Best Buy Strategic Analysis Essays Samples

Company Profile: SWOT analysis of Best Buy

Best Buy is an American with its stocks trading on the New York Stock Exchange. It specializes in consumer electronics, accounting for about 20% of America’s domestic market in technology-based products. Best Buy has 24 stores across the United States. Besides its presence in America, it also operates in the United Kingdom, Mexico and Turkey. By the year 2010, Best Buy and its subsidiaries had more than 1,050 stores in local markets. Today, Best Buy is position 45, according to Fortune’s top 1000 companies. What are the factors that keep Best Buy outshining its competitors in the market? What are its weaknesses and opportunities? Read this SWOT analysis of Best Buy to find out more.

Strengths: SWOT analysis of Best Buy

Best Buy enjoys dominating the market in retailing electronic products in America. For example, it is the leading retailer of electronic goods in the USA, accounting for about 20% of the market. As a result, the company has a unique market position, which favors its business operations, making it position 45 on global ranking.

Another reason why Best Buy excels is its enhanced presence across the United States, with outlets all over. With its strong network, Best Buy is able to maintain its economies of scale and strengthen its brand image. This network allows the company to reach more customers and penetrate the market effectively.

Best Buy has good practices in terms of growth, profitability and community involvement. This gives it a higher customer satisfaction index as compared to other players in the industry.

SWOT analysis of Best Buy further shows that it manages several stores in America, as a joint venture with various warehouses. This relationship helps consumer to buy and use its products with a lot of ease.

Weaknesses of Best Buy

Besides dominating the market in retailing electronic products and making good profits over the years, Best Buy has a range of weaknesses. Its main weakness is over dependence on a few suppliers. By the end of 2007, Best Buy maintained only 25 suppliers, who accounted for the company’s 60% of purchases.

Additionally, Best Buy does not maintain strong ties its suppliers. It does not favor long-term contracts. This approach exposes the Best Buy to risks of shortages especially in the event one of the suppliers turns its back on them.

Another weakness is the endless lawsuits against its operations. In one of the suits, Best Buy was accused of charging higher prices more than what is advertised. In 2000, Best Buy was also charged for concealing warrantees of products with the aim of selling their labeled merchandise. Lastly, its overdependence on the US domestic market could affect sales with low economic growth.

Opportunities: SWOT Analysis of Best Buy  

From this SWOT Analysis of Best Buy, it is clear that the company has a bright future with a range of opportunities to expand and diversify its operations. First, Best Buy can make major acquisitions. From its recent acquisitions, the company was able to increase its customer base and strengthen brand image in the market. Such will allow Best Buy to enter new market and develop new products under the same brand name and increase sales.

Secondly, Best Buy plans to expand its business in other countries. By expanding its operations geographically, this will guarantee the company more opportunities and a higher market share.

Threats of Best Buy Inc

The first threat is cutthroat competition from three main players, Amazon, Apple and Wal-Mart. The competition is stiff as the leading giants increase inventory of products related to electronics. In addition, these retailers offer installation services and focus on increasing their market penetration.  With increasing competition, this many exert pressure on the company’s margins and harm its operating results.

Another threat is the increase in prices of rental equipment in America. If this trend escalates, it may increase Best Buy’s operating cost, which is likely to affect its profitability. The company also faces a risk of low sales because of low desire for Americans to make purchases. This SWOT analysis of Best Buy has explained the business environment, which favors and threatens the company’s optimal operations.

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References:

http://www.bestbuy.com

http://www.euromonitor.com/best-buy-co-inc-in-retailing/report

http://yousigma.com/comparativeanalysis/bestbuy.html

http://www.mbaskool.com/brandguide/lifestyle-and-retail/4197-best-buy.html

SWOT Analysis of Best Buy

 

III. External Environment (EFAS Table; see Exhibit 1) Efas Table A. Natural Environment Best Buy, being a retail chain of consumer electronics and home goods, has a naturally competitive market share. Being a red ocean they constantly have to compete with their rivals based on pricing and strategic promotion deals. Thus being a retail store they naturally have been affected by the rise of new technologies and the rise of E-commerce. Its natural competitors have all transitioned online and the retail store is taking small losses. Due to intense competition which benefits the consumer, the actual company has been struggling to turn profits in the past 3 years. B. Societal Environment 1. Economic Growing Chinese Retail Market (O): The Chinese retail market over the years has been experiencing a constant growth rate. The National Bureau of Statistics of China has reported that the country has retail sales of buyer goods totaling $3,792.4 billion in 2013, which is a year-on-year growth of 13.2%. In addition, in 2014 the total retail sales of buyer goods amounted to $3,060.6 billion, which is a year-on-year increase of approximately 13%. It is also important to note that the demand for household devices and audio equipment increased by 9% in 2014. It is with these distinct economic trends, coupled together with population growth and the increase of affluence in individuals that have led to the expansion of China’s retail market. Its expanding urban population and consumers’ desire to spend more will galvanize China’s

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