Case History on Best Buy

trounce bargain for, Inc. Case field of battle Case History Clayton Bender, Justin Swanson, Kaitlyn Krause, Michelle Chambers, Elmon Tanielian Comp some(prenominal) Background vanquish pervert Co. , Inc. operates as a multinational retail merchant of consumer electronics within the divine services industry. Founded in 1966 under the bear on Sound of Music, Inc. , high hat defile underwent a name change in 1988. It was founded by Mr. Richard M. Schulze and is headquartered in Richfield, Minnesota. trounce deal operates under a Board of Directors notwithstanding is a publicly traded company owned by stockholders.The company operates retail instals and c alone centers and conducts online retail operations under a range of brand names much(prenominal) as scoop up barter for, silk hat sully peregrine, The CarPhone W arhouse, Five Star, forthcoming Shop, geek Squad, Magnolia Audio Video, Pacific gross revenue and The Phone House. outperform profane is the eleventh lar gest online retailer worldwide and ranks 468 on the Forbes Global 2000 (Global 2000 Leading Companies, 2012). The mission of take up bargain, though not straight off outlined as such, push aside be summed up by a quote from the CEO. Our formula is dewy-eyed were a growth company focused on better solving the unmet needs of our clientsand we bank on our employees to solve those puzzles. Thanks for stopping (About. com). Best Buys vision is, To make a meaningful and lasting impact on the quality of life in the countries and communities we serve. Best Buy has quatern primary values that govern decision-making processes unleash the power of our slew, learn from challenges and change, show respect, humility and integrity, and have gambol period being the best ( canon of Business Ethics, 2013).Best Buys Market Philosophy Best Buy operates in all 50 states, districts and territories within the United States. Various brand names under the Best Buy Inc. umbrella exist throughout the geographic ara including Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video and Pacific Sales (Best Buy 10k Report, 2012). In the US alone, Best Buy r distri notwithstandingivelyes about 1 billion consumers each year in stores, on BestBuy. com and on m. BestBuy. com or the mobile shop website. Out of the $165 billion per year spent on electronics in the U. S. , more than 6% of that is at Best Buy ahead of Wal-Mart Stores (12%), Amazon. com (5%), Costco (3. 5), and Target (2. 5%) (On Best Buy Media Ne cardinalrk, 2011). Within the domestic grocery, store development is aimed at multi-channel retail points of presence that focus on a given local environment, while simultaneously lessen overall store square footage. To do this, the company anticipates closing approximately 50 large format U. S. Best Buy branded stores in fiscal year 2013 to explore new(prenominal) options, as well as downsizing to appeal to increasingly popular online obtain trends.They have similar ly decided to stopping point all Best Buy branded stores in the UK, Turkey, and China. They instead chose to focus their solicitude on their Five Star branded stores in China, and their CarPhone Warehouse, and Phone House stores in Europe. Best Buys outside(a) market is comprised of operations in Canada (BestBuy, BestBuy Mobile, Cell Shop, Connect Pro, Future Shop and Geek Squad), Europe (The CarPhone Warehouse, The Phone House and Geek Squad), China (Five Star), and Mexico (Best Buy and Geek Squad) (Best Buy 10k Report, 2012).These varied brands allow the company to include several lines of consumer retail products such as mobile border products, entertainment products, appliances and related services that are tailored to appeal to each niche market. In 2012, international markets generated 26% of Best Buys revenue (Best Buy 10k Report, 2012). In the Canadian market, Best Buy is the fastest-growing specialty retailer and e-tailer of consumer electronics, PCs, and entertainment software.Best Buy focuses on children and communities, attempting to help youth develop their skill set, severalise their talents, and sustain a lasting interest in education (About Us, 2013). Best Buy has decided to close their large-format Best Buy branded stores in China, Turkey, and the United Kingdom in order to reach areas that expand the best growth opportunity to particular locations (Best Buy 10k Report, 2012). Competitive Environment Best Buys competitors range between online retailers (Amazon), big box retailers (Target and Wal-Mart), club stores (Sams Club and Costco), pecialty electronic retailers (Apple), and home overture stores (Home Depot and Lowes). Some Best Buy rivals compete purely on charge, while others compete on experience. Best Buy takes that online retailers will have their price advantage reduced as state governments or so the country re-evaluate gross revenue tax laws that allow some online competitors to offer reject prices. superfluously to com bat price wars Best Buy also has price play offing policies for other brick and mortar retailers and during this last holiday shopping season even matched some online retailers prices (Best Buy to Match Online Prices, 2012).With the elimination of Best Buys biggest rival, tour of duty City, they are left to focus on competitors such as Amazon, Wal-Mart, and Home Depot. None of these stores compete at once with Best Buy in every segment, but each of them offers products that compete directly with Best Buy. As shown in indicate 1, while Best Buy does compete with Home Depot and Lowes, the effect of appliances on Best Buys sales is quite small, accounting for only 5% of sales in 2011.Because there are no stores which offer a value proposition exactly like Best Buy, it presents a problem when analyzing financial statements of Best Buys main competitors (Best Buy 10k Report, 2012). See Exhibits 2-5 for expand copies of Amazon and Wal-Mart financial statements. Trends- Best Buy compe tes in the electronics stores and consumer electronics industries. The industry overall is straits into new stain as online shopping continues to take over the market. Recently, traditional big box stores such as Best Buy have been threatened by an increase in online consumption tendencies.Often, consumers will use stores such as Best Buy as a showroom to test new products, make a purchase decision, but then go home and find a cheaper price online. With many established, online retailers of consumer electronics on the web, retailers must find a new way to attract clients. The various methods of promotional channels such as large and small structured stores, websites, and kiosks, are all ways the company is tailoring to the market they are attempting to reach. Marketing Products and Services- Best Buy specializes in technological goods and services.This includes home office, consumer electronics, appliances, and entertainment software. Best Buy is an ideally suited one-stop-shop. B est Buy offers Geek Squad Technical Support to consumers to aid with any difficulties or defects, to ensure customer happiness, and build loyalty. Also offered is a low-price-guarantee, where Best Buy will match the price if you find a lower price on an identical available product at a local retail competitors store, a local Best Buy retail store or BestBuy. com (Best Buy 10k Report, 2012).As Best Buy is not a manufacturer of unique products, the main differentiating factors would be their low-price-guarantee and the in-home service The Geek Squad, which offers personalized technical support. In addition, there are many products that are liquid ecstasy to Best Buy, such as certain televisions, video games, and computer devices. Distribution- Best Buy sells products through both its 1,103 retail locations and their website bestbuy. com. Domestic Distribution- Inside the U. S. , most Best Buy products are shipped directly from the manufacturers to the regional diffusion centers.The exceptions to this method are large TVs and appliances which are shipped from producers to specific satellite warehouses in each major market. In certain cases, where release dates play a large role in a product, the item will go directly from the producer to individual Best Buy stores (Best Buy 10k Report, 2012). Products purchased online are either picked up in store, or shipped directly to consumers via the same regional dispersal centers the stores receive their products from. worldwide Distribution-In Europe, Best Buys two small cell phone stores have their products shipped from manufacturers to regional distribution centers and then to the stores. Individual stores hold only immediate stock requirements while distribution centers hold superfluous merchandise. Best Buy stores in Canada and Mexico follow the distribution method used in the U. S. (Best Buy 10k Report, 2012). Promotion- The customer base is primarily centered on high income earners (75,000+), 24-54 aged males w ho have children (ad example targeting this listed in discover 6).Best Buy shoppers are viewed as mobile, technically savvy, advanced digital users, who are highly engaged in learning about technology as well as encourage their children to learn about technology, as well (On Best Buy Media Net oeuvre, 2011) (promotion example targeting this listed in exhibit 7). Including selling, general and administrative expenses, promotional costs were $995,000,000 in fiscal year 2012, $862,000,000 in 2011, and $709,000,000 in 2010 (Best Buy 10k Report, 2012).Best Buy has traditionally focused on media involving print, television, large-scale events, and is now shifting gears more towards digital advertising for promotional efforts due to consumer changes in shopping habits. Best Buy spends most of the promotional budget during the holiday season in response to high sales during Thanksgiving, Black Friday, Cyber Monday, and Christmas (Best Buy 10k Report, 2012). A detailed list of quarterly exp enses can be found in exhibit 8. One of the largest and most expensive promotional efforts undertaken by Best Buy is the commercial segments air out during the passing Bowl.Best Buy has utilized this tactic for the past three years. In 2011, the commercial featured the celebrities Justin Bieber and Ozzy Osbourne. In 2012, it featured mobile innovations such as Instagram and the popular game, Angry Birds. For this upcoming Super Bowl, Best Buy will feature the comedian Amy Poehler. These are meaningful decisions considering this years thirty-second ad transcription cost $4 million and is projected to reach over 100 million viewers (The Associated Press, 2013). leadBest Buys Board of Directors, elected by the shareholders, is responsible for overseeing the business and affairs in order to manage the long-term interests of the company (Best Buy, Inc. , 2013). The Board of Directors is in charge of selecting and evaluating the performance of senior executives. thither are four disti nct committees structured within the Board Audit Committee, Compensation and Human Resources Committee, pay and Investment Policy Committee, and Nominating, Corporate Governance, and Public Policy Committee.A detailed visual of the organizational structure can be viewed in exhibit 9. Organizational Culture Traditionally, Best Buy has been known for enforcing strict policies and encourage employees to work overtime. In 2003, however, the corporate culture was radically changed to a system designed by two of the companys own human resource department employees, Cali Ressler and Jody Thompson (Brandon, 2007). This system, known as ROWE or the results-only-work-environment, allows power to come and go as they please.Many corporate employees have no official office or work schedule. Similar systems have become popular in the advanced technical industry, including companies such as IBM, but no such corporate culture existed in a large retail company onwards Best Buy. The system is wor king to meet their goals, as employee turnover decreased drastically after implementation. However, recently, employee joy has suffered as a result of a decrease in company profitability (Conlin, 2006). StakeholdersThe primary stakeholders are the stockholders the individuals that have an active interest in the companys successes and failures because their personal investments are directly impacted. Additional stakeholders include employees (who rely on the company to stay in business and guarantee their employment), consumers (who depend on the products and services of the company), and the surrounding community which Best Buy is committed to serving in their values. Currently, a general concern of stakeholders is the increasingly competitive nature of the of the electronic retail market.With e-retail and internet stores becoming more significant players in the market place, Best Buy depends to have become a place of research and testing by the consumer, rather than actual purch asing. Stakeholders are calling for innovative and differentiating factors to emerge for Best Buy to persist in a key player in the consumer electronic market. In addition, as typical of most companies, the stakeholders of Best Buy want increased sales and profit margins, to hopefully lead to increased stock prices as well. Financials Balance shred-Best Buy currently has approximately $16 Billion in assets, $12 Billion in liabilities, and $3 Billion in stockholder comeliness. Over the past three years, total assets and stockholder equity have been decreasing while total liabilities have been increasing. (Best Buy Balance Sheet) A detailed ratio sheet can be found in exhibit 10. Income Statements- Best Buy had a outlet in net income during FY 2012 of $1. 2 billion compared to net earnings of $1. 3 billion in 2011. A detailed balance sheet can be found in exhibit 11. Objectives Performance outlineBest Buy competes in a competitive retail industry constantly affected by the curr ent state of the economy and consumer confidence. Such an industry presents difficulty in predicting consumer behaviors and corresponding sales. These tough times have forced Best Buy to begin transforming the company and hone in on strategies they believe will offer the best opportunities to improve returns (Best Buy 10k Report, 2012). Best Buy has committed to focusing on four main initiatives all revolving around that transformation and improving financial performance. Multi-year Cost Reductions-Best Buy aims to lower the cost structure of various areas of their business through improvements in efficiency as well as current investments designed to provide long term earnings benefits. These changes will include closing 50 of their large, brick-and-mortar stores within fiscal year 2013. In addition they aim to decrease the costs of goods sold as well as reduction in corporate and support structures (Best Buy 10k Report, 2012). U. S. Store Format Improvements- Best Buy will be revi sing their store formats in order to increase points of presence, while decreasing overall square footage.These changes will occur through increasing the number of their Best Buy Mobile stand-alone stores, decreasing their large-format stores, and to remodel key market Best Buy stores into their smaller, leaner, Connected Stores (Best Buy 10k Report, 2012). reaping Initiatives- Best Buy will execute growth initiatives in e-commerce, connections, services, and China. They will approach growth in e-commerce with more competitive online pricing, broader use of free shipping, the expansion of our online assortment, and further development of Best Buy mart.There will be a focus on increasing all mobile connection expertise, all product services, and store locations in China. Improved Customer Experience- Best Buy believes that they differentiate themselves from competitors through thoughtful and persistent attention to the experiences their customers have. Through programs such as thei r Perfect Match Promise which provides customers with a 30 day period of full technical support, hassle-free returns, and competitor price matching as well as their Reward Zone loyalty programs, they desire to provide their customers with an incomparable experience as they shop at Best Buy.Finally, Best Buy aims to increase their enhanced training for employees in order to meet these customer service goals (Best Buy 10k Report, 2012). Works Cited Global 2000 Leading Companies. (2012, April). Retrieved from Forbes http//www. forbes. com/companies/best-buy/ Best Buy Balance Sheet. (n. d. ). Retrieved from Yahoo finance http//finance. yahoo. com/q/bs? s=BBY+Balance+Sheetannual Best Buy Income Statement. (n. d. ). Retrieved from Yahoo Finance http//finance. yahoo. com/q/is? s=BBY+Income+Statementannual Best Buy, Inc. (2011, January 23).On Best Buy Media Network. Retrieved from Best Buy Media Kit http//www. bestbuymediakit. com/assets/files/Media_Kit_Presentation. pdf Best Buy, Inc. (201 2). Best Buy 10k Report. Richfield Best Buy. Best Buy, Inc. (2013, January 22). About Us. Retrieved from Best Buy Canada http//www. bestbuy. ca/en-CA/about-best-buy-canada. aspx? path=9825360f7559258208ae2438cb28c580en99 Best Buy, Inc. (2013, January 22). Code of Business Ethics. Retrieved from Ethics Point https//secure. ethicspoint. com/domain/media/en/gui/32565/code. html? 3 Brandon, J. (2007, April 4).Rethinking the Time Clock. Retrieved from CNN specie http//money. cnn. com/magazines/business2/business2_archive/2007/03/01/8401022/index. htm Conlin, M. (2006, December 10). Smashing the Clock. Retrieved from Bloomberg Businessweek Magazine http//www. businessweek. com/stories/2006-12-10/smashing-the-clock Kerrigan, H. (2012, April). Results-Only Work Environment Goes Public Sector. Retrieved from Governing http//www. governing. com/topics/public-workforce/gov-results-only-work-environment-goes-public-sector. html The Associated Press. (2013, January 22).Best Buy Super Bowl brand ing spot will focus on humor, enlists Amy Poehler. The Washington Post, p. 1. Zimmerman, A. (2012, 10 12). Best Buy to Match Online Prices. Wall Street Journal. Exhibit 1 Best Buys Domestic Sales Allocation (Best Buy 10k Report, 2012) Exhibit 2 AMZN Income Statement Exhibit 3 AMZN Balance Sheet Exhibit 4 WMT Income Statement Exhibit 5 WMT Balance Sheet Exhibit 6 Promotional Ad Example Promotional Ad Source Exhibit 7 Promotion Example-Scholarship political platform Promotion Example-Scholarship Program Source Exhibit 8 US Promotional Focuses Broken Down in Quarters On Best Buy Media Network, 2011) Exhibit 9 Organizational Chart Exhibit 10 BBY Balance Sheet Exhibit 11 BBY Income Statement Here are my thoughts The purpose of this Case History is to provide info for the next document, the Case Analysis. You should examine your Case History to ensure that it contains sufficient selective information for a have it away Strategic Analysisan Environment Analysis and a Company Analysis. F or example, do you have sufficient data to conduct a PEST Analysis? Do you have sufficient data for conducting a breeze through Competitive Forces Analysis?On page 5, you do not provide data under the heading of Leadership. On a more comprehensive scale, does the Case History tell the story of Best Buy, or is the Case History a collection of different pieces of data? Does the sequence of the data hurry a story? From the Heading Balance Sheet Analysis to the end of the documents text, you seem to be presenting an analysis. The purpose of the Case History, though, is to present data. The analysis should be saved for the next document, the Case Analysis. Midnight- Sunday, February third Other points to Add 5 Forces Model Highlights Risk of Entry by competitors- * Low everyone is in that wants to be * Intensity of Rivalry * High * Bargaining power of buyers * High price and experience dictate where we go * Bargaining power of suppliers * Low buyers took control * Closeness of substitu tes * No idea what a substitute would be * Power of complement providers * PEST Analysis * Political * * Economic * disposable income levels affect the amount people want to spend on these goods * Social * Trending products * Technological * whoever continues to provide/produce the newest gadgets