Best Buy case analysis
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Best Buy faces challenges in a competitive market characterized by low-cost rivals like Amazon and Walmart, along with changing consumer behaviors towards e-commerce and technology. The company must leverage its unique resources, such as its trained sales force and services like Geek Squad, while exploring opportunities within the growing demographic of tech-savvy consumers aged 45-64. Recommendations for improvement include adopting a showroom model and enhancing in-store smart home implementations.
Best Buy case analysis
- 1. Best Buy Analysis Adam Smith, Neal Ferrell, Seth Fryar, Catherine Rasmussen, Ryan Howard
- 2. Introduction • Founded in 1966 • Most recent change in leadership • CEO Hubert Joly- September 2012
- 3. Current Problem • Floating Anchor- Not low cost nor differentiated • Competing in Commodity Market • Amazon • Wal-mart • Lowering Prices • Price match • Trained Salesforce
- 7. Gross Profit Margin (Losses)
- 8. Gross Profit Margin (Losses)
- 9. Technological Trends • Increase in smart phone and data plan usage • Increase in smart devices, appliances, and homes • Increasing pace of technological change
- 10. Demographic Trends • Increase in e-commerce under age of 50 • Window shopping/show rooming • 45-64 year olds = fastest growing age group • Younger generation already tech savvy
- 11. Economic Trends • Fewer good jobs • Student debt is increasing • Individual economic recovery = slow • Increasing economic gap = shrinking middle class
- 12. Threats • Suppliers: E-commerce • Rivals: E-commerce, window shopping, customers have less money • Substitutes: Smart phones with data, window shopping, lower income levels • New entrants: E-commerce
- 13. Opportunities • Generation X - 45-64 year olds • Not extremely tech savvy • Less debt • Better jobs with better pay or already retired • Fastest growing age group • More likely to buy from brick-and-mortar stores • Value of education-based selling (sales person)
- 14. VRIO Analysis Resource Valuable Rare Imitable Organize CA/CP/CD Price matching x x Easy x Parity Best Buy Mobile x x Easy x Parity Trained Sales Force x x Hard x Sustained CA Geeksquad x x Hard x Sustained CA Magnolia x x Hard x Sustained CA
- 15. Current Standing
- 16. Recommendations • RC Willey Showroom model • Smarthome implementation in-stores • Expand Best Buy Mobile