WSJ Article, Essay Example

An article in Wall Street Journal reports that electronics retailer Best Buy has been trimming its management in order to reduce costs and improve operating efficiency due to recent disappointments in financial performance. Best Buy’s troubles have also been due to competition from internal retailers who can offer lower prices to customers. The company also plans to shrink sizes of stores as sales of certain products such as computers and games are now increasingly made online (Zimmerman).

This article demonstrates the importance of continuously monitoring the external environment for emerging trends and responding to them in a timely manner. In addition, it also confirms the importance of Porter’s Five Forces model according to which a company’s competitive strategy is influenced by factors outside to the firm. Best Buy’s troubles are also due to the fact that the company has been slow to the threat from internet rivals.

I believe Best Buy should move most of its operations online except for high-value products which most customers like to inspect in person before buying. Best Buy has a great brand and it should leverage it to increase its share of online electronics retail sector. The company incurs huge costs such as capital investments in stores which internet rivals don’t have to and Best Buy may create core-competencies by being both an efficient online and brick-and-mortar retailer.

Best Buy’s experiences will discourage other competitors from entering the brick-and-mortar electronics retail market because consumers’ preferences and purchase patterns have been changing. Retail model is becoming increasingly inefficient when it comes to electronics, thus, most new entrants will target online electronics retail sector.

I chose this article because it demonstrates the importance of keeping in touch with emerging trends and responding to them in a timely manner. The companies should also keep re-visiting their 4Ps strategy because consumers preferences and lifestyles continue to evolve over time.

Reference

Zimmerman, Ann. Best Buy Shakes Up Management. 24 October 2012. 24 October 2012 <http://online.wsj.com/article/SB10001424052970204530504578077061835914282.html?mod=WSJ_hp_LEFTWhatsNewsCollection>.