Answer To: In doing business analysis, we follow the steps of the strategic management process. You have any...
Aarti J answered on Mar 27 2020
Best Buy: Strategic Management
Course Name
Course Date
Best Buy
Company Introduction
Best Buy Company is one of the multi-national retailer company of different electronic products. The company offers the products under different categories which includes the consumer electronics, computing and mobile applications, home office products, entertainment products and several services which includes the designing, set-up, technical support, delivery and installation of the appliances which has been purchased by the customers. There are different brands which the company sells to its customers. Some of the brands which are marketed and sold by the company includes Best Buy, Platinum, Future Shop, Magnolia, Geek Squad, Best Buy Mobile, Yellow Tag, Dynex, Pacific Sales, Insignia, Rocketfish, Modal and My Best Buy. The company has its operation sin United States, Canada, Mexico and China. (Annual report, 2017)
External environment analysis
Best Buy can be said to be operating in an oligopoly market where the company faces a stiff competition from Wal-Mart and different online competitors which includes Dell and Amazon.
Porter’s five force model
Intensity of rivalry among competitors:
The competition among the large electronic manufacturers and retailers is quite high. The company faces stiff competition from the private as well as public retailers like Walmart, target and Costco. These are the companies which are considered as the discount stores and the company faces stiff competition from these stores. With the emergence of online selling and purchasing, the company also faces stiff competition from the online retailers like Amazon and Ebay. The intensity of rivalry is quite high as there is no switching cost associated in this industry. The products offered by the company are also not differentiated with which the customers can easily switch to other competitors on the basis of pricing and delivery of the product. Thus the intensity of rivalry among competitors is high and the company’s survival is highly dependent on the inventory turnover, after sales services and pricing of the products. (Kenney, Kanfar, 2011)
Threat of New entrant:
The threat of new entrant is quite low, as the industry is already established and the new entrant has to beat the existing competition to survive in the market. The capital requirement for the new entrant is not much, so the threat of entry is low but the potential pool of entrant can be considered high because of the online sales.
Threat of substitute products:
The threat of the substitute is quite low, as there are only few substitutes that are available for different consumer products.
Bargaining power of buyers:
The bargaining power of buyers is quite low, as the purchase volume of the products is low and the cost of the products bought by the consumer is usually high, which results is low bargaining power of the buyers.
Bargaining power of the suppliers:
The bargaining power of the suppliers is high as there are limited number of suppliers who can fulfil the demand of the consumers. Some of the major suppliers includes Sony, Samsung, LG, Hitachi and other companies. All these companies has specialized technology and specializes in their products in one means or the other. There is high bargaining power because of the capital, technology and the competition that the suppliers face. Some aspects which can lower their bargaining power includes the increase in sales that the companies expect from the online retailers.
Competitive environment
The competitive environment of Best Buy is quite high because of...