Best Buy Inc.: Company Analysis Project

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In the current day globalization, world has seen many organizations climb the ladder of success and they have remained to be on the top of their achievement graph. (Epstein, 2008). Few of these corporate leaders can be named as Proctor &Gamble (P&G), Unilevers, Hewitt-Packard (HP), International Business Machine (IBM), Dell, Nestle SA, Sony, Wal-Mart, Amazon and Best Buy. This paper will look into the company analysis of Best Buy as a corporate leader of today excelling in the sales of electronic goods.

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Best Buy Inc.

Over view

Best Buy Inc. is a publicly held organization which is world’s largest specialty in consumers’ electronic goods retailers. Best Buy has been selected at sixty-sixth rank in Fortune 100. It is an innovative and perpetually growing company which has one target to accomplish; i.e., to serve the customers with the technology and helping the consumers to use it to their best. The combination of blue and yellow declares their leadership on the retail ship of consumers’ electronic goods which is present across the world serving its potential customers and increasing them every second. (Best Buy, 2009)


Best Buy Inc. originated Forty years ago, which can be termed as a family of global electronic brands which has been conceived with just one idea behind it: serving the customers. Best Buy Inc. was found by Mr. Richard Schulze along with business partner to start with a music store named ‘Sound of Music’ in St. Paul, Minnesota USA in 1966. In 1969, Sound of Music gained the status of a publicly held company and opened three more stores in Twin Cities area. In 1981, Best Buy made a display of a socially responsible company by organizing ‘Tornado Sale’ when a tornado had hit Minnesota by introducing low prices in retail.

In 1983, Sound of Music’s board of Directors approved the new name for the company, and became Best Buy Co., Inc. and opened its first store under this name in Burnsville, Minnesota. 1993 saw Best Buy as the USA’s second largest consumer electronics retail store. In 2000, Best Buy started online retail business and was ranked amongst top ten performing stocks by Fortune Magazine. In 2001, Best Buy entered the international business arena by taking over the Canada based ‘Future Shop’, and gains the status of a multinational organization. In 2009, Mr. Brian J. Dunn is named as the Chief Executive Officer (C.E.O.) of Best Buy Inc. (Best Buy, 2009)


Best Buy Inc. is a multinational organization which is currently operating in USA, China, Canada and Mexico. Best Buy Inc. believes that global expansion helps them avail better opportunities and aids them making a productive use of global talent and resources available (Fritz, 1996). By acquiring Future Shop in Canada, a market leader in Canada, they have provided strength to the company and have become more popular in Canada amongst its customers, and the customers love Future Shop. Same is what Best Buy Inc. is doing in China, and getting popular there by operating the Five Star Brand and the Best Buy Brand. (Best Buy, 2009)

The Brands of Best Buy Inc.

Best Buy has established it self as a global business which specializes in retail of consumers electronic goods and is presenting the consumers across the world with the following brands( Wheeler , 2006). They are Audiovisions, Best Buy, Five Star, Future Shop, Geek Squad, Magnolia, Napster, Pacific Sales and Speakeasy. Audiovisions is an electronic contractor and enhances the lifestyles of the people and brings technology more elegantly in the life styles of the people. Future Shop specializes in retailing of consumer electronic goods, serving the markets of Canada.

Geek Squad serves all the computer lovers who come across any kind of problem, Geek Squad aids and assists in other technological problems which people encounter. Magnolia specializes in Home theaters weaving quality viewership for all the audience. Napster initiated digital music and brought a revolution into the life style of people and provides music experience like never before. It is an entirely owned subsidiary of Best Buy Inc., and has its headquarters in Los Angeles. Pacific Sales provides an array of services for builders, designers, consumers and contractors. The objective of Pacific Sales is to make the house of every individual look elegant and beautiful and making those services at lowest prices. (Best Buy, 2009)

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Management in Best Buy Inc.

Best Buy Inc. has introduced Results-Only Work Environment (ROWE), which has made life simpler and easier for employees. The rules governing formal organizational structures such as formalization of rules and regulation have been made defunct at Best Buy. Employees have the liberty to decide when and where they want the job to be completed and how. The only way of measuring the performance of the employees is through the productivity and goal oriented behavior of them. The employees do not have to be continuously supervised and controlled. (Hitt , Ireland & Hoskisson , 2007)

Best Buy Inc. has proved to be an organization which not only looks after the employees of the company but makes sure that the work is being done as desired, without creating complications for the employees and serving their customer’s best way possible(Paladino, 2007)

SWOT Analysis of Best Buy Inc.

SWOT (Strength, Weaknesses, Opportunities and Threats) Analysis is a tool used by marketers before launching a product or coming into the market. It sis way of analyzing the market and its trends and it helps the organization know four basic points. The potential strengths which organization holds in the market, the weaknesses it have the opportunities it can come across and the threats which can be faced by the organization. (Porter , 1998).

It would not be wrong to say that these tools are a method of having a market audit to help the organization equip itself will all the resources and strategies it needs to implicate in case of any future scenario which can come up as a result of these four conditions. (Crouch, 2008)

Marketers have used SWOT analysis to learn about the market conditions not only before entering a market but, there is always a need to conduct an audit during the life of an organization. if an organization over looks the analysis due to the fact that it is performing well, it might face some tribulations in future as a result of not keeping the market needs and wants in check. SWOT Analysis has helped organizations overcome lots of hurdles which have come in their way of success, and has paved way for the organization to become market leaders by understanding the needs of the customers and offering them a product which not only satisfies them but also delights them. (Porter , 1998).

Best Buy Inc. names its growth and success after its customers who have been the prime reason of the current day achievement of Best Buy Inc. best buys understand the needs of the customers and provides them with low priced electronic goods, better than what others are doing.


The strength of the Best Buy Inc., is the high customer oriented business which has created it customer profile by making it sure that goods are always available at low prices. It is leading electronic retailer, and due to the size of the company the organization has a bargaining power with the electronic goods producers and the high financial resources allow having advertising on large scale. The country wide prescience of its stores has also given them an advantage of being known through out the country and due to its advantage in high sales of Digital TV market, consumers prefer coming to Best Buy Inc. rather than other organization. Best buy has also been recognized as the Best HDTV retailer by the Academy of Digital Television Gadgets in the year 2005 (Schnaars , 1998).

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The gross margins of the company have been decreasing over the years and another weakness which is being faced by Best Buy Inc. is the over dependence of it’s on the domestic market for the sales. The over dependence on local US consumers good market has been one weak point of Best Buy which should be improved. Approximately, 75% of the revenue generated is accountable to the sales in USA only. Another problem which is being faced is the cost of expansion. The expansion plans have come down expensively on Best Buy Inc. and operational expenses in Canada have been rising, giving a plunge in the costs of Best Buy Inc (Hooley , 2008).


Best Buy Inc. has designed the store to be customer centric. It has seen success in 2004, and believes that this success will accelerate the sales of Best Buy. Hence by segmenting the market according to the customers need and their demographics, Best Buy plans to have success in the industry and plans to over its competitors by serving the target market in a different style. (Crouch ,2008)

Another opportunity is the high rise use of Digital Products in the category of entertainment. The high use of digital technology and Best Buy Inc. being equipped with it has given them an edge over other retail store outlets to attract more customers and to have higher sales in future and today. The use of LCD (Liquid Crystal Display) TV has also taken a surge and it will account for high sales for Best Buy Inc. in the near future, and will come as an opportunity for them. (Crouch,2008)


The increasing competitive strategies by the competitors are the threat to Best Buy Inc. and Best Buy has been facing severe competition due to that. Strong competitors such as Dell, Wal-Mart, Amazon and Apple have become a major threat as the low price policy has become the motto of almost all the organizations.

Best Buy Inc. is not a new organization which does not know how to over come these problems (Hooley, 2008). It can make a better use of the opportunities which are present in front of best Buy and it is still world’s number one consumer electronic good retailer. The mission of the company is to serve the customers with technology rather than technology being served by the customers. With these goal oriented strategies and a decentralized style of management, Best Buy Inc. can over come all forms of threats it is facing and all forms of weakness it has can be eradicated.

Target marketing and segmentation

Target marketing and segmentation have been one of the major parts of any marketing plan designed while entering any market to serve the customers. Target market can be described as the market which is to be served by the organization. Target marketing has always proved to be a key to success for the companies as their target market helps them devise a sound marketing plan and to create a product just according to the needs and wants of the customers. Hence target market is the market to which an organization wants to serve. (Crouch, 2008)

Out of that target market, the market is further segmented into more categories, which can be according to the demographics, the income group, and geographical segmentation and according to the nature of the work and business (McDonald & Dunbar, 2004). The target market of Best Buy Inc. are the households and small businesses which want to purchase goods for their house hold work such as the installation of any particular gadget or repairing the computer or buying a home theater to enjoy an lazy Sunday afternoon. All of this provided by Best Buy to the customers. Best Buy Inc. partnering with other organizations such as Microsoft provides solution to the problems of the customers and hence brings innovation in their lives. (Crouch ,2008)

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Small business who want electronic goods as a part of their business operations are also the customers for Best Buy Inc. Best Buy Inc. also practices niche marketing by understanding the needs of the customers who are not being catered. Employees look around and are always present for the help of customers to assist them and make their visit no a purchase of a good available at low price, but they make their visit an experience for them. The blue shirts, as being called by most, Best Buy Inc. serves the customers in the following category of segmentation. (Best Buy, 2009)

The organization has made five key customer segments, namely, young entertainment enthusiast, wealthy professional males, tech savvy families, upscale urban mothers and small businesses. (McDonald & Dunbar , 2004). Each of these segments is served separately and generates revenues for the organization. This way the organization has become customer centered, by serving the customers three sixty degrees and by providing them an in-store environment just the way customers expect it to be. Best Buy Inc. calls it ‘Customer-Centricity Model’ which helps people position and differentiate the product on the basis of their demand and need and also according to the type of the product they are being served in the store itself. (Best Buy, 2009)

Young entertainment fans would drive up to the stores of Best Buy to purchase i pods and i phones. They will purchase Napster DVDs to listen to music and would go to nearest Geek Squad to fix a problem in their lap tops.

Urban mothers on the other hand would like to improve their houses by installing better washing machines and cooking ranges. Tech savvy families would go for buying a home theater for their lounge to enjoy their Sundays together by watching movies all day long! And that is exactly what Best Buy Inc is doing by providing quality life to people on low affordable prices with employees of great experience and good nature to serve and assist them. (McDonald & Dunbar, 2004).

Best Buy Inc has developed these segments on the basis of demographic and behavioral information gather through intense research. They have gathered information about their life styles, their pace of adoption of technology, and their attitudes towards the fast paced changes in the technological arena. This has given them a solution of targeting the correct segment with the correct product and erasing all kinds of ambiguity from the minds of the customers and hence working towards delighting their customers. (McDonald & Dunbar, 2004).

Company Analysis

Best Buy is the organization which is operating the North America, Europe, China and Mexico and has about 3,900 stores through out the world. The organization accounts for 75% of its sales from USA and has its stores present in nearly 49 states. The number of employees is nearly 155,000 across the globe and has a profit of $153 million or 36 cents a share in the quarter which ended this May 30, in comparison to $179 million or 43 pence a share recorded last year. (New York Times, 2009)

These figures relate as to how the profit of Best Buy Inc has fallen, despite of the fact that new stores were opened and the organization has been doing large scale advertising. The organization has to concentrate to sales outside USA and must not put all the resources in the publicity of Best Buy Inc. in USA only. It must promote the organization present in the other countries. (Jenster & Hussey , 2001).

Best Buy Inc. has also been facing threats from the growing competitors which have also been applying the low priced strategy, hence the organization must concentrate on applying strategies that would make them more customer centric and segmenting the market accordingly. The employees must focus on how to retain and attract customers by coming up to their expectations and providing them what they want. They must make their supply chain more efficient and quicker and eradicate the loop holes which are coming up (Jenster & Hussey , 2001).

The organization must make in itself in line with the fast paced technology and should give just what the customers want. The technologies are become complex and hence the home work for the organization is increasing. They must make them selves equipped with the desired information to keep mile ahead with what the competitors are doing.


The organization has been declared the best amongst 100, and stands on 66th place according to Fortune Magazine. They must speed up their progress to come under the top 25 to the least. With employees keen on improvement and change for better, the organization can climb up the ladder of success in no time, if it concentrates on few of the loop holes which are coming up its way.


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