Best Buy Company Industrial Analysis, Research Paper Example

Richard M. Schulze and Gary Smoniak established Best Buy Company in the year 1966. It operates an audio specialty store.  The company based in the United States, but it has a wide scope of the market including UK, China and the rest of the world. Best Buy has more than 1,900 stores and locations, including large-format and Best Buy Mobile stores. The company makes its promotions of sales through an online set up,   at a retail store and call centers. Its target consumers for is mainly the entire population.

Factors that had led to its growth since inception include; its geographical location the company is located in a place with the adequate market for its products, quality products that satisfy consumer need in the market and are the best alternative compared to their competitors. Good macroeconomic environment regulated by the US government, which allows free entry and exit of the companies into the market and prices of the commodities dictated by the market forces has also led to the growth of the industry (Epstein & Buhovac, 2014). Best Buy Company owns a large market share in consumer electronics in US-Mexico and Canada. It accounts for 90% of the company’s total revenue yearly.

The company has experience some fluctuations in the net revenues in the recent past this has led to the initiation of renewing blue turnaround strategy by the company (Kassicieh et al., 2012). The strategy aimed at increasing efficiency id delivery of services to the customers, closing down underperforming stores, enhancing merchandise by expanding the alternative and branding. This strategy enabled the company to increase its growth in sales by 2.5% in 2015 down -0.8% in 2014. A key objective of the Best Buy is to deliver quality products through optimization of products and service delivery. The company has invested many funds in market research and evaluation targeting opening of 15 Pacific Kitchen and Home stores-within-a-store, with the company intending to end the year with 117 such stores.

Best Buy commands a significant market share with 60.9m people shopped at Best Buy in the US within the last three months, 64.01m people living in households shopped for electronics within the last 12 months. The company had 1915 stores globally by the year 2012. The company netted a revenue of over billion dollars in 2014 fiscal year over 80% of this revenue was generated the United States (Hitt et al., 2012). The company has realized this revenue due to implementation of cost reduction strategy; the company had cut cost by $350m by 2014 through the closing of less profitable stores, managing recurrent expenditure, and making a supply chain efficient. The company expects more reduction in cost with the adoption of renewing blue strategy this would be successful by optimizing the procurement and logistics; the company targets to save $1 billion in savings.

The Company’s Key suppliers include Microsoft and Samsung; the company has collaborated to ensure that it faces off stiff competition in the market by building stores with these companies. One of the principal competitors of best and buy is Apple Company that expands its scope through retail business. Amazon, an online company, has threatened Best Buys market share, and this has made Best Buys to cross over to the online market. The company is determined to expand it online business, and this has led to shipping of the products.

References

Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.

Kassicieh, S., Ahluwalia, S., & Majadillas, M. A. (2015). Financial analysis in management of technology programs: links in a clinical approach. Technological Forecasting and Social Change.