Introduction
The case presents some central facts, which are essential for the comprehensive analysis of the company. Undeniably, Best Buy is the leading consumer electronics vendor in the United States, representing about 19 percent of the market share. Internationally, the firm runs roughly 4,000 shops in Turkey, China, Mexico, Canada, and the U.S. As part of the determination to establish dominance in its operating sector, the business extricates itself from opponents by employing an innovative differentiation approach of the customer-centricity angle rather than product discount strategy. To attain this service-oriented tactic, Best Buy transformed its compensation arrangement from the sales partners to a customer-centric structure, offering end-to-end services. The company invested hugely in the capacity building of sales professionals for the enhanced familiarity with its products and improved customer support, leading to wide recognition for brilliant service delivery.
Despite this sheer success in the recent past, the company has had some key overriding matters requiring immediate attention. For instance, it encounters stiff competition from e-commerce shops such as Amazon and brick and motor retailers like Wal-Mart. Moreover, the economic slump and the ever-increasing economic advances (continual introduction of novel products) exert pressure on its quality service rendition and financial capability. Another matter that merits consideration is pricing and debt management brought by acquisition. The purchase of Napster and a 50 percent stake in Best Buy Europe substantially increased its debt and lowered the available cash. Consequently, the company is compelled to reduce its prices, leading to declined margins, and subsequent negative effects on operating and net income.
Stakeholder Analysis and Management Evaluation
Stakeholders in the case include employees, consumers, suppliers, and shareholders. First, employees have a vital stake in the implementation of the customer-centricity perspective that the company enjoys. In an immensely competitive market characterized by leading players such as Amazon and Wal-Mart, Best Buy believes in availing extremely trained employees with the core responsibility of educating customers on respective product features. The strategy permits purchasers to exercise informed buying decisions on its wide range of items. Moreover, employees through its Geek Squad offer installation services, customer support, and product repair, resulting in a much-needed end-to-end customer solution. Through this service-oriented concept, the staff can always provide required information to customers.
Second, just like employees, consumers are important stakeholders and have significantly contributed to meeting the overall core vision of the company. It is the consumers who drive Best Buy’s marketing goals. The advertising objectives encompass selling products based on the transformative concept of customer-centric operating ideal, handling the requirements of customer lifestyle, and remaining at the lead of technological developments. It also seeks to meet and provide customers with tailored end-to-end answers. Consumers can access Best Buy domestically and internationally through its various stores and brands.
Third, suppliers have a momentous stake in Best Buy’s stakeholder structure. While boasting as the biggest firm in the consumer electronics business with around 4000 stores globally, the company should have good relations with vendors to attain the desired feat. It exploits economies of scale owing to high order volumes, leading to cost advantage. The suppliers also have the role of providing high-quality products, competitive pricing, an apt supply of goods, and meeting any other contractual obligations. The shareholders have a vital duty in ensuring the sustained growth of the company. They have tasks in participating in meetings, stakeholder’s council, engagement in policy formulation, and timely reaction to Best Buy’s needs.
In its attempts to always remain on the positive growth trajectory, the company has had to make bold managerial decisions, proving successful in the long term. For example, the numerous acquisitions have led to the huge integration of many firms under the Best Buy family. The method has created a substantial global presence, providing the business with deep insights into international patterns in the consumer electronic segment while affording access to emerging economy markets. Additionally, the decision to change from a low-priced strategy to a service-oriented model has had huge positive business ramifications. Customers have the opportunity to be briefed on key features and other intuitions on a product for enhanced purchasing choice.
Recommendations and Implementation
While the company has realized some level of success from several international and domestic acquisitions, it is recommended that it halts any further acquirements or possible contemplated mergers. Some purchases have come at a painful cost seen in the mounting debt, reduced hard cash, declining operating margins, and net income. For instance, the company recorded increased long-term debt evident in the 2008 and 2009 financial statements following the purchase of Best Buy Europe and Napster. The company can also review its pricing model as currently dictated by the market forces. Although the customer-centricity concept has proved fruitful in steering growth at the company, the increased competition from archrivals like Amazon with low prices reduces Best Buy’s market share and revenues.
The alternatives that can be explored in the company include price reduction to conform to market standards. In the short run, it can also develop and implement a debt management strategy coupled with the operationalization of cost economization techniques. In the long-term, Best Buy should develop a strategy to rival e-retailing giants such as Amazon for a competitive edge. Reconsideration of marketing strategy should remain one of the key implementation priorities for the company. Best Buy, while providing an end-to-end solution to its customers should also integrate low prices as part of its competitive approach.