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Assignment No 3: Case Study Case: Best Buy Company Starting in 2005, Best Buy initiated a strategic transition to a customer-centric operating model, which was completed in 2007. Prior to 2005, the company focused on customer groups such as affluent professional males, young entertainment enthusiasts, upscale suburban mothers, and technologically advanced families. After the transition, Best Buy focused more on customer lifestyle groups such as affluent suburban families, trendsetting urban dwellers, and the closely knit families of Middle America. To target these various segments, Best Buy acquired firms with aligned strategies, which were used as a competitive advantage against its strongest competition, such as Circuit City and Wal-Mart. The acquisitions of Pacific Sales, Speakeasy, and Napster, along with the development of Best Buy Mobile, created more product offerings, which led to more profits. Marketing these different types of products and services was a difficult task. That was why Best Buy’s employees had more training than competitors. This knowledge service was a value added competitive advantage. Since the sales employees no longer operated on a commission-based pay structure, consumers could obtain knowledge from salespeople without being subjected to high-pressure sales techniques. This was generally seen to enhance customer shopping satisfaction. Best Buy’s operating goals included increasing revenues by growing its customer base, gaining more market share internationally, successfully implementing marketing and sales strategies in Europe, and having multiple brands for different customer lifestyles through M&A (Merger and Acquisition). Domestic Best Buy store operations were organized into eight territories, with each territory divided into districts. A retail field officer oversaw store performance through district managers, who met with store employees on a regular basis to discuss operations strategies such as loyalty programs, sales promotion, and new product introductions. Along with domestic operations, Best Buy had an international operation segment, originally established in connection with the acquisition of Canada-based Future Shop. The objectives of Best Buy’s human resources department were to provide consumers with the right knowledge of products and services, to portray the company’s vision and strategy on an everyday basis, and to educate employees on the ins and outs of new products and services. Best Buy employees were required to be ethical and knowledgeable. This principle started within the top management structure and filtered down from the retail field officer through district managers, and through store managers to the employees on the floor. Every employee must have the company’s vision embedded in their service and attitude. Despite Best Buy’s efforts to train an ethical and knowledgeable employee force, there were some allegations and controversy over Best Buy employees, which gave the company a bad black eye in the public mind. One lawsuit claimed that Best Buy employees had misrepresented the manufacturer’s warranty in order to sell its own product service and replacement plan. The lawsuit accused Best Buy of “entering into a corporate-wide scheme to institute high-pressure sales techniques involving the extended warranties” and “using artificial barriers to discourage consumers who purchased the ‘complete extended warranties’ from making legitimate claims.” In a more recent case (March 2009), the U.S. District Court granted Class Action certification to allow plaintiffs to sue Best Buy for violating its “Price Match” policy. According to the ruling, the plaintiffs alleged that Best Buy employees would aggressively deny consumers the ability to apply the company’s “price match guarantee.” The suit also alleged that Best Buy had an undisclosed “Anti-Price Matching Policy,” where the company told its employees not to allow price matches and gave financial bonuses to employees who complied. What is/are the strategy (ies) adopted by Best Buy? 1 pt Explain the contribution of various functional areas of Best Buy Company to its well-being. 1 pt Determine the issues affecting to the strategic competitive advantage of the company. 2pts Identify opportunities and threats as well as strengths and weakness of the company 1pt
What is/are the strategy (ies) adopted by Best Buy?
Best Buy adopted a number of strategies to help the firm increase productivity and their profit margins. First, the firm was good at marking their market niche. The type of consumers for their products. He consumers are the people who are willing to buy the products or the market share to which the commodities are made. They are the ultimate buyers and customers who will be willing and are able to afford the commodities produced by Best Buy. In this case, the affluent families in suburban areas, technologically advanced households, entertainment enthusiasts and male affluent professionals among others. Secondly, the business invested enough in marketing strategies and manners in which consumer could be reached adequately. The employees particularly the sales representatives were trained adequately on a number of consumer needs, choices, tastes and preferences. As such, they were able to meet consumer expectations. However, it is vital to mention the merger and acquisition strategy which was implemented by the organization that saw its services internationalized to other regions.
Explain the contribution of various functional areas of Best Buy Company to its well-being
The sales department is very critical to the organization since it segmented the market to focus on particular niche. This gives the organization to have the real value the consumer is looking for thus meeting their needs, taste and preferences. The company is also able to know what competitors are offering and how best to have a competitive advantage by solving a rival`s problem. The human resource department was is an important functional area of the organization since it seeks to foster the consumer loyalty by passing the values and objectives to the clients. It build on a good organizational culture through training of the employees on ethical and knowledge based areas. These competencies enable them to meet consumer demand and expectations on value addition when making consumption choices. The senior management is a functional unit which is critical since it has devolved operations and internationalized management practices from the top office down to the floor of various stores using regions, districts and stores.
Determine the issues affecting to the strategic competitive advantage of the company
Despite the good efforts the company is injecting to increase the market share, there is a serious problem in the brand image, and keeping consumer trust, and loyalty. The strategic competitiveness of the firm has been built on training f employees on marketing skills for value addition. Furthermore it built on mergers and acquisitions to increase market share and value. However, the bad reports on misbehavior of the company employees about misrepresenting warranty to get more sales was a serious setback. Moreover, the other law suit where the company was sued over a price match policy violation dented the image on the firm to the consumers. Once the consumer cannot trust the organization, they loyalty can shift to competitors.
Identify opportunities and threats as well as strengths and weakness of the company
The strengths of the organization is on her ability to keep an informed employees who interacts with the consumers on a daily basis. They employees are able to sell the vision of the organization and its objectives to the customers, besides the organizational culture. This is significant in building consumer confidence, and loyalty to the organization. The weakness of the firm is on the bad public image to the prospective clients over law suits on violation of price policy, and warranty. The opportunities lies on the internationalization strategies where it has merged and acquired business in other countries. It can thus tap to new markets, new clients and increase profitability. The threats that the firm faces in the changing consumer behavior due to economic growth of a country, government policies and competitors.
References
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons. https://s3.amazonaws.com/academia.edu.documents/43126581/Granrtaaa.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1542576339&Signature=hY9fDxQ6G4WR35DXXAoGx4gi5Y0%3D&response-content-disposition=inline%3B%20filename%3DContemporary_Strategy_Analysis_Concepts.pdf
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy. Pearson. https://testbank24.com/pdf/Solutions-Manual-Strategic-Management-and-Business-Policy-Globalization-Innovation-and-Sustainability-14th-Edition-Wheelen.pdf
