Consumers' high level of interest in all these products and their build-to-order configurations also point to significant bargaining power of suppliers.
Suppliers of MP3 players, cell phones and convergence products also have a significant bargaining power relative to Best Buy and other retailers, and this is especially true of Apple with their series of iPods. MP3 as the market standard for music formats has correspondingly lead to significant bargaining power for Apple globally.
The bargaining power of PC manufacturers as they trim down and consolidate their distribution channels is another significant factor in the supplier mix for Best Buy, as they must keep HP, IBM, Toshiba, and other suppliers satisfied with the sell-through rates of their products through Best Buy stores.
Networking products companies including Cisco (Linksys) and NetGear have significant bargaining power as suppliers of home and business networking products. Their ability to define pricing, discounts, and promotions is based on their significant bargaining power as suppliers. As a group, networking products vendors have significant leverage on all retailers given the high level of interest many families and companies alike have in creating their own wireless networks.
Microsoft's Xbox Sony's PlayStation 2, and Nintendo's Dual Screen game consoles all represent, collectively, the bargaining power of suppliers in the time-critical holiday selling season. Best Buy relies on new product introductions from these three companies in the console gaming area to increase revenues in their 4th calendar quarter sales. The bargaining power of each of these manufacturers in the console gaming market is also very significant and when any of these vendors introduces a new model, allocations typically occur, further accentuating their bargaining power.
Potential Entrants
Wal-Mart's entrance in flat-panel and LCD TVs is the greatest potential threat, as is their move into consumer electronics and higher end MP3 and cell phones. At present Wal-Mart pressures its supply chain to deliver flat panel TVs at costs that allow for $250 price points on models that would normally go for $400 - $500 in Best Buy, creating a significant competitive advantage for the global retailer in high end electronics.
Dell and Gateway continue to attempt to sell higher-end flat panel TVs and LCD TVs, in addition to DVD TV convergence products, and they have both already proven to be entrants into the home entertainment system markets. Their continued growth and testing of the market for digital cameras for example will continue to force Best Buy to not broaden their lines of cameras carried, but me more knowledgeable about them through better trained Sales Associates working on the store floor.
Defining the Best Buy e-Commerce Strategy
In defining the Best Buy e-commerce strategy the transition needs to be noted that throughout the 2005 timeframe an emphasis on customer centricity was heavily invested in and managed from the top down. Brian Dunn, President and Chief Operating Officer (COO) stated during the most recent Best Buy Shareholders Meeting (2006) that the company would in 2006 re-vitalize all operations, supply chain, fulfillment including distributed order management, and in-store staffing and training to create a unified, customer-centric operating model. The COO continued on saying that by creating e-commerce strategies that unified the many inputs from customers and gave Best Buy greater insights into their wants, needs and behaviors of the highest value customers. This strategic shift to put the customer at the center of Best Buy strategies is squarely aimed at the competitive, buyer, and substitute areas of Dr. Michael Porter's five forces model. In addition, the Best Buy went on to say that additional priorities were the profitable cross-selling and up-selling of consumers relying on the Magnolia Home Theater concept to showcase higher end flat panel and plasma TVs in addition to higher-end stereo components. Clearly the need for an integrated approach to guided selling and configuration including strategies for up-selling and cross-selling are critical also for this goal.
The COO went on to say that the additional top priorities are making Best Buy for Business a larger percentage of total revenue, growing international business, and creating end-to-end selling strategies that would unify the entire e-commerce strategy.
Based on the remarks made by the COO and other executive's observations regarding the current state of Best Buy's electronic initiatives, the following main classifications of their strategies emerge. They are as follows:
Guided Selling Strategies - This is by far where the majority of emphasis is today in Best Buy as it provides a foundation for selling quickly and easily customized products (sometimes called Assemble-to-Order) in addition to support for logic workflows that support cross-selling and up-selling. The integration of electronic shopping...
Best Buy Strategy Best Buy Current Strategy Best Buy Co. Inc. is a global retailer that produces technology and entertainment products and services across the globe. The company incorporated in 1966 in the state of Minnesota and today it is operating in U.S., Europe, Canada, China and Mexico. Best Buy controls a collection of retail stores and websites under eleven brand names. Target Market Best Buy mostly targets the individual consumers, which Best Buy
Introduction The target market for Best Buy is appliance and electronics consumers—people in the 18-35 year range, though the retailer does target older adults as well as “millennials” (ISU College of Business). Its main target is described as “highly engaged consumers who love technology” (WARC). In recent years, Best Buy has had to redefine itself and redefine its corporate strategy. In fact, it’s had to redefine everything—from its core products to
Part II. The company is traded on the New York Stock Exchange, under the symbol BBY. Best Buy had its initial public offering (IPO) on Nasdaq in 1985 but migrated to the NYSE in 1987. A chart of the company's stock over the past four weeks is as follows: Source: Yahoo! Finance (2013) Short-term movements in share price are mostly relevant to day traders. Most investors hold the stock much more than
"Bricks-and-mortar" vs. "clicks-and-mortar": An equilibrium analysis. " European Journal of Operational Research 187.3 (2008): 671. Bala Chakravarthy, Peter Lorange. "Continuous renewal, and how Best Buy did it. " Strategy & Leadership 35.6 (2007): 4-11. Elizabeth Gibson, Andy Billings. "Best practices at Best Buy: a turnaround strategy " The Journal of Business Strategy 24.6 (2003): 10-16. Erik Gruenwedel. "Best Buy Q4 Sales Grow, Profit Dips. " Home Media Magazine 30 Mar. 2009: 3. James
There is little reason to believe that the upside is going to be sufficiently high to place a "buy" rating on the stock. Returns are likely to be either in line or below what the beta implies unless Best Buy is able to find new ways to grow. More likely, it will be subject to increased competition from its major competitors and will be forced to cut margins further in
Best Buy Inc. Stock Evaluation Analysis Best Buy is the largest specialty retailer of consumer electronics in the U.S., selling a variety of brands of electronic devices such as TVs, home theater systems, cameras, appliances, computers, mobile phones, video games, software, and repair & installation services to consumers across the country under different store brands (Trefis, 2014). The company has over eleven hundred brick and mortar stores in the U.S. And also
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