Best Buy’s Strategy & Competitiveness Advantage

Best Buy

Best Buy’s strategy is to remain the leading house-hold name in America by differentiating from its rival distinctively and attracting more customers into its products and services (Thompson, Strickland and Gamble, 2008). Best Buy is a Multi-national Corporation operating mainly in North America, Asia and Europe. It is a household name because there is no living room in America that does not have product that can be found or was bought in the Best Buy outlet stores. Best Buy is the leading multi-conduit global retailer and developer of technology products and services (Best Buy, 2012).

Its strategy is the ability to form acquisition with other companies as a way to integrate services and products into its retail stores and win the markets by offering an array of services and products which benefits its portfolio. According to its web-site data, Best Buy’s strategy is evident of unwavering relationships with its suppliers i.e. Samsung, AT&T, Apple, Verizon, HP, Dell, Sony, LG, WD, Wii, Toshiba, RCA, On Star, and many more (Best Buy, 2012).  

Toward winning competitive advantages, Best Buy has restructuring and transformation strategy that will allow them to be better equipped to accept changes and challenges that are brought by new technologies, time and space. This strategy has allowed Best Buy to refocus into profitable markets by closing some outlet stores in Asia and Europe because its data shows that North America is its most profitable markets (Best Buy, 2012).

The new Best Buy strategy of "Making technology work for you" was unveiled this summer aiming to boost sells during back to school and holiday seasons after the protracted sales plummeted and cumulative competition from rivals Wal-Mart, Amazon and Target (AdAge, 2012). This strategy is done by restructuring its outlet stores, marketing focusing on college age students who are digital gadgets consumer, repairing consumer and public relations after former CEOs annoying the public and moving forward focusing on the technology (AdAge, 2012). 

This may work, but the worry is that its rivals are matching ahead as well and affiliates like Apple are now selling its “i” products in its own outlet stores and we see the results are more revenue for Apple. Also, this strategy has not yet been tested, we have to wait and see if it will hold water during the back to school and holiday seasons. The meter for this strategy is based on its developments using Best Buy’s vision, mission and values that will set the objective with mechanisms on how to attain them through effecting and monitoring the strategy’s growths, assessed recitals and applying changes as they come (Thompson, Strickland and Gamble, 2008).

Best Buy needs a clear plan, which is the best strategy that can help it to tackle the enormous challenges it faces. Apart from the financial difficulties, Best Buy is facing leadership crisis that affects management and production. It needs a strategy that can clear the cloud of uncertainty on being taken over and focus on its experience and knowledge of the products and services it produces and offer. The strategy toward attaining a competent leadership will support the management, inspire employees, produce good quality services and products, win back customers, and reinvigorating its trusted and household brand (Thompson, Strickland and Gamble, 2008).

For now, the uncertainty about Best Buy being taken over is not lingering anymore. To my knowledge the new CEO was appointed last month. Also, the new Best Buy strategy of "Making technology work for you" was unveiled this summer aiming to boost sells during the back to school and holiday seasons after the protracted sales plummeted and cumulative competition from rivals Wal-Mart, Amazon and Target (AdAge, 2012). If this is the right strategy for Best Buy it is yet to be told because it is too soon to reap its effects.

About eight years ago, Best Buy was named by Forbes as the company of the year; also at the same period Best Buy was among the most admired companies name by Fortune Magazine (The Motely, Foo 2012).  It is agreeable that since its shining moments that gave it competitive edge and shining light Best Buys could not maintain its spotlight. Things got so bad finance and markets are becoming its devastating challenges. Something needs to be done because the current strategy is not working.

For example, the Xerox CEO, Ursula Burns, who said that the world is changing and therefore people and organizations are also changing, organizations that resists to transform and conform to the changes as they happen such organization will get stuck (Burns, 2012).

Therefore, we can agree that Best Buy needs first a strong and visionary leader who will then articulate a strategy that will take the company out of financial crisis and maintain the company in the path of growth and thriving. Such leader and strategy must be a team player and team builder who is able to use his/her skills and experience to spur growth by exciting employees, winning back customers, reaffirm the Best Buy brand (Yahoo Finance, 2012). This strategy will also need to blend Best Buy to have a proactive action strategy that will improve its financial performance while striving to outperform its rivals and adaptive strategy will react to unforeseen developments and emerging markets based on time and space (Thompson, Strickland and Gamble, 2008).

Why Best Buy did not manage to capture most of Circuit City customers when Circuit City went bankrupt?  Instead Amazon, Wal-Mart, Staples, Target and eBay captured chunk of the Circuit City’s customers and now are head-on competitors of Best Buy. This is an interesting question. I loved to go to Circuit City and Best Buy because I could get a deal by making comparison of sales and prices. Actually, the city I used to live before circuit city closed had a shopping center/mall with Target, Wal-Mart, Best Buy, Circuit City, Radio Shack and staples within a one mile radius. I never really grasped the fact that’s why Best Buy is doing so poor, while all circuit city customers would become its customer in a matter of over-night? I’m one of circuit city customers still shopping at Best Buy. But I don’t believe that customers are monogamous and I could be a great example. When circuit city closed actually my Reward Zone benefits decreased because I did not have the one-stop shopping within a mile radius as I used to. Therefore Amazon, eBay and Craigslist came into picture and I’m more diversified than ever. This has become the major problem of Best-Buy, and rivals are exploiting it by all means necessary.

Apart from the financial difficulties, Best Buy is facing leadership crisis that affects management and production. It needs a strategy that can clear the cloud of uncertainty on being taken over and focus on its experience and knowledge of the products and services it produces and offer. The strategy toward attaining a competent leadership will support the management, inspire employees, produce good quality services and products, win back customers, and reinvigorating its trusted and household brand (Thompson, Strickland and Gamble, 2008).

In results Best Buy has appointed a new CEO, Hubert Joly and the former head of global hospitality company Carlson, who will take over this September (Yahoo Finance, 2012). The decision to hire a new CEO is aiming to turn around which Yahoo Finance predicted to take three years from now. That is how deep in financial messy Best Buys is into. This is due to the fact that the new CEO’s vision, leadership and strategy are not yet implemented and or tested. That makes it difficult to draw conclusion on whether Best Buy’s strategy is the right prescription for the magnitude of trouble is into or not. Best Buy, the electronics giant is vowing to remain competitive in the world markets. Can the new CEO deliver this ambitious strategy?

The new CEO’s vision, leadership and strategy are not yet implemented and or tested. That makes it difficult to draw conclusion on whether Best Buy is viable and stronger today or not. But we can agree that Best Buy needs first a strong and visionary leader who will then articulate a strategy that will take the company out of financial crisis and maintain the company in the path of growth and thriving. Such leader and strategy must be a team player and team builder who is able to use his/her skills and experience to spur growth by exciting employees, winning back customers, reaffirm the Best Buy brand (Yahoo Finance, 2012). This strategy will also need to blend Best Buy to have a proactive action strategy that will improve its financial performance, while striving to outperform its rivals and adaptive strategy will react to unforeseen developments and emerging markets based on time and space (Thompson, Strickland and Gamble, 2008).  Is the new CEO that leader? This question is remained to be answered.

Reference:

AdAge. (2012). Best Buy gets back in the game with new tagline focus. Retailer looks to boost sales and move past exec exits with creative centered around tech. http://adage.com/article/cmo-strategy/buy-back-game-tagline-focus/235589/

Best Buy. (2012). Fiscal news relies: Reports fiscal second quarter 2013 Results. Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=irol-newsArticle&ID=1727161&highlight=

Burns, U., (2012). “If you don't transform, you're stuck”: On the imperative to transform. Xerox CEO: NPR staff. http://www.npr.org/2012/05/23/153302563/xerox-ceo-if-you-don-t-transform-you-re-stuck

The Motely Foo. (2012). Best Buy could tumble without new strategy.http://beta.fool.com/stockcroc1/2012/04/13/best-buy-could-tumble-without-new-strategy/3616/

Thompson, A., Strickland, A., Gamble, J.  (2008). Crafting and executing strategy; The quest for competitive advantage: Concepts and cases, 17ed.  New York, NY:  McGraw-Hill Irwin. 

Yahoo Finance. (2012). Best Buy names Carlson's Hubert Joly as new CEO to turn around consumer electronics chain. http://finance.yahoo.com/news/best-buy-hires-joly-ceo-111702889.html

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