Best Buy Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Best Buy was founded in 1966 by Richard M. Schulze and James Wheeler in St. Paul, Minnesota, under the original name “Sound of Music Store.” This retailing company, offering mainly consumer electronics, and has more than 150,000 employees. The headquarters are in Richfield, Minnesota, and the Best Buy Co. shares are listed on the New York Stock Exchange. Chairman Schulze is still leading the business, which is focused on consumer electronics, home office products, entertainment software, domestic appliances, and related services. Consumer electronics contribute about 41 percent to current sales, home office products about 28 percent, and entertainment software about 19 percent. Domestic appliances and services are less important, accounting for 6 percent of sales each.

Best Buy manages five private label brands: Insignia (personal computers and accessories), Dynex (low-price computers and home entertainment), Init (storage and portability for technical devices), Geek Squad (best known for its 24-hour on-site technical support services, high-end computer accessories, and cables), and Rocketfish (high-end cables primarily used for home theater installations). Products with these private labels are sold exclusively in Best Buy’s own retail outlets. The outlets are identified by the light-brown façade and a “blue box” entrance. The logo is a yellow price label with the name Best Buy printed on it in black letters.

Best Buy, whose 1,150 retail outlets are usually the epitome of the “big box” style, has been ranked 12th among U.S. retailers.

Best Buy has successfully acquired other retail chains, such as Audio Visions, Five Star, Future Shop, Magnolia, Pacific Sales, and Speakeasy. The trust currently ranks 23rd in the Fortune Top 100 and is the leading consumer electronics vendor in the United States and Canada. The company ranks 12th in the list of U.S. retailers and accounts for 17 percent of the North American electronics market. The company has generated an impressive performance: Since the 1990s, their revenue has increased faster than that of Microsoft and the dividend per share was higher than that of Intel, Inc. This is remarkable, considering that Best Buy lost almost all of its profits just 10 years ago. In 1997 an expansion strategy resulted in hyper growth, overextending technical and financial resources as well as management capacity.

To cope with stagnation of turnover in the U.S. retail industry, Best Buy expanded its business to overseas sites. In a total of 1,150 outlets, Best Buy offers goods and services in the United States, Canada, Puerto Rico, Mexico, and Turkey. By the end of 2008, Best Buy hoped to have eight stores operating in China. The first two were opened in Shanghai.

Best Buy is about to expand to the major European markets. The first step is a joint venture with a British mobile phone provider, Carphone Warehouse. In addition to mobile telephony, this joint venture intends to sell various consumer electronics in the 2,400 outlets in the United Kingdom. Carphone Warehouse also provides this joint venture with stores in other European countries, including 240 Phone House outlets in Germany. Thus, Best Buy could become a credible competitor to the German Metro Group, operating two successful consumer electronics chains, Media Markt and Saturn, in various European countries.

Best Buy’s business model differs from those of competitors by emphasizing care for customers’ needs. On the one hand, customers can ask for technically skilled employees to install the products in their homes, thus receiving a sophisticated technical solution including planning, financing, all installations, inspections, and repairs. On the other hand, the private label, low-price offerings match the quality of national brands.

Best Buy is currently facing negative publicity because of the computer repair services it provides. Critics focus on lost data stored on notebooks that were left for repair. However, Best Buy is well known for its elaborate corporate responsibility strategy, fitting social and environmental protection aspects into the stakeholders’ interest portfolio. Striking elements of Best Buy’s corporate relations are the sponsoring of the NASCAR Haas CNC Racing team, the Best Buy Scholarship, and the Best Buy Teach Awards.

Bibliography:

Best Buy, Annual Report Fiscal Year 2008;
Chakravarthy and P. Lorange, “Continuous Renewal, and How Best Buy Did It,” Strategy & Leadership (2007);
Elizabeth Gibson and Andrew Billings, “Best Practices at Best Buy: A Turnaround Strategy,” Journal of Business Strategy (2003);
Elizabeth Gibson and Andrew Billings, Big Change at Best Buy: Working through Hypergrowth to Sustained Excellence (Davies-Black, 2003);
McWilliams, “Analyzing Customers, Best Buy Decides Not All Are Welcome,” Wall Street Journal Online, online.wsj.com (2004);
Salomann, L. Kolbe, and W. Brenner, “Self-Services in Customer Relationships: Balancing High-Tech and HighTouch Today and Tomorrow,” e-Service Journal (2006).

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