Best Buy Company Analysis

Company Overview

Best Buy is among the leading retailers in Consumer Electronics and Appliances. The company is also one of the leading retailers in technology and entertainment products and services. With more than 1500 stores in the United States, the company generates more than $40 billion in revenue. Consistently, we perform a comprehensive analysis to develop a strategic analysis of the company.

Existing Mission and Vision Statements

Unfortunately, Best Buy does not provide an official mission statement on their website. The above statement is what is considered to be their mission statement by other authors (Jurevicius, 2013).

The company does not have a vision statement.

Proposed Mission and Vision Statements

Ideally, Best Buy mission statement has been evaluated and found to be a poorly structured mission, because it focuses on only three components; customers, employees, and the organization survival. The proposed mission statement attempts to include values that are missing from the company’s missions statement, while maintaining the original focus of the organization.

Organization External Opportunities

Many merchants make the mistake of overlying on U.S. – based market and fail to expand to international markets, but Best Buy and recognizes the potential in overseas markets and has expanded their presence in areas such as China, Europe, Mexico, and Canada.

Unlike before, there is a high number of users who are currently using smartphones, which has changed the buying trends from physical to online stores.

Private label is when a retailer buys products from different manufacturers and markets them under their brand (Lincoln, 2009). Private brands are sold under the name of the store. One of the benefits of selling products under the private brand is winning consumer loyalty since clients are assured of reliable and quality products. According to Bustillo and Lawton (2009), Best Buy Co. rapidly embarked on expanding their private-label business as a way of gaining a competitive advantage over rivals such as Wal-mart and Amazon. The company believed it would prosper in private-label electronics, a move that placed them strategically in the market.

Threats

Investors project that the United States economy is likely to slow down as early as 2018. According to Frank (2017), the U.S. economy is displaying all the likelihood of slowing down substantially, especially with wages slowing down and the rate of employment going down. The consequences of this slowdown include a market sell-off and depreciating the dollar. Consumers are also likely to cut down on their expenditure, especially with Best Buy products, which are more luxurious as opposed to a necessity. 

Initially, internet purchases were tax-free, until recently when the U.S. Senate passed a motion allowing states to tax internet sales. By introducing internet sales tax, the move is likely to reduce the spending habits of consumers who tend to buy products online.

China is known for counterfeit products, which makes it hard for consumers to trust the quality of products from the market in China.

Despite being a giant retailer, Best Buy also faces stiff competition from other retailers such as Walmart in Tv and electronic sales and Lowes and Home Deport in the overseas market. In 2014, radio Shack embarked on its journey to expand their market in overseas by opening two concept stores in China and Malaysia (World Franchise Associates, n.d). Although not a major competitor of Best Buy, expanding to international markets means that they are likely to take a certain percentage of Best Buy customers.

Competitive Profile Matrix

The competitive profile matrix represents the competitors of Best Buy and how well they compete in different areas within the industry. Ideally, Best Buy ranks the highest with a 2.87 rating among its competitors due to its strength in its financial position, product quality, consumer loyalty, sales, customer service, and price competitiveness. Best Buy’s closest rival was found to be Amazon where their strength lies in E-commerce, which received a rating of 4. The Competitive Profile Matrix also indicates Wal-Mart is the least threatening competitor, with declining percentages in almost all areas within the industry, which explains their 2.37 score.

External Factor Evaluation (EFE) Matrix

The External Factor Evaluation Matrix explains whether Best Buy can effectively take advantage of existing opportunities and minimizing external threats. Ideally, the total weighted score should always be within the range of 1 to 4 regardless of the total number of opportunities and threats, with a 4 weighted score rating indicating that the company can effectively maximize the existing opportunities and minimize the risk. A weighted score rating of 1 indicates that the company is unable to take advantage of their opportunities or even avoid threats. In the case of Best Buy, the total weighted score is 3.18, which is above average indicating that Best Buy can avoid threats and take advantage of their opportunities. 

Organization’s Internal Strength

Strengths

The customer has always been king, and an online presence is a priority. Positive customer reviews for Best Buy means that potential customers are likely to consider buying from Best Buy after reading what other customers have experienced. Potential customers are also likely to trust Best Buy even before doing business with them because of the positive ratings from existing or previous customers.

Customers who shop with Best Buy get rewarded with points that are redeemable for reward certificates (Best Buy, n.d). The reward certificates can then be used for discounts on future purchases. 

According to an article in New York Times by Roose (2017), while spending millions to build a speedy delivery system, Best Buy also did something else – improving their customer service. The company has a much-loved workforce, who are tech trained to offer the necessary support and more proficient

Weaknesses

Best Buy has a huge presence in U.S. markets with more than 1500 stores in North America. This has limited their overseas presence, which is a major weakness as compared to its competitors.

Internal Factor Evaluation (IFE) Matrix

The Internal Factor Evaluation (IFE) Matric is designed to help identify and evaluate the relationship between the company’s strengths and weaknesses. It is a strategy tool that will be used to evaluate ways in which Best Buy is performing in regards to its internal and external strengths. In this case, the weight assigned to each strength or weakness indicates the relative importance of the factor to its success in the industry. The rating represents whether the factor represents a major or minor strength or a major weakness or a minor weakness. The weighted score was determined by multiplying the weight and the rating. A weighted score of less than 2.5 indicates that the company is internally weak in their business operation. Score. For Best Buy, the weighted score is 3.19, which indicates that the company has a strong position.

Proposed Specific Strategies

In order for Best Buy to maintain their competitive advantage, we proposed that the company should focus on advertising and promote their specialized brands to ensure that more people become aware of their products.

Expanding the phone market will ensure the company gets a higher market share and be able to compete with mobile phones giants such as Samsung and Apple who sell directly to the consumers.

Best Buy has also known for its excellent customer service all thanks to their well-trained and prepared employees. The company should continue enhancing the relationship between the employees and the company to ensure continued motivation and employee dedication to the organization success. 

Implementation of Recommendations

The company has various specialized brands including Rocketfish, Insignia, Dynex, Init, and Geek Squad. Promoting these brands to create more awareness among their consumers is a move projected to increase the company’s competitive advantage.

Best Buy increased the number of mobile stores in 2010 from 74 to 350 by 2016. The company can consider increasing the number of stand-alone mobile stores in the United States to ensure that clients who need tech help access it easily. Increasing the floor space at Best Buy stores will also ensure that the clients can easily buy from the physical stores and get the necessary help they may require.

Procedures for Strategy Review and Evaluation

Strategy evaluation is a significant procedure because it expands on the efficiency and effectiveness of the comprehensive organizational plans in achieving the proposed objectives or company goals (David, 2017).

Ensuring internal consistency ensures that individual policies fit into an integrated pattern of corporate goals. It also ensures that the policies are not judged in individual terms, but in their relation to other policies. Consequently, internal consistency is important because it helps identify areas where strategic choices must be made.

Consistency with the environment is based on the efficacy of policies in relation to the situation as it exists. The atmosphere of the organization keeps on changing and ensuring success over the long run means that management must continuously assess the degree to which the policies are consistent with the environment. 

A strategy must not overtax or create additional problems with the available resources. Rather, it should resonate with the available resources without straining the capabilities of the organization.

Competitive advantage usually comes from resources, skills, and positioning. Position plays a significant role in deterring full-scale attacks from rivals. It is also self-sustaining as long as the key internal and external factors remain constant. When evaluating strategy, it is important to evaluate the nature of positional advantages associated with the specific strategy.