Best Buy Inc.: CRM, Organizational Management and Strategy

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Introduction: Overview of Best Buy

Best Buy Inc. is an American international company that is well-traversed in the sale of electronic devices, ranging from kitchen and gym utilities to more personal efficacies like phones. According to Sawhney et al. (2017), the company was founded as Sound of Music by business partners Richard Schulze and James Wheeler in 1966. As the name suggests, the store was purely for the retailing of music paraphernalia, specifically high-definition stereos that had only just hit the market at the time. It is said that the name “Best Buy” originated from an unfortunate incident where the Roseville store got hit by a tornado, and Richard had a sale where he only put the items in best condition up for sale (Sawhney et al., 2017).

The company then expanded exponentially to become a public company and opened several stores in the United States. As of today, Best Buy has branches in China, numerous countries in South America, to mention just but a few; positing that the company is booming would be an understatement.

The company has been divided into sub-organizations, each dealing in their specialized product, which provides an arguably better outcome and improved consumer satisfaction. Of Best Buy’s sublets, Geek Squad is the most dominant, dealing in computers and related equipment, followed by the regular Best Buy, dealing in all other appliances and Best Buy mobile that retails phone merchandise (Sawhney et al., 2017). Moreover, Best Buy produces its own merchandise by owning significant shares in in-house brands like Insignia, Pacific Sales, amongst six others. The division of tasks into sub-organizations trickles down to the departments and staff. For instance, the Best Buy mobile department is completely segregated from all the others. In a manner of speaking, this form of organizational structure streamlines operations within the company, keeping all endeavors above water.

Analysis of Its Management Information System

Best Buy has a series of business processes, and by the magnitude of scale, it is necessary to integrate an effective information system to ensure a streamlined flow of operations. Liu et al. (2017) define information systems as a set of interconnected elements that gather, distribute, process, and store information to enable apt decision-making and solution-finding within a company. Furthermore, the need for a suitable information system is more emphasized by the fact that Best Buy is at the heart of technological advancement by virtue of the sale of electronics (Sawhney et al., 2017). Thus, they are charged with being fully immersed in innovative strategies, which in this case are information systems.

Secondly, the proper utilization of information systems assures the minimization of operational costs while contemporaneously maximizing sales, giving Best Buy an enviable competitive advantage (Amponsah & Ahmed, 2017). Drawing from the arguments above, it is more than necessary for Best Buy to inculcate information systems into their operations, only query remaining as which would be the most suitable one.

There are various types of information systems and largely vary according to the magnitude of the company in question and the functionality of the system. Liu et al. (2017) explained the main types of information systems are transaction processing systems, expert systems, and neural networks, management information systems, and decision support systems. A keen glance at Best Buy in its entirety reveals that it needs all these systems at one point or another during its day-to-day operations. However, the systems more in use are transactional and database systems, especially because of the large consumer market that is availed by online platforms (Sawhney et al., 2017). As seen, information systems have evolved over the years; the user interface is quite friendly and a key element in oiling the company’s engine.

To clearly understand the information systems in use at Best Buy, it is vital to scrutinize the business processes in play. Sawhney et al. (2017) suggest that the company has eight key areas, which begin with supply chain management which works with delivering merchandise to the consumer in an ideal time, whether at the brick-and-mortar store or an online order. The second one being warehouse management, which requires an inventory management system with different levels of access according to the hierarchy of the staff involved (Liu et al., 2017).

Thirdly, the company handles business intelligence and data analytics, which involves the use of raw data to place the company’s current position in different aspects, then uses the same data to extrapolate into the future and mark out the best business-oriented path to take. Furthermore, order processing is a key element that the company handles, direct client orders becoming more popular with the global pandemic changing the face of business.

Analysis of Best Buy Information Security System

One of the most pertinent elements of running a current business is ensuring that information is kept safe. Liu et al. (2017) elaborate that with the privilege of streamlined operations facilitated by information systems comes great responsibility for safeguarding it. In this light, Best Buy has tons of important information ranging from client addresses to employee health records. Exposure to such information by the wrong party could lead to tainting the company’s reputation and possible financial expenditure to make up for the fallbacks. It carries out mandatory training for all new employees and refresher courses for the existing ones (Sawhney et al., 2017). Furthermore, classified information requires a password availed to employees with clearance of access, who sign a document promising confidentiality. These measures ensure that Best Buy runs a tight ship with regard to information security.

Customer Relationship Management (CRM) Analysis

Customer relationship management is arguably the most vital element that assures the growth and sustainability of an enterprise. Rahimi (2017) elaborates that for an enterprise to be successful, it needs to factor in strategies that ensure involvement with the customers and include perks that make the customer feel valued. Well aware of this, Best Buy has implemented a system known as the reward zone program, in which the customer earns a point for every dollar they spend, as well as reward, certificated that can be cashed out as store credit, which is topped by exclusive access to events held by Best Buy stores. In the documentation of the company by Sawhney et al. (2017), they mention the outstanding elation of the clients by the reward program, to the extent of recommending it to their friends and family.

Moreover, as Amponsah and Ahmed (2017) postulates, communication with the client should not dwindle even after they purchase the object of their desire. In a bid to enact this, the information entered by the client when signing up for the reward program facilitates future communication regarding sales and exclusive offers.

It would be short-sighted for any business to be content with its existing customers. Amponsah and Ahmed (2017) elaborate that with effective marketing policies, a company can effectively retain the existing customers and simultaneously attract more. Taking into consideration that the bargaining power of customers and suppliers, competition by rivals, and new entrants are at an all-time high as a result of the magnanimous shift to online shopping, Best Buy has to revisit the basics. For instance, Sawhney et al. (2017) note that the company uses advertisements on social media platforms like Facebook and Instagram to put up sales and new customer offers.

Creating awareness of the product they sell and the service they provide, for example, the new implementation of the curbside pick-up attracts more potential clients. Furthermore, quick replies by the support team to queries by the clients give a competitive edge since the client does not feel neglected by the retailer. These maneuvers bring to light the brittleness of human nature and the importance of paying attention to the finer details.

Analysis of Best Buy Enterprise Resource Planning

Enterprise resource planning involves the use of a software application by an organization to assess and manage the existing tasks being performed and eventually provide results. Quyen and Nguyen (2020) outline the importance of integrating ERP in an organization, suggesting that it determines the cost of running the business and outlines the avenues where the business can potentially save resources. With the integrated information system discussed earlier in this text, the management team can easily oversee the business processes as they work hand in hand. Sawhney et al. (2017) note that the existence of shared transactional information from several sources poses a threat of duplication, which the ERP systems solve. Moreover, the enterprise resource planning system ensures that the attributes and data fields compile concurrently with the company’s overall ledger, thus facilitating the integrity of records.

Business insight is paramount for the management of any successful company. In light of this, Quyen and Nguyen (2020) promote the idea that integrating ERP systems implements the factor mentioned earlier and assures lower operational costs. According to Sawhney et al. (2017), with the implementation of the ERP systems hand in hand with the information systems within the company, there has been enhanced collaboration from manufacturers and employees at large, improved efficiency in operations, and a notable reduction in risk. Furthermore, having integrated this system earlier than the rivals, Best Buy recorded consistent infrastructure from the warehouse to the store, with all business processes portraying the same feel. Evidently, the company is very forward-driven when it comes to implementing strategies that give it a competitive edge.

SWOT Analysis of Best Buy

Best Buy is undeniable a unique company in surviving the change of times and strides in business, more definitively in the sale of consumer electronics. Amponsah and Ahmed (2017) explain the importance of aggressive marketability and a business entity being able to hold its own and still bring in profit despite market statistics. Regardless of the position it holds at the top of the electronics sales, supply chain and market changes being experienced are more radical than they are favorable. In order to bring these issues into perspective, the strengths, weaknesses, opportunities, and threats are outlined as follows:

Strengths

Being a long-standing retailer, Best Buy has built a name for itself; and has become a household name when it comes to electronics. Sawhney et al. (2017) suggest that the company has an impeccable reputation with its customers, ranging from teenagers to stay-at-home mothers. In light of the exemplary rapport between client and supplier, there has been an unmatched ability to build and maintain customer loyalty.

Evidently, as supported by Amponsah and Ahmed (2017), retaining customer loyalty is one of the most vital marketing points that a company can have. Additionally, the Best Buy marketing team has shown immense expertise and finesse in electronics, thus continuously attracting more buyers. The creation of a good relationship with the brands in electronics such as Apple is key in targeting specific niches, especially when handling customers who only purchase from one brand (Sawhney et al., 2017). Therefore, having the latter in the bag, Best Buy has a stepping stone to a magnanimous footprint in the United States, consequently assuring a larger flow of revenue.

Weaknesses

Before the unfortunate advent of COVID-19, Best Buy had a disappointing reliance on brick-and-mortar stores while the rest of the world was shifting to e-commerce platforms. One of the pertinent policies by Amponsah and Ahmed (2017) entails the ability of a business’ marketing strategies to evolve according to the changes in the market progressively. During the lag period, the company ran at higher operating costs in comparison, the increment being caused by the costs incurred by the stores like employee wages and taxes. Additionally, Sawhney et al. (2017) elaborate that the sale of luxury products, amongst which are play stations and associate software, is a great investment but can easily take a dip in sales and eventually sink the entire ship. Best Buy is dependent on supplier credit as well, which requires it to pay the supplier once the agreed shelf time lapses.

Opportunities

The current world is increasingly reliant on technological assistance for efficiency and time-saving purposes; consequently, the market for electronic devices is continuously growing. The constant release of new cutting-edge devices from brands like Apple provides avenues for free marketing for the retail store. Furthermore, Sawhney et al. (2017) suggest that the closure of avid competitors like Circuit City and Radio Shack leave Best Buy at a pedestal for consumer electronics. In light of the major shift to social media platforms, the company has easy marketability with events like black Fridays that increase consumer interest in said electronics. In addition to that, the more apt option of contactless delivery of products makes the idea of purchasing items more lucrative to the consumer.

Threats

The threats facing Best Buy are spearheaded by the changes in technology enabling the manufacturers to have direct retail stores, thus cutting off the middleman. Moreover, the advent of widespread online retail platforms increases the competition, especially if the price is slightly lower than those at Best Buy. Sawhney et al. (2017) imply that the existence of shopping as a hobby up until recently worked in favor of the company, but seeing as the popularity of the hobby is dwindling, market sales concurrently reduce. In view of the ease of access to products, the risk of losing client loyalty runs very high, which puts the entire franchise at risk.

Best Buy Organizational Management and Strategy

Much like most companies, Best Buy is headed by one Chief Executive Officer, who then gives instructions to company executives, each head of a division. Sawhney et al. (2017) outline that the management system at Best Buy is the more traditional one but has proven to be functional over the years. The head of the organization is the CEO, followed by company executives, corporate staff, regional managers, district managers, store managers, and regular staff. The chain of communication only effectively runs down with instructions. However, the flow of information up the ladder is something that still requires tuning. Information to regular staff is passed through an employee feed, coming from the corporate level employees to base level employees but has no channel of vice versa flow. To put the hierarchy at Best Buy into perspective, the student has put together a detailed chart at the end of the essay.

Organizational Hierarchy at Best Buy
Organizational Hierarchy at Best Buy.

Conclusion

Best Buy is a multinational company well traversed with the sale of consumer electronics and has adjusted well with the changes in the times, contributing to its impeccable growth. Sawhney et al. (2017) propose that the company has come further than most and continues to take hold of the American population, with the rest of the world in tow. The flow of operations is seamless, with the implementation of information and ERP systems facilitating lucrative efficiency of operations. However, according to the existing documentation on the company, the information system needs to provide a platform that enables communication of grievances, compliments, and ideas up the chain of power. Together with the existing strategies in place, such inclusion will propel Best Buy to greater heights.

References

Amponsah, C. T., & Ahmed, G. (2017). New global dimensions of business excellence. International Journal of Business Excellence, 13(1), 60-78.

Liu, D., Santhanam, R., & Webster, J. (2017). Towards meaningful engagement: A framework for design and research of gamified information systems. MIS Quarterly, 41(4), 1011-1034.

Quyen, P. T. B., & Nguyen, N. P. (2020). The impact of perceived accounting benefits on the enterprise resource planning success: The mediating role of effective system use. Journal of Intelligence Studies in Business, 10(3).

Rahimi, R. (2017). Customer relationship management (people, process, and technology) and organizational culture in hotels. International Journal of Contemporary Hospitality Management. Web.

Sawhney, M., Goodman, P., & Keerthivasan, G. (2017). Best Buy: Creating a winning customer experience in consumer electronics. Kellogg School of Management Cases.

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BusinessEssay. 2022. "Best Buy Inc.: CRM, Organizational Management and Strategy." December 4, 2022. https://business-essay.com/best-buy-inc-crm-organizational-management-and-strategy/.

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BusinessEssay. "Best Buy Inc.: CRM, Organizational Management and Strategy." December 4, 2022. https://business-essay.com/best-buy-inc-crm-organizational-management-and-strategy/.