Best Buy and Globalization, Essay Example

Best Buy is a multinational retailer which sells products including consumer electronics, computing and mobile phone products, entertainment products, and related services through both brick-and-mortar retail stores as well as internet stores (The New York Times). The company operates in several regions including North America, Europe, and Asia (Reuters). It is not a surprise that Best Buy competes in both domestic and international markets such as Canada, Mexico, and China because the products and services it sells have global appeal. Globalization has also led to quick dissemination of technology, products, and services which is the time gap between the introduction of products and services in developed countries and developing countries has been declining. As a result, more and more products and services now enjoy a global demand.

Product innovation has also grown in importance for several reasons. First of all, consumers have more income and even more choices available due to globalization that has intensified the competition. As a result, consumers have higher expectations and demand better value for their money. Thus, product and service innovation has become necessary to achieve differentiation and stay ahead of the competition. The second reason which has increased the importance of product innovation is the declining product life cycles due to rapid advancements in technology. As a result, companies have been forced to allocate more resources to research and innovation activities to introduce new products more often and offer better alternatives to the customers as compared to the competition. Product innovation has also become more important because trade barriers have been eased among countries and as a result, almost everyone has access to cheap manufacturing processes. Thus, only products or services that are difficult to imitate provide competitive advantage and innovation helps companies build core competencies.

Best Buy and other competitors have taken several steps to respond to the competitive pressures in the industry which have also resulted from the emergence of internet-only retailers including Amazon and TigerDirect. The internet retailers have benefitted from the fact that they don’t have to make heavy investments in physical infrastructure and their operations are also more agile and automated. Best Buy has opened mobile retail outlets to create more intimate relationship with customers (Sturgess).

Best Buy and other retailers are also placing greater emphasis on services part and one example is Best Buy’s Geek Squad subsidiary which offers instant guidance and information on digital products to consumers through phone, email, or in-person. Similar, these players are also investing more in employees’ training and redesigning their store layouts to enhance customers’ overall experience (Wingate).

Best Buy and other market players have also been adding popular product lines to counter the wide product selection offered by online-only retailers. Similarly, these brick-and-mortar retailers have not only stayed loyal to their traditional distribution strategy but have also created a formidable presence online. This provides greater flexibility to the customers as they can shop both online and/or in-person at the retail outlet. The industry leaders have also embraced latest marketing tools such as social media to better understand their customers and collect valuable data on them.

References

Reuters. Best Buy Co Inc. 5 May 2013 <http://www.reuters.com/finance/stocks/companyProfile?symbol=BBY.N>.

Sturgess, Donna. The Jolt to Best Buy. 3 April 2012. 5 May 2013 <http://www.innovationexcellence.com/blog/2012/04/03/the-jolt-to-best-buy/>.

The New York Times. Best Buy Company, Inc. 5 May 2013 <http://topics.nytimes.com/top/news/business/companies/best_buy_company/index.html>.

Wingate, Monika. Can Best Buy innovate its way back to success? 5 May 2013 <http://insight-to-strategy.com/archives/210>.