTENTS

Company Analysis

Recent History of Best Buy 5

SWOT Analysis 7

Strengths 7

Weaknesses 7

Opportunities 8

Threats 8

Typical Customer 9

Financial Analysis 9

Income Statement Analysis 9

Adapting to Change 10

Embryonic Stage 10

Growth Stage 11

Shakeout Stage 11

Maturity Stage 12

New Developments 12

Best Buy’s Strategies

Business Strategies 15

Functional Strategies 15

Distinct/Core Competencies 16

Industry Analysis

Major Competitors 19

Best Buy’s Position within the Industry 20

Remaining at the top 20

Becoming main source 21

Influences 21

Industry Factors 21

Impact of Factors 21

Recommendations 22

Conclusion

Conclusion 24

Bibliography 25

Appendices

Common Size Income Statement 27

SWOT Matrix 28

Executive Summary

Best Buy is currently on top of the electronics retail industry. It is followed by Circuit City and Radio Shack. Best Buys’ total annual sales for last year were $35,934 million, and Circuit City was at $12,429 million (“Competitive Landscape”). If you look at the electronic retail area, which includes Best Buy and Circuit City, you will see that Best Buy is ahead by $23,505 million more dollars than Circuit City.

The factor that makes the biggest impact on the industry of electronic retail is the competition from discounted stores. The stores that sell the same merchandise as Best Buy, but at a cheaper price are what make a huge impact on the industry as a whole. After Best Buy’s last earnings miss, competition from Wal-Mart, Target, and Costco were all cited as culprits, on top of decreasing margins for various products (Lee, 2007).

Best Buy’s business strategy centers on meeting individual consumer electronics needs with end-to-end solutions, which involves greater employee involvement and increased services (“Overview”). On the Functional level, Best Buy provides superior customer service upon everything else. Along with great Customer service, the company also tries to keep the retail cost down, so when customers want to buy products they are more able to afford them. Best Buy’s competencies include offering unique services, low prices, and informed/educated employees.

Company Analysis

Recent History

Best Buy has had a bright last couple of years. With many projects on the table and many capable ways to handle new businesses Best Buy seems to just flourish with new opportunities. Best Buy is not just an electronic retail store any longer; it also offers services as well. The most known would be the Geek Squad and the company has also acquired Magnolia Home Theatre. Along with those services, Best Buy also has Best Buy for business, which targets mainly small to medium sized businesses.

In 2000, Best Buy enters the online retailing business by launching Bestbuy.com (“Our History”). This was a major opportunity for the company because it was a function that better helped serve the customer. If the store did not have the certain product that the customer was looking for then the employee could refer that customer to Best Buy online so the customer could purchase that product there.

In 2001, DSN Retailing Today names Best Buy “Specialty Retailer of the Decade” (“Our History”). This helped the company out tremendously. Consumers want to know that they are getting the best service, deal, and product they can find. When DSN named Best Buy “Specialty Retailer of the Decade,” that made customers want to flock to the stores to see just what the big deal was and when they arrived there they understood.

In 2002, Best Buy and the Geek Squad join forces (“Our History”). When Best Buy and the Geek Squad partnered it was monumentous for the company. Not only was Best Buy the leader in the specialty retail industry, now the company was able to provide services as well!! This was a match made in heaven for both the Geek Squad and Best Buy. The Geek Squad gained more national recognition and eventually gained huge amounts of business due to the fact that now they as a company were part of Best Buy.

In 2003, U.S. Best Buy stores surpass the 600 mark and the company opens its first global sourcing office in Shanghai, China (“Our History”). With Best Buy having over 600 stores, that fact ensured that the company was in every major city and was advertising in all surrounding cities. If consumers did not have a Best Buy in his or her own home town, the company made sure that it advertised to those smaller towns nearby and those customers could then commute to shop in the Best Buy stores. Best Buy had implemented a very well designed marketing strategy and very effective also, which made customers want to shop with the company because it made retail electronic shopping FUN. Opening the store